Steps to register private limited company

What is a Private Limited Company?

A Private Limited Company (PLC) is a business structure that is commonly preferred by small businesses and startups. This structure offers limited liability protection to its shareholders, meaning they are only responsible for the company’s debts to the extent of their investment in shares. Ownership of the company is restricted to a maximum of 200 shareholders, and shares cannot be publicly traded. This makes it an ideal option for small to medium-sized businesses looking for a limited liability structure without the public scrutiny of a public company.

Advantages of Registering a Private Limited Company in India

1. Limited Liability
   Shareholders are only liable for the amount invested in the company, ensuring that their personal assets are protected from company debts.
2. Perpetual Succession
   A private limited company continues to exist even if a shareholder or director leaves or passes away, ensuring continuity and stability.
3. Access to Capital
   A Private Limited Company can raise funds through equity, which provides opportunities for expansion while keeping personal liability to a minimum.
4. Credibility and Trust
   Being registered with the Registrar of Companies (RoC) under the Companies Act, 2013, increases the credibility and trustworthiness of the business, making it more appealing to investors and partners.

Other Types of Company Registrations

In addition to Private Limited Companies, there are other options for business registrations, including:

• Limited Liability Partnership (LLP) Registration
• One Person Company (OPC) Registration
• Partnership Firm Registration
• Proprietorship Firm Registration
• NGO Registration (Section 8 Company)

How to Register a Private Limited Company

Here is a step-by-step guide to help you register your Private Limited Company:

1. Obtain a Digital Signature Certificate (DSC)
   A DSC is required for signing online forms for company registration. All subscribers and witnesses of the Memorandum of Association (MoA) and Articles of Association (AoA) must have DSCs, which can be obtained from certified authorities.
2. Apply for a Director Identification Number (DIN)
   The DIN is a unique identification number for individuals who wish to become directors of the company. It can be acquired through the DIR-3 form or as part of the SPICe+ form during incorporation.
3. Name Approval
   The company name can be reserved by applying through Part-A of the SPICe+ form or as part of the incorporation process. The name is reserved for 20 days, during which the company must be registered.
4. File Form SPICe+ (INC-32)
   This form simplifies the company registration process and covers name reservation, DIN allotment, and incorporation. Additional forms include PAN, TAN, EPFO registration, and more.
5. File e-MoA (INC-33) and e-AoA (INC-34)
   The e-MoA and e-AoA are the documents that outline the company’s constitution and internal rules, and they must be digitally signed by all subscribers.
6. Apply for PAN and TAN
   You can apply for the company’s PAN and TAN through the SPICe+ form. After approval, the certificate of incorporation will be issued along with PAN and TAN details.

Documents Required for Filing SPICe+ (INC-32)

For Indian Nationals:

• Affidavit from subscribers
• Proof of office address (rental agreement or ownership deed)
• Utility bills not older than two months
• Trademark documents (if applicable)
• NOC from the property owner (if applicable)
• Proof of identity and address (for subscribers without DIN)

For Foreign Nationals:

• Passport
• Address proof (e.g., driving license, residence card)

Time Required for Registration

The process of registering a Private Limited Company typically takes around 10 working days, depending on the availability of documents and the processing time with the Registrar of Companies (RoC).

FAQs

What are MoA and AoA?
The Memorandum of Association (MoA) outlines the company’s objectives, constitution, and powers, while the Articles of Association (AoA) govern the internal rules and regulations of the company.

Can a Residential Address be Used for the Registered Office?
Yes, the Ministry of Corporate Affairs (MCA) allows a residential address to be used as the company’s registered office.

Are PAN and Aadhaar Mandatory for Subscribers to the MoA and AoA?
Subscribers with a valid Director Identification Number (DIN) are not required to attach proof of identity and residence.

How Are PAN and TAN Communicated to the User?
Upon acceptance of the SPICe+ form, the Certificate of Incorporation (COI) is issued along with the PAN and TAN details, which are emailed to the applicant.

Key Benefits of a Private Limited Company

1. Limited Liability
   Shareholders’ liability is limited to the value of their shares, safeguarding their personal assets.
2. Separate Legal Entity
   A Private Limited Company is a distinct legal entity, separate from its owners, allowing it to own assets, incur liabilities, and enter into contracts independently.
3. Capital Raising Ability
   This structure enables businesses to raise funds by issuing shares, making it easier to finance expansion.
4. Enhanced Credibility
   Registration with the RoC and visibility on the MCA portal boosts credibility and trust in the business.

Compliance Requirements After Registration

Once a Private Limited Company is registered, there are several compliance obligations to maintain its legal status and ensure smooth operations. Here are some key requirements:

1. Appointment of an Auditor
   Within 30 days of incorporation, the company must appoint a statutory auditor to audit its accounts.
2. First Board Meeting
   The first board meeting must be held within 30 days of incorporation. Subsequent meetings should occur at regular intervals, adhering to the statutory guidelines.
3. Annual Filing of Financial Statements
   Every year, the company is required to file financial statements and annual returns with the Registrar of Companies (RoC). This includes submitting balance sheets, profit and loss statements, and other necessary documents.
4. Maintaining Board Meeting Minutes
   A Private Limited Company must hold regular board meetings, and the minutes of these meetings must be maintained. These minutes are an essential part of the company’s records and are required for audits and inspections.
5. Filing Income Tax Returns
   A Private Limited Company must file annual income tax returns with the Income Tax Department, based on its financial performance during the year.
6. Annual General Meeting (AGM)
   The company must conduct an AGM within six months from the end of the financial year. The AGM is used to present the company’s financial results and to elect or re-elect directors and auditors.
7. Compliance with GST, PF, and Other Statutory Requirements
   If the company’s turnover exceeds the prescribed threshold, it must also comply with Goods and Services Tax (GST) regulations. Additionally, companies must comply with statutory requirements like Provident Fund (PF), Employee State Insurance (ESI), and others depending on their nature of business.

What Makes a Private Limited Company Ideal for Small Businesses?

A Private Limited Company is a favorable option for small businesses due to the following reasons:

• Flexibility in Ownership
  The ability to have up to 200 shareholders allows a broad range of people to invest in the company. This helps businesses access capital from various sources, including family members, friends, and investors.
• Protection of Personal Assets
  Since the liability of the shareholders is limited to the value of their shares, their personal assets, such as property and savings, are not at risk in case of business debts or liabilities.
• Attractive to Investors and Partners
  The ability to raise capital through the issuance of shares makes a Private Limited Company an attractive business structure for investors and partners. It also boosts credibility and trust, which is essential for forming business relationships and partnerships.
• Tax Benefits
  A Private Limited Company enjoys various tax exemptions and benefits compared to other business structures. This helps businesses minimize their tax liabilities while adhering to legal regulations.

Key Takeaways

• A Private Limited Company provides limited liability protection to its shareholders and continues to exist even if ownership changes, offering business continuity.
• The company structure allows for easier access to capital through equity investments, enhancing growth potential.
• The company is a separate legal entity, safeguarding the personal assets of its owners.
• It offers enhanced credibility and transparency, which are crucial when dealing with investors, partners, and clients.
• After registration, the company must comply with several regulations, including appointing an auditor, conducting annual meetings, and filing financial reports.

By choosing to register as a Private Limited Company, business owners can enjoy numerous benefits that will help them establish a strong foundation, promote growth, and expand their reach in the market while ensuring legal protection.