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Are you looking to Setup a Private Limited Company?

Streamline Your Company Registration Process Today in just 48 Working Hours at just INR 6,999/-* 

Private Limited Company
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What is a private limited company?

A private limited company is a kind of privately restricted company designed for small businesses. They limit the maximum number of members to 200 and prohibit these members from selling their shares to the general public. They also limit the owner's responsibility to the shares owned.

Types of Private Limited Companies

In India, incorporation of private limited company is one of the most popular business forms. Private limited firms have a number of benefits and drawbacks. Allow me to clarify.

 

  • Private Firm Limited by Common Stock (LTD):
  1. Ownership: Shareholders are the owners.
  2. Liability: Investors run the risk of losing just the money they put in.
  3. Profits: Dividends from profits are given to owners.
  • Private Limited Business via Guarantee:
  1. Ownership: Consists of individuals who consent to pay a specific sum in the event that the business fails.
  2. Liability: In the event that the firm winds up, the members' risk is capped at the amount they have committed to contribute.
  3. Profits: Usually distributed rather than reinvested in the business.
  • Infinite Private Enterprise:
  1. Ownership: Shareholders are the owners.
  2. Liability: Even with personal assets, shareholders are responsible for paying off the company's debts.
  3. Profits: Distributed to stockholders.

Advantages of a Private Limited Company

  • Limited exposure of shareholders' property: despite the impression that private limited firms only reveal a tiny portion of their shareholders' property. It also means that you will only be responsible for the amount of responsibility that corresponds to your ownership stake in the business. Since the shareholders are not held legally responsible for the company's obligations, they do not contribute financially to the firm's risks.
  • Legal Recognition: A private limited corporation is an entity unto itself, distinct from its shareholders and members. This simply means that the firm is in charge of managing its debts and creditors as well as its assets and liabilities. The aforementioned stance appears to let the shareholders off the hook even though they are nonetheless accountable for the company's losses. As a result, the creditors are unable to sue the shareholders or the directors to get the money back on their behalf.
  • There are certain compliance requirements: associated with this area of registration as well. Nevertheless, young and ambitious businesspeople embrace the opportunity to register a private limited company because it provides them with a platform to raise capital, grow, and control their exposure in accordance with Section 122 of the equity method's legal requirements.
  • Reliability: Under the Firms Act of 2013, Indian firms are incorporated with the Registrar of Companies (ROC). The public can see all of the company's documentation via the completely accessible Ministry of Corporate Affairs (MCA) government website. Even more crucially, this section includes information about the establishment of the firm that pertains to all of the directors. Thus, it becomes clear that the private limited company type of corporate structure is more trusted. 
  • Legal Personality: A business has perpetual succession, which implies that it will continue to exist and function until the day it is dissolved.  In the same procedure, a company is defined as an organization that is acknowledged as a distinct legal entity with its existence. As a result, a company can continue to exist despite changes in its membership makeup and can do so independently of the passing away or cessation of any of its members.

Disadvantages of a Private Limited Company

Running a private limited company faces specific drawbacks before starting your business. 

 

  • Compliance Burden: These entities need to fulfill mandatory reporting pressures relating to financial accounts and official document submissions and account review procedures.

  • Complex Setup: A higher level of process work together with expense requires management compared to simple organizational structure models.

  • Share Limits: Restricted share transfers; maximum 200 shareholders in India.

  • Public Disclosure: Financial reports are available to the public when a private limited company makes its accounts public, which lowers company privacy.

  • Exit Complexity: Ease of selling or exit stands as a more difficult procedure when compared to additional structure options.

  • Slower Decisions: The participation of directors with shareholders often creates a prolonged decision-making process.

Requirements for Registering a Company in India

  • Directors and Members: In accordance with the Companies Act of 2013 of India, a private limited company must be incorporated with a minimum of two directors and 200 members.The Director Identification Number, which can be obtained from the Ministry of Corporate Affairs (MCA), is a necessary requirement for eligibility. Also, it is stipulated that each firm should possess a resident Indian director who ought to have worked no less than 182 times in India in the year of creation.
  • Name of Company: Two things need to be taken into account when choosing a name for an Indian private limited business registration. It is adequate to have a first name that can be interpreted to indicate towards the enterprise's business object and the primary target market.
  • Registered Office Address: The firm's registered office address must be submitted to the company registrar as the final step in the registration process. Such an office is used for business operations, and all paperwork related to the management of the company is completed there.

Company Registration Process

People may occasionally find themselves in a situation where they must register a private limited business; the information below will be helpful. This is a step-by-step instruction that will help you register your business as a private limited company:

 

 

  • Step 1: Obtain a Digital Signature Certificate (DSC) Acquire a Digital Signature Certificate (DSC) from the Controller of Certification Agencies (CCA) by providing essential details such as passport-sized photos, PAN Card, Aadhar Card, phone number, and email address. Foreign nationals should also submit notarized and apostilled documents if applicable.
  • Step 2: Secure a Director Identification Number (DIN) Obtain a Director Identification Number (DIN), a critical requirement for directors that must be included in the registration form.
  • Step 3:  Reservation of the name of your company involves the filling of SPICe+ Part A ( concerning the type of a company, type of a class, type of a category and type of a sub category) with relevant information concerning the business. It can only be said the two names so that it be able to enjoy the privilege of belonging to one identity.
  • Step 4: Submit Company Details (SPICe+ Part B) Provide exhaustive information about the company's capital, registered office address, subscribers, directors, stamp duty, PAN, and TAN applications. Ensure all necessary documents are attached for a complete submission.
  • Step 5: Prepare and Submit Incorporation Forms (SPICe+ MOA and AOA) Draft the Memorandum of Association (MOA) and Articles of Association (AOA), incorporating all vital company details. Obtain Digital Signatures Before submitting the documents to the MCA for approval, ensure that you obtain digital signatures from all subscribers and professionals involved in the company registration process.

Additional Step: File AGILE-PRO-S Form Complete the AGILE-PRO-S form to register for GST, EPFO, ESIC, a bank account, and a shop and establishment license (which may vary by state). This streamlines the post-incorporation compliance process.

 

  • Step 6:  Certificate of Incorporation Upon successful verification of all documents, the MCA will issue the Certificate of Incorporation (COI) along with the Company Identification Number (CIN), PAN, and TAN. Formal Establishment of Your Company Upon receiving the Certificate of Incorporation (COI) from the MCA, your company is formally established, marking the beginning of your entrepreneurial journey.

List of Documents Required for Private Limited Company

Proposed directors must submit identification and proof of address documents to register a private limited corporation.

 

  • Foreign nationals need to show a passport, but Indian citizens are required to have a PAN card.

  • In addition, a document bearing the director's address needs to be filed. For Indian citizens, this can be a passport, driver's license, election ID, ration card, or Aadhar ID; for foreign nationals, it can be a bank statement, driver's license, or residency card.

  • For both Indian and international nationals, proof of residency must be demonstrated by a bank statement, power bill, or phone bill generated within the last two months.

  • A board decision authorizing investment, the incorporation certificate, and evidence of address for the company must be submitted if a private limited company in India, whether headquartered in India or overseas, is a shareholder.

  • Completing these prerequisites will guarantee a seamless and effective registration process for private limited companies.

Thank you for your cooperation. Instabiz Filings looks forward to assisting you in setting up a profitable private limited business in India.

Why Should You Use Instabiz Filings

Our Company i.e. Adih Biztech Private Limited has a skilled team of Chartered Accountants, Company Secretaries, and Lawyers, as well as on-call support to handle all your financial, legal, and company formation needs.

 

  • Each client is assigned a dedicated relationship manager to guide them through the process and ensure a seamless and stress-free experience.
  • Our company formation & private limited company registration in India registration process is fully online, hassle-free, and designed for a quick turnaround time.
  • We offer affordable pricing options to make our services accessible to businesses of all sizes.
  • Instabiz Filing has served thousands of happy customers, and our client's satisfaction is our top priority.
  • We offer exclusive offers such as No-cost EMI and referral discounts as a way to express our gratitude to our valued customers.
  • Our commitment is to provide comprehensive, hassle-free, and affordable solutions to our clients' financial, legal, and company formation needs, so they can focus on growing and succeeding in their businesses.

 

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FAQs

FAQs

A private limited company is distinguished by its separate legal identity from its shareholders and directors, thereby limiting their liability to the value of the shares they own. An example of a private limited company is Google India Pvt. Ltd., which is a subsidiary of Google LLC.

Yes, an LLP (Limited Liability Partnership) can be converted to a Private Limited Company in India. The process involves filing an application with the Registrar of Companies (ROC) and obtaining the necessary approvals.

The compulsory requirements of a Private Limited Company in India include:

1. Minimum share capital of ₹1 lakh
2. At least 2 directors
3. DIN and DSC for directors
4. Registered office in India
5. MoA and AoA
6. Company seal
7. PAN and TAN
8. GST registration (if turnover exceeds ₹40 lakh)
9. Annual compliance with ROC
10. Auditor appointment
11. Board meetings and AGM
12. Maintenance of statutory registers
13. Compliance with labour laws

1. Private Limited Company (Pvt Ltd): For small businesses with limited liability.
2. One Person Company (OPC): For solo entrepreneurs with limited liability.
3. Limited Liability Partnership (LLP): For partnerships with limited liability.
4. Public Limited Company (Ltd): For large businesses with public shareholding.
5. Section 8 Company (Non-Profit Organization): For charitable or social purposes.
6. Nidhi Company: For borrowing and lending money among members.
7. Producer Company: For farmers or producers of goods.
8. Government Company: For government-backed projects.
9. Foreign Company: For foreign companies operating in India.
Joint Venture Company: For collaborations between two or more companies.

It should have a minimum of 2 Directors and 2 Members < The company members should hold an annual general meeting < The maximum number of Members cannot exceed 200.

There is no minimum turnover prerequisite for a Pvt Ltd company in India. However, certain threshold limits under the Companies Act 2013 trigger different compliances for Pvt Ltd companies, such as certification of annual return, corporate social responsibility, internal audit, appointment of auditor, etc. These threshold limits are based on the paid-up share capital, turnover, net worth, net profit, loans, borrowings, deposits, etc., of the Pvt Ltd company.

The total cost of registering a Private Limited Company in India can range from ₹25,000 to ₹50,000 or more, depending on the authorized capital and other factors.

A Private Limited Company in India requires a minimum of 2 members and a maximum of 200 members.

A Private Limited Company is a type of company that is owned by a small group of shareholders, usually family members or close friends. The liability of shareholders is limited to the amount of shares they hold, and shares cannot be freely transferred. The minimum capital requirement for a Private Limited Company is ₹1 lakh, and it can have a minimum of 2 and a maximum of 200 members.
 
On the other hand, a Public Limited Company is a type of company that is owned by the general public who can buy and sell shares. The liability of shareholders is also limited, but the company itself is responsible for its debts. Shares of a Public Limited Company can be easily bought and sold on stock exchanges, and the minimum capital requirement is ₹5 lakh. There is no limit on the number of members in a Public Limited Company, and it can be listed on a stock exchange.

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