Private Limited Company is the most common incorporated business organisation in India. It limits liability of its members & has a perpetual succession. For starting a Private Limited Company minimum 2 members and directors are required. In this article we provide a comprehensive guide to Private Limited Company registration as per the provisions of Companies Act,2013.
Type of Business Entities for doing business in India :
Private Limited Company :
Private Limited Company is the most popular structure for businesses and startups. Private Limited Company allows outside funding & Foreign Direct Investment easily. Private Limited Companies are required to hold Board Meetings,Register Secured Loans with Ministry of Corporate Affairs,Hold Members Meeting for Important matters,Make complete disclosures about important matters in their Board Report. Due to all these regulatory disclosures and requirements imposed on Private Limited Company by Company Law they tend to be viewed with more credibility than a Limited Liability Partnership (LLP), One Person Company (OPC), or General Partnership.
Limited Liability Partnership:
Limited Liability Partnership is suitable for Service based industry (for example-web designing,architects,doctors etc.). In comparison to general partnerships it limits the liability of its Partners. However, if you’re looking to raise venture capital or attract talent with employee stock options, private limited is the way to go as LLPs cannot easily accommodate it.
Partnership Firm :
General Partnership Firm is thought to have lost its relevance since the introduction of the Limited Liability Partnership (LLP) because its partners have unlimited liability, which means they are personally liable for the debts of the business. However, low costs, ease of setting up and minimal compliance requirements make it a sensible option for some, such as home businesses that are unlikely to take on any debt. Registration is optional for General Partnerships.
Procedure for Incorporation of Private Limited Company
Following are the steps involved in Incorporation of a Private Limited Company in India:
Obtaining Digital Signature:
Digital Signature is required to sign Incorporation application and other forms for regular compliance needs,It is issued by certifying authority (like Sify,Vsign, Emudra etc.).
Following are the documents required for obtaining Digital Signature for Directors:
1.) For Indian citizens & residents:
a.) Copy of Pan Card
b.) Copy of Driving license/Passport/Aadhar Card/Voters’ Identity Card
c.) Dully filled and signed Digital Signature Form.
2. For Foreign Nationals:
a.) Copy of Notarized or Appostilled Passport if the country is a party to hague convention.
b.) Dully filled and signed Digital Signature Form.
Name Approval Application in E form RUN:
Application for Name approval may be filled using E-FORM RUN . Care must be taken while applying for Name approval, Name of proposed Company must not resemble with an already registered Company and a Registered Trademark or with the mark for registration of which Trademark application has been filled.
We will help you to check the name availability for your new Company.
Preparation of Incorporation Documents:
- Form INC -9 ( Declaration from First Subscribers and Directors )
- Form DIR-2 (consent to Act as Director )
- E MOA
- E AOA
What is E MOA and E AOA :
- E MOA is Memorandum of Association of the Company i.e. Constitutional Document in which Name of the Company , State of Registered Office of the Company, Main Objects of the company, Share Capital of the Company and Liability of Members are mentioned.
- E AOA is Articles of Association of the Company i.e. in which Rules and Regulations for governing of the Company is mentioned.
Our Team will help you to get your E MOA and AOA drafting as your requirements.
Shareholding (Ownership) in the Proposed Company , how it is decided :
In this case if you are two persons starting a New Company it is important that what ownership you will held in the proposed Company , Lets take and Example – We will Incorporate a Private Limited Company which will have Share capital Divided into 10000 Equity Share Shares of Rs. 10 Each in this case We divide 5000 Share each to both the persons , the ownership will be 50-50% for both the persons. Ownership decides the voting rights of members in the proposed Company.
In New Company Share are subscribed by mentioning the no of shares in the Subscription page of MOA of the Company and it is witnessed by Company Secretary, Chartered Accountant or Cost Accountant in Practice.
Subscribing to Memorandum and Articles of Association:
By subscribing to Memorandum and Articles of Association members agree to become member of Proposed Company. Following are the manner for Subscribing to Memorandum and Articles of Association:
1.) If all the members are Indian resident Individuals:
Subscriber sheets of Moa & Aoa must be signed by respective individuals stating the shares subscribed against their name in Moa Subscriber Sheet.
2. If members include Body Corporate or only Body Corporate are members:
Subscriber Sheet must be signed by nominee of Body Corporate who is authorized by a resolution passed by Board of Directors for subscribing on behalf of Company and other individual subscribers.
3. In case foreigner are members of proposed Company:
Subscriber Sheet of Moa & Aoa is required to be signed by respective individual or nominee of Body Corporate and must be Notarized by Notary Public of that Country if the country is not a party to Hague convention if that country is a party of Hague convention than it must be appostilled accordingly.
Filling of Incorporation Application to CRC:
Once all the above processes are completed than incorporation application may be filled using the forms available on website of Ministry of Corporate Affairs.
Obtaining DIN and Name Approval can directly be made through SPICE form. GST Registration can also be applied along with Spice form through AGILE.
Opening of Company Bank Account :
It is very much advisable to open a Company Current Bank Account as soon as company is registered, and deposit the subscription money to company bank account .
Filing of Form INC 20A for Commencement of business of Company :
The Company has to file form INC 20 A for Commencement of Business of the Company , Company cannot Commence and exercise borrowing powers if company does not file form INC 20A .