In India, it is always beneficial to start a business with Pvt ltd registration. If you start a business or a start-up, this option will give you better opportunities for your growth. A private limited company is consolidated.
We need the company’s act of 2013, and it is represented and controlled by the Ministry of Corporate Affairs (MCA). A private company is a duly registered corporate framework that enables businesses to establish their separate legal identity, which is different from its owners. This has major key advantages like safeguarding personal assets and the power to contract in its own name.
A Pvt. Ltd. Company means that that company has been incorporated as a private institution. The details of which are mentioned in section 2 (68) of the companies act of 2013. The maximum number of 200 members is required to be a private company apart from its present and former employees.
As a mandatory practice for its recognition, the private company has to add the term Pvt. Ltd. as a suffix to its name. Also, a private company must compulsorily have two directors and two members. A private company has the power to issue debentures to as many as the number of people it wants.
There are also restrictions on the transfer of shares by a Pvt ltd company. However, the pre-emption clause says that if a member of the private company wants to transfer his or her share, then the air is offered to an existing company member first. If the existing members do not want to take that share, then such shares are open to outside people unless any other condition is stated in the article.
The company director will decide the price of such transferred shares according to the pricing formula mentioned in the company article.
Just like LLP, a private company is a limited liability framework. Start-ups have certain key advantages of their own. The share capital defines the ownership of a private company. The share capital is easy to transfer in a private company as compared to the ownership transfer in LLP. Ownership and management are differentiated in a private company. This is the main reason by angel investors' banks, and VCs prefer private companies over LLPS for providing equity funds and debts.
Documents Required For Pvt. Ltd. Company Registration
1. A Photocopy of PAN Card of all directors
2. Passport size photograph of all directors
3. A Photocopy of Aadhaar Card or a Photocopy of Voter Identity card of all directors
4. In case the company premises are on a rented property, a Photocopy of a Rent agreement is required.
5. In case the company premises are on a rented property, Landlord NOC.
6. Electricity Bill or Water bill of the company as address proof.
7. In case the company premises are on an owned property, a Photocopy of the Property papers.
Advantages of a Private Limited Company.
There are many advantages and benefits of registering your company as a limited private institution.
• It becomes easier to gain the attention of VCs, Angel investors, and banks.
• It is easier to distribute and allocate shares to directors and other investors.
• The separate legal entity puts limits on your liability.
• Partnership terms can be flexible in private limited, and members have an advantage.
• A Pvt Ltd company is easier to run, control, and manage.
• It is easier to register your company as a Pvt. Ltd. at the same time. It is easy to dissolve or wind up the company if such time comes.
Minimum Requirements for Company Registration
• Minimum of two shareholders in the company.
• Minimum two directors of the company.
• Minimum 1 Lac rupees as Share Capital.
• DPIN is compulsory for all the Directors.
• At least one partner should be a Resident of India.
How to register your company as a private limited.
Registering your company as a limited private institution is easy and less time-consuming. It involves 5 simple steps for the company registration procedure.
1. Apply for DSC & DPIN:
The first step is to apply for a digital signature and DPIN. The partners of the company do this. A digital signature is an online signature. It is used for filing. DPIN stands for Directors PIN. It is a number issued by the Ministry of Corporate Affairs. If the directors already have their digital signature and DPIN, then this step is skipped.
2. Submit Names for approval:
You have to submit two different names as options for your company name to the Ministry of Corporate Affairs. One of these is selected. Hence, the name suggested should be unique, and there shouldn't be any other company of the same name. It is beneficial if the name suggests the company's business.
3. Submit Memorandum of Association (MoA) and Articles of Associate (AoA):
After the Ministry approves the name of Corporate Affairs, a Memorandum of Association (MoA) is drafted with Articles of Associate (AoA), which states the necessary terms and conditions. These two documents, along with the Digital Signature Certificate (DSC) attached to both, are filed to the Ministry of Corporate Affairs.
4. Get incorporation certificate:
An incorporation certificate is proof that your company has been created. It contains a CIN number. A period of 15 to 25 days is necessary for establishing a Pvt. Ltd. Company with an Incorporation Certificate.
5. Apply for PAN, TAN, and Bank Account:
The final step is to apply for PAN and TAN. A time period of 7 working days is required for acquiring this. Once you get all these documents, you can submit them to the bank and open your bank account. The bank account requires an Incorporation Certificate, Memorandum of Association, Articles of Association, and PAN number. Now with our New Spice forms, We get the PAN, TAN & Other registrations along with the incorporation certificate.
Concerns Related To Private Limited Company
• A Pvt. Ltd. Company needs more ROC compliances, which costs an amount per annum.
• A Pvt. Ltd. Company needs a minimum capital amount of Rs.1, 00,000
• A Pvt. Ltd. Company has a limit of a maximum of 200 members only.
Yet, a Pvt. Ltd. Company provides unparalleled scope for growth. Hence, young entrepreneurs are always in a hurry to get the Pvt. Ltd. Company tag behind their company name.
Factors to Consider During the Selection of the Company Name.
The company's name should be carefully chosen. It should be unique and should suit the company and business. Apart from this, the name is the first impression on your clients, stakeholders, and customers. Hence, it should be simple, subtle, and attractive. You have to submit three options for your company name. These are the factors you should consider while submitting the names.
• It should be meaningful. The name of your company must be meaningful to your customers and clients. It can either directly portray the service which you offer or state the ideals of your business.
• The name of your company should be unique to avoid confusion. It should not coincide with any other company with a similar name.
• The name should be short and simple to pronounce and remember. It should not be a homophone.
• The name should not be offensive or illegal. It should not hurt anyone's sentiments. It should not spread hatred or create any political issues. It shouldn't be against or abuse any religion.
Compliances fulfilled by a Private Limited Company.
A Pvt. Ltd. Company should fulfill many compliances which incur additional costs to the company. However, it is necessary to fulfill them.
• A Pvt. Ltd. Company must compulsorily have an auditor.
• The auditor must audit the company books. Hence, the company needs to maintain them properly.
• A private limited company must compulsorily schedule one Annual General Meeting (AGM) and a Board Meeting in each quarter that is four months.
• As a part of annual compliance, the private limited company must fill the AOC-4 and MGT-7 form. It needs to be filed in the specified period.
• A private limited company must file the ITR and registrar annually.