What is private limited company registration?
Private Limited Company is the most prefered form of business entity in India charaterised by perpetual succession with at least two directors & shareholders, the maximum being 15 and 50 respectively and such requirement also applies for private limited company registration. It is very convenient to organize and operate & can be commenced immediately with no minimum paid-up capital required to commence operations. It also increases the credibility of the business thereby enhancing the future growth of the company.
Many start-ups and companies consider private limited companies as it-permits capital funding to be raised easily, limits the liability protection to its shareholders and enables them to offer employee stock options to motivate their employees. Availability through a bank loan, equity or debt funding makes a private limited company the most recommended legal structure of many small and medium-sized business entities that are family-owned or professionally run in India.
Why Choose a Private Limited Company (PLC)
1. Limited Liability
One of the key advantages of registering a Private Limited Company in Mumbai is the protection it offers through limited liability. In the event that the company faces financial difficulties or is unable to repay its debts, the personal assets of the directors remain secure. Only the capital invested in the business is at risk. This is in contrast to a partnership firm, where partners are personally liable and may need to use personal assets to settle debts. A Private Limited Company is a distinct legal entity, offering financial security to its shareholders.
2. Perpetual Succession
A Private Limited Company enjoys perpetual succession, meaning it continues to exist regardless of changes in ownership or the death or resignation of any director. Once incorporated, the company has an independent legal identity and remains operational until it is formally dissolved. This ensures long-term stability and continuity of business operations.
3. Easy Transferability of Ownership
Ownership in a Private Limited Company can be easily transferred through the sale or transfer of shares. This process involves signing a share transfer form and handing over share certificates. While shareholder approval is typically required, the process is straightforward, making it easier to bring in new investors or transfer control of the business.
4. Enhanced Borrowing Capacity
Private Limited Companies have greater access to funding options. After registration, they can raise equity capital, issue preference shares, debentures, and even accept deposits (subject to RBI guidelines). Financial institutions and banks are more likely to extend credit to Private Limited Companies than to sole proprietors or partnership firms, owing to their structured governance and limited liability model.
5. Legal Protection and Scalability
While ownership in a Private Limited Company is limited to its shareholders, the structure offers significant legal protections. It is relatively simple to manage and operate, making it ideal for entrepreneurs looking to grow and scale their businesses. Additionally, winding up or dissolving the company is a more straightforward process compared to other business structures.
DOCUMENTS REQUIRED FOR PVT LTD COMPANY REGISTRATION
1. FOR DIRECTORS & SHAREHOLDERS
- Copy Of PAN OR Passport (For NRI’S).
- Copy Of Voter’s ID OR Passport OR Driver’s License.
- Copy Of Latest Bank Statement OR Electricity Bill OR Telephone Bill.
- Passport sized photographs.
- Specimen Signatures
2. FOR REGISTERED OFFICE
- Copy Of Latest Bank Statement OR Electricity Bill OR Telephone Bill
- Copy Of Notarized Agreement of the rent (English)
- Copy Of Property owner’s NO-Objection certificate
- In case of owned property, Sale deed (English)
PVT LTD COMPANY REGISTRATION PROCEDURE
In order to get a private limited company registration, the Ministry of Corporate Affairs (MCA) came with new rules for the Incorporation of a Company under the Companies Act, 2013 by introducing e-form INC-32 under the SPICE scheme in one single step.
*SPICE – Simplified Proforma for Incorporating Company Electronically.
The SPICE form was introduced by MCA with a motive to prepare MOA & AOA electronically (E- MOA or E-AOA). Due to this amendment, the manual preparation of MOA & AOA & physical signature by the concerned persons will not be required.
This form can be used for the following:
- Application of DIN (up to 3 Directors)
- Application for the availability of Name
- No need to file a separate form for the first Director (DIR-12), the address of the registered office (INC-22), PAN & TAN.
*E-MOA – Form INC-33
*E-AOA – Form INC-34
- DSC of every subscriber is Mandatory. The subscribers & witnesses shall affix their digital signatures to the E-MOA and E-AOA.
- The approval of DIN, Name, and Incorporation will usually take 1-2 days.
- INC-32 will require Professional Certification.
- For private limited company registration, the company should have a minimum of two directors or shareholders and a maximum of 150 to 200, respectively. One of them must be an Indian citizen.
- During Pvt Ltd Company Registration, there is no specific requirement for authorized capital. The company is allowed to choose an amount suitable to the business needs.
- It should be ensured that the proposed company name is unique and complies with the Ministry of Corporate Affairs guidelines.
- While registering for a private limited company, the company must have a registered office address in India for receiving official communications.
- Also called DSCs, they are necessary for the online filing procedure of the company’s Directors and Shareholders.
- For Private Limited Company Registration, directors must obtain a Director Identification Number (DIN) from the Ministry of Corporate Affairs.