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A company is an association of both natural and artificial persons. A company is a “legal person” or “legal entity” separate from, and capable of surviving beyond its members.
Private Limited Company is a popular option to start a business in India by startups and businesses with higher growth aspirations. Private Limited Company is incorporated under the Companies Act of 2013, and governed by the Ministry of Corporate Affairs (MCA).
As per (Section 268) of the Companies Act, 2013. “private company means a company having a minimum paid-up share capital of one lakh rupees or such higher paid-up share capital as may be prescribed, and which by its articles”.
1.) Restricts the right to transfer its shares.
2.) Except in the case of One Person Company, limits the number of its members to two hundred.
3.) Prohibits any invitation to the public to subscribe for any securities of the company.
What is the minimum number of directors required for formation of a Private Limited Company ?
As per section 3(7), a private limited company may be formed for any lawful purpose by two or more persons, by Subscribing their names to a memorandum and complying with the requirements of the Act in respect of registration. Section 149(1) further lays down that a private limited company shall have a minimum number of two directors. The only two members may also be the two directors of the private limited company. The words Private Limited must be added at the end of its name by a private limited company to start a business in India.
1.) No minimum capital is required to form a Private Limited Company.
2.) Can raise funds from the Venture Capitalists or investors.
3.) A Private Limited Company is a separate legal identity in the court of the law.
4.) The personal assets of members will not be used to pay the debts of the Company as the Liability of the members/shareholders is limited.
5.) Any foreign entity or foreign person can directly invest in a Private Limited Company because 100% Foreign Direct Investment is allowed.
6.) The particulars of the company are available on a public database. It improves the credibility of the company.
How to apply for a Company Name ?
A proposed name can be reserved for the purpose of incorporation of a company or change of name of an existing company through the RUN service by logging into the MCA portal along with a fee of Rs. 1000/-.
Further, you may use the SPICe form for the integrated process of name reservation and incorporation of a company.
An approved name is valid for a period of:-
1.) 20 days from the date of approval (in case name is being reserved for a new company).
2.) 60 days from the date of approval (in case of change of name of an existing company).
The concept of a Director Identification Number (DIN) was introduced for the first time with the insertion of Sections 266A to 266G of Companies (Amendment) Act, 2006, according to which all the existing and intending Directors must have a DIN.
Forms for DIN application and modification thereof :-
• SPICe Form :- Any person (not having DIN) proposed to become a first director in a new company shall have to make an application through eForm SPICe. The applicant is required to attach the proof of Identity and address along with the application. DIN would be allocated to User only after approval of the form.
• DIR-3 Form :- Any person intending to become a director in an existing company shall have to make an application in eForm DIR-3.
• DIR-6 Form :- Any changes in the particulars of the directors shall be filed in form DIR-6.
Incorporating a company through Simplified Proforma for Incorporating Company electronically (SPICe -INC-32) is the default option and most companies are required to be incorporated through SPICe only. Once the eForm is processed and found complete, company would be registered and CIN would be allocated.
Also DINs gets issued to the proposed Directors who do not have a valid DIN. Maximum three Directors are allowed for using this integrated form for filing application of allotment of DIN while incorporating a company. Also PAN and TAN would get issued to the Company.
Note :- MCA accepts only above specified documents for ID proof and Address proof.
The first Step is to obtain the Digital Signature Certificate (DSC) of the proposed Director which shall be followed by the following procedures.
Procedure of Incorporation through SPICe (Without filling RUN) :-
1.) Here the stakeholder is required to file SPICe form (INC-32) :- Simplified Proforma for Incorporating Company electronically directly without any need for reserving a name prior to filing of the SPICe form. This is an integrated form for 5 different services, namely, Name Reservation, Allotment of Director Identification number (DIN), Incorporation of New Company, Allotment of PAN and Allotment of TAN.
2.) One name for the proposed company can be applied through SPICe (INC-32).
3.) The form has to be filed with eMoA (INC-33), eAOA (INC-34). The Memorandum shall state the Name of company, the State of ROC, the Objects of company, the Liability of members, Share capital details, whereas the Articles of the company shall contain the regulation for the management of the company. In case eMoA, eAoA are not applicable, users are required to attach the pdf attachments of MoA and AoA.
Procedure for Incorporation through SPICe (With RUN) :-
1.) Name reservation :- RUN service shall be used for name availability.
2.) Incorporate Private Limited Company :- After name approval, form SPICe shall be filed for incorporation of the Private Limited Company within 20 days from the data of approval of RUN along with eMoA (INC-33), eAOA (INC-34) as mentioned above.
Other necessary documents to be filed with MCA :-
• Declaration by first subscriber(s) and director(s).
• Proof of the Registered office of the proposed Company along with the proof of ownership and a NOC from the owner.
• Affidavit and Consent of the proposed Director in Form INC-9 and DIR-2 respectively.
• A declaration in from INC-8 by a professional including an Advocate, a Chartered Accountant, a Cost accountant or a Company Secretary in practice certifying that all compliances have been made.
On verification, the Registrar of Companies (ROC) will allot a unique Company Identification No. (CIN) and shall issue a Certificate of Incorporation pertaining to the company.
Note :- The company shall file form INC-22 within 30 days once form SPICe is registered in case the address of correspondence and registered office address are not same.
A Company Secretary has an important role to play in incorporation of a Private Limited Company. We are ready to serve you through the integrated efforts of our strong team of expert professionals for all your needs pertaining to Incorporation of a Private Limited Company in a systematic and phased manner as outlined below :-
1.) Help in applying to RUN (Reserve Unique Name) form to obtain and reserve an appropriate name for the company. This is the first step of incorporating a Private Limited company.
2.) We help in applying for DSC and DIN for the directors.
3.) Preparation of all crucial documents, such as, MoA, AoA, financial statements and other declarations that are required to be filed.
4.) Filing the SPICe form along with prescribed documents.
On receiving a request, our representative shall contact you at the time of your convenience to collect necessary information and documents required for Incorporation of Private Limited Company. He/She shall act as a front-office Relationship Manager for all communication with you. At the back-office he/she shall coordinate with our in-house team of professionals comprising of legal experts, Chartered Accountants, Company Secretaries, Document Writers and other junior officers to get the work executed systematically, while remaining in touch with you throughout.
Any individual can become a shareholder in a private limited company. For becoming a director in a company, no professional or educational qualification is required.
Because in Pvt ltd company there are more freedom and gives more protection to cover personal losses.
A registered office is required to hold Annual general meetings, for keeping records and receiving correspondence from all the statutory/government authorities. The registered office does not have to be necessarily owned by the company, it can be on rented premises also.
Yes, A private limited company can be set up following provisions of Companies Act, 1956.
As said before, the biggest advantage of starting a business with private limited company form of organization is the outlook by all outside parties towards the business. A private limited company is perceived to be more trustworthy compared to other business structures.
It provides creditability to business in the eyes of financial institutions, suppliers and potential clients. It makes easier for companies to get loans at favorable rates from banks or in convincing potential clients while entering into deals.
There is no bar in particular on the minimum capital requirement to run a private company. Although an amount equal to Rs. 500 are spent on the ROC Compliances of the private limited company. It would hardly take 40,000 to 50,000 to register a private limited company.
⇒ Strong team of qualified experts – Our strength in matters related to Incorporation of a Private Limited Company is attributed to our team of highly qualified and experienced working professionals from different disciplines, including legal experts, Chartered Accountants, Company Secretaries, Document Writers etc. who work in tandem with each other and are assisted by junior officers.
⇒ Smooth and seamless interaction – We endure to provide our best services in all matters relating to Incorporation of Private Limited Company, by ensuring smooth and seamless interaction with you preferably through digital communication mode to save your time and efforts.
⇒ The entire process is digitized – We have digitized the entire process of Incorporation of Private Limited Company using a dedicated software comprising a comprehensive checklist to ensure that all the obligations are fulfilled at each stage within the prescribed due time. Using this software, we are able to provide end to end services on all aspects relating to Incorporation of a Private Limited Company in a systematic manner. We also have specially designed data-entry forms which are essentially replicas of various e-forms prescribed for Incorporation of a Private Limited Company and shall be shared with you online for filling in the desired details under assistance from our team.
⇒ Regular Updating – The names and contact details of all our esteemed clients are preserved in a database which enables us to send them updates on new policies and regulations whenever they are announced, through SMS/WhatsApp/E-mail entirely free of cost.
⇒ Total Business Solution – We provide service assistance in each and every aspect of doing business whether in relation to its establishment or its working as well as undertake to provide total business solution on turnkey basis.
FilingDoor is India’s most trusted technology-driven legal advisory and tax filing platform that ensures a smooth transition of accounting operations for startups and established businesses. Found in the year 2017, FilingDoor is based in Delhi and has successfully assisted 5000+ clients till now. Some of our core services include government registrations & filings, accounting, documentation, and annual compliances. We aim to offer hassle-free legal consultancy and tax-related services to individuals and businesses.
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