Private Limited Company is the most prevalent and popular form of business structure in the world. The registration of Private limited company in India is mainly governed by the Companies Act, 2013 read with Companies Incorporation Rules, 2014. To register a private limited company, minimum two shareholders and two directors are required. A natural person can be both a Director and Shareholder, while a corporate legal entity can only be a shareholder. Further, foreign nationals.
PRIVATE LIMITED COMPANY REGISTRATION
Private Limited Company is the most prevalent and popular form of business structure in the world. The registration of Private limited company in India is mainly governed by the Companies Act, 2013 read with Companies Incorporation Rules, 2014. To register a private limited company, minimum two shareholders and two directors are required. A natural person can be both a Director and Shareholder, while a corporate legal entity can only be a shareholder. Further, foreign nationals, foreign corporate entities or NRIs are also allowed to be Directors and/ or Shareholders of a Company with Foreign Direct Investment, making it the most preferred choice of entity for foreign promoters and foreign entities.
There are the most unique features of a Private Limited Company like limited liability of Directors, protection of shareholders interest, ability to raise funds either from Equity shareholders or borrowing from outside, separate legal entity status and perpetual succession make it the most recommended type of business entity.
A Private Limited Company is nothing but the closely held business entity which is run by minimum 2 persons who are the same family members or close friends. A Private Limited concept is best suited to the business organisations which starts on a very small scale basis and controlled management yields the greater outputs since 100 % focus is on a business rather than focusing on other unwanted dispute situation or and unnecessary conflict of interest.
What will you receive in Company registration package ?
Filing of Declaration of Commencement of Business.
Advantages of Private Limited Company Registration
1.Separate Legal Entity (Management & ownership is separate):
Private Limited Company is a legal entity and a juristic person established under the Companies Act, 2013. Hence, a company has a wide range of legal capacities and the members (Shareholders/Directors) of a company have no personal liability to the creditors of a company for company's debts.
2.Perpetual succession gives longest business life:
Private Limited Company has 'perpetual succession', which means uninterrupted existence until it is legally dissolved. A company being a separate legal person, is unaffected by death or other departure of any member and it continues to be in existence irrespective of changes in ownership.
3. Large scale Borrowing Easily available:
Private Limited Companies can raise equity funds or borrowed funds as per the requirements. Companies can also issue equity shares, preference shares, debentures and accept deposits with RBI permission. Banks and Financial Institutions prefer to provide funding to a company rather than partnership firms or proprietary concerns.
4. Easy share transfer process:
Ownership of a business can be easily transferred in a company by transferring shares. The signing, filing and transfer of share transfer form and share certificate is sufficient to transfer ownership of a company. In a private limited company, the consent of Board of Directors is required to effectuate share transfers.
5. Owning Property in own name:
Private Limited Company being an artificial person, can acquire, own, and alienate, property in its own name. The property owned by a company could be machinery, building, intangible assets, land, residential property, factory, etc., No shareholder can make a claim upon the property of the company - as long as the company is a going concern.
6. Growth & expansion:
A Private Limited Company is based on a principle of Fast growth and controlled management systems which generates potential achieve greater outputs due to 100% focus is on a business.
7. Small business can take benefit of MSME status:
A Private Limited Company starts from very small scale rather from a very micro level. At this point profitability and security of its own trade interests is very difficult to manage. Hence, this Companies can take Undyog Aadhaar for being considered itself as a Small Scale Industrial unit and at least get concession on statutory Govt. Fees upto 50%such as discount to MSME registered Pvt. Ltd. Companies for Trade Marks registration fees under Trade Marks Act, 1999 and so many other benefits are available under Income Tax Act, 1961, Copyrights, Patents registration, etc….
8. Start up registration for Income Tax benefits:
If your business is uniquely identified and has potential for generating the large scale employment opportunities, then you can register your Private limited Company under Govt.’s Start-Up India Scheme and take huge Income Tax Benefits for at least 5 years.
What are the minimum requirements for Registering a Company in India?
Minimum 2 Shareholders *
There is no minimum capital requirements
DSC of the promoter - shareholders of proposed Company
Step 1: Obtain the DSC Tokens of all the shareholders
Step 2: Apply for Name Reservation
Step 3: Prepare and filing of Form Spice Form INC-32 for incorporation
Step 4: Obtain the Certificate of Registration
Step 5: File Form INC-20A for Declaration of Commencement of Business
The entire process for registration of Company will take at least 7 to 15 working days from the receipt of all the necessary documents and filing with the ROC.
What Documents are required for Company Incorporation ?
Copy of PAN Card of all Directors & Promoters
Passport size photograph of Directors & Promoters
Copy of Aadhaar Card/ Voter identity card/ Passport/ voting ID card of Directors & Promoters
Copy of Rent agreement (If rented property)
Electricity/ Gas bill/ Water Bill/ Electricity Bill/ Bank Statement for Office of Company
Copy of Index II or Property Tax Receipt (If owned property)
Landlord NOC (Format will be provided)
Precautions to be taken while name reservation
Meaningful: The name of your company should have some meaning even though more than two words combination is used. The name taken by the promoters of the Company should not be able to be challenged by anyone.
Unique: It should not create resemblance with the existing Company or LLP names or even the Trade Marks (either registered or in the process of registration).
Activity reflecting: In the name of your proposed Company, activity or main business object should be reflected or represented.
Should not be illegal / offensive: The name of your company should not be against law. It should not be abusive or against the customs and beliefs of any religion.
Is there any benefits available to a Private Limited Companies under Start-Up India ?
Small Companies, Private limited and One Persons Companies are three types of Companies which forms large part of the total companies in India. All these small scale business units / Companies are the actually the growth indicators of the Country’s Economy such as Concepts like Start Up India, Make in India, Digital India, etc… whichare the most successful recent govt. initiated programmes to strengthen the growth potential of the Indian businesses at micro level.
One of the programme is Start Up India which gives the following enlisted benefits as per the scheme:
1. Self-Certification: Self-certify and comply under 3 Environmental & 6 Labour Laws.
2. Tax Exemption: Income Tax exemption for a period of 3 consecutive years and exemption on capital and investments above Fair Market Value.
3. Easy Winding of Company: In 90 days under Insolvency & Bankruptcy Code, 2016.
4. Startup Patent Application & IPR Protection: Fast track patent application with up to 80% rebate in filling patents.
5. Easier Public Procurement Norms: Exemption from requirement of earnest money deposit, prior turnover and experience requirements in government tenders.
6. SIDBI Fund of Funds: Funds for investment into startups through Alternate Investment Funds.
To take above mentioned benefits it very much necessary to get your Company or LLP or Partnership or Proprietary Firm register under this Start Up Scheme. Following is the Eligibility Criteria for Startup Recognition: