Guide to Private Limited Company Registration In India

September 18, 2019

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.

Overview of Legal Structures For Organizing A Business In India

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 requirments 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 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.

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.

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,Tcs 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.

Director Identification Number and Name Approval:

As per the provisions of Companies Act,2013 every person intends to be appointed as a Director in a Company must have a Director Identification Number (DIN). After obtaining Digital Signature DIN may be obtained easily and quickly by filling E-FORM DIR-3 which require copy of Pan card and Copy of  Copy of Driving license/Passport/Aadhar Card/Voters’ Identity Card as attachments. After completing this Form and attaching relevant documents this form is required to be Digitally Signed by the applicant and must be Certified by a Practicing Company Secretary or Chartered Accountant or Cost Accountant in Whole Time Practice.

After obtaining DIN of at least 2 Directors application for Name approval may be filled using E-FORM INC-1. 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.

Drafting of Memorandum and Articles of Association of Proposed Company:

Once the name is approved by Registrar of Companies it is available for 60 days which means if you does not file application for Company Incorporation within 60 Days the name is not reserved for you and it is available to public for registration. For Filling application for Incorporation of Company you must have Draft Memorandum and Articles of Association of Proposed Company which are bye laws of Company.

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 Noatary 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:

Once all the above processes are completed than incorporation application may be filled using the forms available on website of Ministry of Corporate Affairs.

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