Private Limited Company formation in India – FAQ
Private Limited Company is the most popular form of business entity among foreign investors, including USA investors, to form a subsidiary, a joint venture or 100% owned company in India.
How many shareholders are required to incorporate a private limited company?
To incorporate a private limited company, a minimum of two shareholders are required. A minimum of two shareholders and a maximum of up to 200 shareholders are allowed in a private limited company. The shareholders could be natural persons or companies, including foreign companies.
How many directors are required in a private limited company?
A private limited company must have a minimum of two Directors and can have up to a maximum of fifteen Directors.
What are the requirements to be a Director?
The Director needs to be over 18 years of age and must be a natural person. There are no limitations in terms of citizenship or residency. Therefore, foreign nationals can be directors in a Indian Private Limited Company.
What is the capital required to start a private limited company?
Minimum authorized capital of Indian Rupees 100,000 (US $ 2250 approximately) is required to form a private company in India. There is no upper limit.
Is an office required for starting a Private Limited Company?
An address in India where the registered office of the Company will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received.
Do you have to be present in person to incorporate a Private Limited Company?
No, you will not have to be present in India for registering of a Private Limited Company.
What are the documents required for registration?
Identity proof and address proof is mandatory for all the proposed Directors of the Company. PAN Card is mandatory for Indian Nationals. In addition, the landlord of the registered office premises must provide a No Objection Certificate for having the registered office in his/her premises and must submit his/her identity proof and address proof. Memorandum of Association and Articles of Association and other documents are prepared by us.
How long will it take to incorporate a Company in India?
We can incorporate a Private Limited Company in India from 2 to 6 weeks. The time taken for registration will depend on submission of relevant documents by the client and speed of Government Approvals. To ensure speedy registration, please choose a unique name for your Company and ensure you have all the required documents prior to starting the registration process.
Can a company be incorporated quickly?
Yes, the process can be expedited if all the paperwork is signed and authenticated faster, and the proposed name of the Private Limited Company is very unique. Names that are similar to an existing private limited company / limited liability partnership / trademark can be rejected and additional time will be required for resubmission of names.
What is a Digital Signature Certificate (DSC)?
A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature. Hence, a Digital Signature is required for all Directors of a proposed Company.
What is Director Identification Number (DIN)?
Director Identification Number is a unique identification number assigned to all existing and proposed Directors of a Company. It is mandatory for all present or proposed Directors to have a Director Identification Number. Director Identification Number never expires and a person can have only one Director Identification Number.
How long is the registration of the Company valid for?
Once a Company is incorporated, it will be active and in-existence as long as the annual compliances are met with regularly. In case, annual compliances are not complied with, the Company will become a Dormant Company and maybe struck off from the register after a period of time. A struck-off Company can be revived for a period of up to 20 years.
What are the statutory compliances required for a Private Limited Company?
A private limited company must hold a Board Meeting at least once in every 3 months. In addition to the Board Meetings, an Annual General Meeting must be conducted by the Private Limited Company, at east once every year. For details see: Corporate Compliance in India
Can a Foreign National or an NRI be a Director in a Private Limited Company?
Yes, a Foreign National or an NRI can be a Director in a Private Limited Company in India after obtaining Director Identification Number. However, at least one Director on the Board of Directors must be a Resident India.
Can a Foreign National or an NRI hold shares of a Private Limited Company?
Yes, a Foreign National or an NRI Foreign Companies can hold shares of a Private Limited Company subject to Foreign Direct Investment (FDI) Guidelines.
Can a Foreign Company or a Foreign Corporation hold shares of a Private Limited Company?
Yes, Foreign Companies can hold shares of a Private Limited Company in India subject to Foreign Direct Investment (FDI) Guidelines. Please see the FDI Guidelines for various sectors.
Can a Foreign Parent Company incorporate a Subsidiary in India?
Yes, Foreign parent or holding Companies, including USA parent companies, can incorporate a subsidiary, as a 100% owned Private Limited Company in India subject to Foreign Direct Investment (FDI) Guidelines. Please see the FDI Guidelines for various sectors.
What are FDI Guidelines for Foreigners in a Private Limited Company?
100% Foreign Direct Investment is allowed in India in many of the industries under the Automatic Route. There are called RBI Approvals – if the percentage allowed for various Sectors is met. However, an application for approval is required for automatic approvals.
What are the Steps required for incorporating a private limited company in India?
For Steps involved see: Steps for Forming Private Limited Company in India
What are the other requirements for starting business in India?
Besides incorporation there are many other formalities in establishing a business in India. For other requirements for establishing business in India, see: Other Steps to Establish Business in India.