Private Limited Company Registration – A Precise Summary
Once you have decided to start a business, the first and foremost requirement is to select a favourable business structure. The choice of the right business structure affects many factors starting from business name, capital to be invested, how to file taxes / statutory dues and so on. Therefore we can say that the financial and operational success of the business depends upon the right business structure. One of the most cited legal structure for businesses in India is a Private Limited Company Registration. Normally, Start-ups and growing companies prefer to have online Company Registration to raise funding easily.
Registering a business as a private limited company provides added advantages to an entrepreneur like a company can enter into contracts on its own name thus it protects personal assets of the owner from the business liabilities. It is always preferable for investors to invest in a company. If you are willing to set up a company in India, make sure you get it done with the help of expert professionals in the industry.
Benefits of Private Company Registration in India
- Private Limited Company must have a minimum of two members and a maximum of fifty members.
- Directors / Shareholders have limited liability to creditors.
- If there is any default, the banks or creditors can only ask for sell-off company's assets not personal assets of the owners.
- Loans can be issued on the name of the company
- It is considered as a separate legal entity.
- Tax benefits are available to the company.
- Right from the time of establishment, the power to hold and dispose of the property is with the company.
- Creates goodwill for its brand.
- Global reach.
- Set up a platform to deal with suppliers, industries, vendors, and customers.
- A registered company can sue or can be sued on its own name. The name of the entrepreneur will not be used here.
- It is easy to distinguish one company from another by entering into a corporate environment.
- You can collect money from the general public to make an investment in the company.
Regulatory Authority for Company registration in India
The primary regulatory authority for the company registration process in India is the Ministry of Corporate Affairs (MCA). If an individual wants to establish a company, then all the necessary information and documents need to be submitted with the registrar of the company on the portal of the MCA.
Mandatory Requirements for Registering a Private Limited Company in India
Minimum 2 Shareholders /Directors
To register a private Limited company in India, a minimum of two persons are required, who must act as shareholders or directors of the company. The highest number of shareholders a company can have is 200, and a maximum of 15 directors. If the shareholders are foreign nationals then the requirement of submitting a passport and other documents is mandatory.
At least one director of the company needs to be a resident in India. Any person if he or she stays in India for at least 182 days during the financial year irrespective of their citizenship shall be deemed to be a citizen of India. However, as per the Finance Act 2020 and the Income Tax Act, 1961 if an individual stays in India for more than 120 days, then they would be considered as a resident Indian. However, this would depend upon the amount of taxable income earned in India. If the taxable income earned in India is more than Rs.15, 00,000/- per annum.
The investment must be made as per the necessity of the business, and there is no least capital requirement for a company. However, while measuring capital, even the Government fee is added. Minimum capitalisation requirements are considered under this.
Unique Name of Company
The suggested name of the company must not be similar to any existing company or LLP. Moreover, you also need to verify the trademark registry to ensure that the name is not similar to any registered or applied trademark in India. The name of the company must not go against any provisions of any intellectual property law in force in India. The name must not go against the Copyrights Act or the Trade Marks Law of India.
The registered office does not need to have a commercial space. Even a rented home can become a registered office, after obtaining a NOC from the landlord.
Check Company Name for Registration – Why? & How it can be done?
It is essential to check the name of the company before applying for registration. If you check the name of the company before applying for company registration then you will be able to avoid any form of overlapping. Plus additional benefit is that the company will get to know if there would have any company with a similar name.
For example if already a company is registered with a particular name, then registering another company with a similar name will cause some form of confusion in the eyes of consumers.
Apart from this, it is important to check the names of the company in order to comply with the laws of the land. For instance, the name must not be offensive to any national emblems or religion as well as the name must be according to the provisions of the intellectual property law.
For example, if the name of the company is protected as per the laws of intellectual property rights then it is known as a trademark. It is important to ensure that the proposed name does not breach any other marks or company rights. Trademark represents the particular brand of the company.
The name of the company can be checked on the portal of the Ministry of Corporate Affairs (MCA) and respective authorities like the IP office of India.
Documents required for Private Company registration in India-
- Copy of PAN Card or Passport of directors in case Foreign Nationals & NRIs
- 2 Passport size photographs of the proposed directors of the company
- ID proof such as Aadhaar Card or Voter identity card of the proposed directors
- Copy of address proof such as rent agreement or property papers
- Electricity or Water bill of the proposed registered office of the company
- Landlord NOC in case of rented office
- In the case of personal property, a copy of sale deed or property deed
- For foreign nationals, a notarized copy of the passport must be submitted mandatorily. The residence proof documents like a bank statement or electricity bill must be less than two months old.
- To get company registration in India, the company must have a registered office. In order to prove the functionality of the registered office, a recent copy of the electricity bill or the property tax receipt or water bill must be submitted. Along with the rental agreement, utility bill, or the sales deed and a letter from the landlord with her/his consent to be used to register the particular address as the registered office.
Process of Private Company Registration in India-
Application for DSC
The first step is to apply for a digital signature certificate. A digital signature certificate is a legal document which is used for signing electronic documents. When incorporating a company, the first step is to apply for the DSC from the certifying authority.
Application for DIN (Director Identification Number)
Once you have applied for the DSC, it is crucial to apply for the director identification number. The DIN would indicate that all compliances have been met by the company when recruiting a director. The proposed directors have to apply for the director identification number which now can be directly applied through SPICe+ form.
Name Availability of the Company
Next step is to check the company name. This step is very important in the process of company registration. When you check the name of the company, the portal will inform you if the name is already chosen or if it is going against the provisions of intellectual property laws. Name availability can be checked online on the MCA portal.
Filing Memorandum of Association and Articles of Association Online
The applicant for company registration has to file documents such as the memorandum of association and articles of association online. Filing these documents would provide legal certainty of the formation of the company. This process must be carried out through the Ministry of Corporate Affairs Portal.
Application for PAN and TAN
After company incorporation form filing will be done, an applicant needs to apply for securing a PAN and TAN.
Certificate of Incorporation
Once everything is over, the ROC will review the application and in case no issues found, a certificate of incorporation would be granted to the applicant. The certificate of incorporation is a legal document which provides some form of legal status to the company.
Opening a Bank Account
After securing the certificate of incorporation, the applicant must open a bank account on the name of the organisation. This would be required for carrying out transactions on behalf of the company. Hence a corporate bank account must be opened by the applicant.
Recent updates- Company Registration
On Mar 9, 2020- SPICEe+ Form requires Mandatory Registration of EPFO & ESIC. After the introduction of SPICe+ (e-form) for company incorporation in India, registrations for EPFO and ESIC shall be mandatory for all the registered organizations, and none shall be separately issued by the respective agencies.
On Mar 06, 2020- Company Registration must be done in a new MCA portal
A Public, Private, and one person company registration in the EPFO, ESIC will be done on the new MCA portal. It simplifies the registration process by using a new web form SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus), integrating ten services from various departments.