Complete Checklist for Registering Private Limited Company in India

Shubham Chauhan

10 Oct, 2020

There are many types of companies that can be incorporated through our governing law, and Private Limited Company is one of them. Private Limited Company is one of the most popular types of corporate legal entity in our country. The Companies Act, 2013, governs its incorporation. As per the Companies Act, 2013 minimum of two shareholders is required to start a private company, while the higher limit of members may go up to 200. The Ministry of corporate affairs (MCA) recently by launching the SPICE+ has simplified the process of Private Limited Company Registration, a step towards increasing the ease of doing business in India. In this write- up, we shall discuss in detail about the process of Private Limited Company registration in India.

Characteristics of a Private Limited Company

The Characteristics of Private Limited Company are as follows:

Members Required

As per the provisions of the Companies Act, 2013^[1], a Private Limited Company requires a minimum of 2 members for its incorporation. The maximum number of members may go up to 200.

Limited Liability

In Private Limited Company, the financial liability of each member or shareholder is limited to their shares. This means if the Company goes into loss under certain circumstances, the shareholders will not risk losing their personal assets. Although committing a fraud related to the Private Limited Company would negate an owner’s limited liability protection.

Continued Succession

One of the advantages of a Private Limited Company is its perpetual succession, even after the owner dies or leaves the business. The Company keeps on existing in the eyes of the law until it is legally dissolved.

Number of Directors

According to the Companies Act, 2013, a Private Limited Company needs to appoint at least two directors. With the existence of two directors, the Company can begin with its operations.

Paid-Up Capital

There is no requirement of minimum paid up capital.

Separate Legal Entity

A Private Limited Company is recognized as a separate legal entity with continued existence. The Company can have a PAN number, bank accounts, licenses, approvals, assets, and liabilities in its unique name.

Availability of credit

A Private Limited Company can gather funds from debentures as well as from the stockholders. A registered Private Limited Company attracts numerous angel investors and venture capitalists, which allows the Company to expand and raise its funds for the growth of the business.

Pre-Requisites of Private Limited Company Registration in India

Before starting a Private Limited Company, there are certain requirements that need to be fulfilled. Given below is the list of requirements that should be fulfilled before registering a Private Limited Company in India:

• The name of the Private Limited Company should be unique and must not resemble any other registered company and trademark.
• One of the key pre-requisites to start a Private-Limited Company registration is to have a minimum of two directors and two shareholders. The maximum number of members in a Private Limited Company can go up to 200, and the maximum number of directors can a Private Limited Company can have is 15.
• To incorporate a Private Company, it is compulsory for all directors and members of the Company to obtain Digital Signature Certificate, which is required to sign the e-forms digitally.
• While selecting a name for the Company it should be kept in mind that the proposed name is not offensive to any section of people.

Checklist of Documents Required for Private Limited Company Registration

The registration of a Private Company in India cannot be done without proper identity proof and proof of address. The detailed list of documents required to incorporate a Private Company in India is given below:

• The proof of address of registered office, which may include either of the documents among Lease Deed/ Rent Agreement/ Ownership document/ Non Objection Certificate (if the ownership of property is in blood relation).
• Scanned copy of utility bills that are not older than two months.
• Scanned copy of Voter’s ID/Passport/Driver’s License
• Passport-sized photographs of proposed Directors
• Board Resolution
• Digital signature certificate of Directors
• Director Identification Certificate of Directors

In case the Director/shareholders are a foreign national, then, the documents required are as follows:

• Identity proof of the proposed Director i.e. Passport
• Residence Proof: Driving license, Bank statement or electricity bill less than 2 months old.

Complete Process of Private Limited Company Registration

Following are the steps involved in Private Limited Company Registration:

Name Approval

The first step towards incorporating a Private Company is to get the name of the Company approved from MCA. You can apply for two names through incorporation form i.e., SPICE+. The Registrar will choose between the two names and shall approve one. Before applying, it should be remembered that the name you apply for should not be similar to any of the existing registered Companies with MCA.

Obtain DSC (Digital Signature Certificate)

Since the registration process of the Company is online, Digital Signature Certificate (DSC) is required for signing the e-forms of company incorporation. DSC can be obtained from any authorized agency recognized by the Government of India. DSC is compulsory for all subscribers and witnesses in the memorandum and articles of association. The cost of obtaining DSC varies depending upon the agency from where you get it. You should obtain either class 2 or class 3 category of DSC. In class 2 category, the identity of the person is verified against the pre-verified database, whereas under class 3 category, the person needs to be present physically before the registering authority to prove their identity.

Apply for DIN (Director Identification Number)

It is mandatory to obtain DIN for anyone who wishes to become the Director of the Company. There are a couple of ways of applying for DIN. One can apply for the Director Identification Number (DIN) through the Spice+ form. The other way to apply for DIN is by filling the DIR-3 form.

MoA (INC-33) and AoA (INC-34) drafting

The Memorandum of Association (MoA) and Articles of Association (AoA) are crucial documents for a Private Limited Company registration in India. The Memorandum of Association represents the character of the Company, while AoA comprises the internal rules and regulations of the country. Both MoA and AoA can be filed online on the MCA portal.

Application for Certificate of Incorporation

After all the above-mentioned formalities are done, one shall proceed for making an application of incorporation through the filing of Spice+ Part B form accompanied by SPICe_MOA, SPICe_AOA, AGILE-PRO, and INC-9. Through the SPICe form, you can also apply for Company’s PAN and TAN by using form 49A for PAN and 49B for TAN. These forms will be auto-generated by the system after the submission of the SPICe form.  After uploading the required forms, the application of company incorporation is successfully submitted the application is processed by the Department. If everything is found satisfactory, MCA shall issue the Certificate of Incorporation.

Final Thoughts

Also, read: Read About Designation Hierarchy in a Private Limited Company