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A Private Limited Company is a corporate entity held by a small group of people. It is owned by a group of individuals known as shareholders and registered for pre-defined objects. Private corporations are frequently selected as ideal company structures by start-ups and organisations with higher growth objectives. By registering under India’s 2013 Companies Act, the corporate entity is acknowledged as a company. The Ministry of Corporate Affairs, sometimes known as MCA, is the governing body.
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According to Companies Act Section 2(68), a company is considered a private company if it has a minimum paid-up share capital of one lakh rupees or more, as may be prescribed. It states that there are restrictions on the transfer of shares and that the number of members is limited to 200, with the exception of one-person companies, which are not allowed to invite the public to subscribe to any of their securities.
Under section 2(68) of the businesses act, if two or more people possess one or more shares in a company, they will be considered a single member for the purposes of this clause. Moreover, the number of members does not include people who work for the company and people who were once members of the company but kept their membership after their employment ceased. In contrast, a one-person company can have a maximum and minimum of one person.
The following documents must be submitted for private limited firms to register:
Step 1: Obtaining Digital Signature Certificate: The application of the company formation documents requires digital signatures. All forms used in the registration procedure must have a digital signature. DSC is required by the Memorandum of Association (MOA) and Articles of Association (AOA) for all subscribers.
You must receive digital signature certifications from certifying authorities that the government acknowledges. Depending on the certifying authority, a DSC can be obtained for a variety of prices. The DSC class 3 category is a requirement.
Step 2: Apply for Director Identification Number: A director’s DIN serves as an identification number. Everyone who wishes to serve as a director in a firm must obtain it. One DIN is sufficient to serve as a director for any number of businesses.
A maximum of three directors may apply for DIN using this SPICe+ (INC 32) filing procedure. Suppose the applicant wishes to incorporate a company with more than three directors, but more than three of those directors do not have DIN. In that case, the applicant must first incorporate the company with only three directors, and then after incorporation, new directors must be appointed.
Step 3: Approval of the Name: Using Part-A of the SPICe+ Form to reserve the name: The Ministry of Corporate Affairs (MCA) has implemented the SPICe+ web service for the incorporation of a business in an effort to simplify the processes for both new and existing enterprises. While reserving Unique Names for the Businesses, Part-A of the SPICe+ form provides for “name reservation” with two proposed names and one re-submission (RSUB).
The applicant must resubmit another SPICe+ form along with the required fee in the event that the name is rejected due to any name similarity. The name will be reserved for 20 days after it has been approved, during which time the company must proceed with incorporation by filing Part B of the SPICe+ form.
Step 4: Form SPICe+ (INC-32): The MCA has introduced Form SPICe+ for the registration of new companies. The SPICe+ form’s Part-B, which facilitates the incorporation of businesses, is also available online.
Following name approval, the applicant can proceed with incorporation by clicking the link for the accepted name (found on the user’s dashboard). The new SPICe+ form’s Part-B enables web-based incorporation and accomplishes the following tasks with the convenience of a single application:
The new SPICe+ form makes incorporation simple and rapid by allowing web-based entries and real-time data checking. The information entered in Parts A and B of SPICe+ will be filled up automatically in the associated forms AGILE-PRO, eAoA, eMoA, URC1, and INC-9 (as applicable).
All of these forms must be downloaded in PDF format, signed digitally, and then submitted for incorporation. The user must also download the SPICe+ form in PDF format and attach the DSC to the form to digitally sign it after filing the SPICe+ form.
All of these forms have now been combined into a single SPICe+ form, and the RUN service is only available to alter the name of an existing form. The SPICe+ form is the only option for incorporating a company. No ROC costs are required for the incorporation of a company with up to 10 lakhs authorised capital.
Step 5: E-AoA and E-MoA (INC-33) (INC-34): The terms “e-MoA” and “eAoA” stand for electronic memorandum of association and articles of association, respectively. Introducing these forms has simplified the process of registering a corporation in India.
Initially, the articles of association and memorandum of the association had to be physically filed. On the MCA portal, however, these forms are now submitted as connected forms with SPICe+ (INC-32). The Memorandum and Articles of Association subscribers must digitally sign both of these forms.
Step 6: Application for PAN and TAN: After submitting the SPICe+ form, the system will automatically produce these forms. After the SPICe+ Form has been approved, the PLC’s Certificate of Incorporation is issued along with the PAN that the Income Tax Department has assigned. The MCA will email you the PAN, TAN, and Certificate of Incorporation. The Income Tax Department will issue the PAN card.
The MCA will authorise the registration and assign a CIN (Corporate Identity Number) if all the needed information is correctly filled out in the form and the necessary supporting documentation is via the MCA site. You may also track this CIN online.
Limited Liability: The legal status of only being liable for a small portion of a company’s debts is known as limited liability. A company’s obligation is only as great as the face value of the shares that its members have purchased. In the case of a winding-up, the number of unpaid shares that the members own limits their obligation.
Uninterrupted existence: Unless it is legally dissolved, a firm has “perpetual succession,” which refers to continuity or uninterrupted existence. Since a business is a separate legal entity from its members, it is unaffected by their deaths or other departures, yet its existence will endure regardless of membership changes.
Shares are freely and easily transferable: A shareholder may transfer their shares to anyone. In contrast to transferring an interest in a company operated as a proprietary concern or a partnership, the transfer is simple. In addition to submitting and signing a share transfer form and giving the buyer the shares, a share certificate is required.
To sue and to be sued: To sue is to take legal action against someone or to file a lawsuit in a court of law. A firm, being an autonomous legal body, can sue and be sued in its own name just as a person can commence a legal action in their own name against someone in that person’s name.
Foreign Direct Investment (FDI): Any foreign person or entity may directly invest in a private limited company, which allows 100% Foreign Direct Investment (FDI). The company will expand nationally and even internationally with the aid of FDI.
Credibility: You can find a private limited company’s financial accounts and incorporation information on the MCA website. It raises the company’s credibility by making it simple for clients, financial institutions, and investors to verify corporate information before working with it.
Forming a private limited company is simple with the single online portal and the forms provided by the Ministry of Corporate Affairs. These companies must abide by the rules and laws established by the government because they were established for a specific purpose. The private limited company is the best option for a business that intends to attain profit and success quickly.
Also Read:Private Limited Company Incorporation in IndiaPrivate Limited Company Incorporation ProcedureMinimum Paid up capital for Private Limited Company
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