Private Limited Company Incorporation Procedure

Tanya Verma

27 Jan, 2021

If you are on the verge of starting a business, then you must read this blog about the business commencement procedure. This blog can provide you with all the information on the Private Limited Company incorporation procedure. A private Limited Company is one of the most preferred types of business entities. Also, through this blog, you would get to know about the other type of business entities.  The information will enhance your knowledge to help you decide which type of entity you finally want to go with.

Worrying about how can you incorporate a company of your own? Don’t worry we will help you. Also, we will help you gather and file all the documents with the concerning government authorities. You just have to follow the Company incorporation procedure as mentioned in this blog post.

Type of Companies

There more than one type of business entity an entrepreneur can choose from these types to incorporate its own firm. The types of business structure include the following;

• Sole Proprietorship: Sole proprietorship is a type of firm having only one person as the in charge of the whole business somewhat like in an OPC. However, the Sole proprietorship firm has a disadvantage that there is no legal distinction between the owner and the business entity. So, when there is a case of loss the owner suffers all the losses and even his personal possessions can be seized in the case of winding-up of the entity.
• LLP: LLP or Limited Liability Partnership is a type of business entity in which some or all the partners have limited liabilities. Therefore, in an LLP one partner is not responsible for the misconduct or negligence of the other partners.
• Partnership Firm:  A Partnership Firm is a type of business entity in which two or more individual come together as partners and agrees to distribute profits in an agreed ratio. However, this type of business entity suffers from certain limitations such as limited resources, limited skill, and unlimited liabilities.

But the most preferred form of business organization is a Company because it possesses numerous benefits over the other entity types. Also, there are different types of companies and each company type has its own advantages and disadvantages. You should have the knowledge about all of them beforehand and know the type which would be most suitable for your business model. But before going deep into the incorporation procedure of the private limited company, we would first get to know about the different types of companies that can be incorporated through the SPICe form.

The major types of companies that can be incorporated through the SPICe form are as follows;

• Private Limited Company: It is the most opted type of company in India when compared to other company types.  The advantages of Incorporating Private Limited Company includes having limited liability, ease of creation and winding up, separation/freedom of ownership and management, etc.
• Public Limited Company: It is a type of company that has limited liability and offers shares to the general public. The stocks of this type of company can be acquired by anyone either privately through Initial Public Offering (IPO) or by trading on the stock market.
• Producer Company: A Producer Company is involved in one or all of the following activities including, production, grading, pooling, handling, marketing, selling, harvesting, the export of primary produce, or import of services/goods.
• One Person Company: An OPC is a type of company that was first introduced in the Companies Act, 2013. The OPC involves only one person as the owner or in charge of the whole company and the company enjoys all the benefits similar to a Private Limited Company.
• Nidhi Company: A Nidhi Company is a type of company that comes under the Non-Banking Financial Sector and is recognized under Section 49 of the Companies Act, 2013. 
• Section 8 Company: Section 8 Company is formed with an objective to promote a specific field of art, science, commerce, sports, research, charity, environment protection, social welfare, etc.

Pre-Requirements of Private Limited Company Incorporation Procedure

There are certain pre-requirements of incorporating a company, before filing the SPICe Form. These pre-requirements include;

• The objective of the company: Set your goals and be certain of your objective and the areas you are going to cover or provide services to though your company/business.
• Name of the company: Then decide the name of the company and get it registered with the Ministry of Corporate Affairs^[1] (MCA). The company owner can file an application through the RUN web service along with the prescribed fees of Rs. 1000 for checking the availability of a suitable name and getting it registered with the MCA. Also, you can apply for the name application facility directly through the SPICe or INC-32 Form.
• Shareholders: Decide the number of Shareholders for your company. The minimum number of shareholders is 2 and the maximum is 200.
• Directors: Also, decide the number of directors in your company. The minimum number of directors in a private limited company is 2 and the maximum is 15.
• Authorize capital: Finally, authorize the final amount of capital you want to go with.

Company Incorporation Procedure

Step by Step Procedure to Incorporate a Private Limited Company

Earlier the process of incorporating a company was a very lengthy process and it used to take as it involved the filing of numerous forms. But with the introduction of the SPICe form, the process was all digitalized and hence, the time period was reduced. The full form of SPICe is Simplified Performa for Incorporating Company electronically. You need to follow these steps to set-up your Private Limited Company through the SPICe form;

• Apply for DSC and DIN: File the application to get the {Digital Signature Certificate} DSC and {Director Identification Number} DIN {DIN can be obtained through the SPICe form}

First, you need to obtain the DSC from an authority authorized for issuing DSC for the proposed directors and subscribers of the company.

Then you need to register your DSC on the MCA’s website.

• File application for name availability: Once you get the DSC issued, you can file an application for checking the availability of the name for your business.

You need to check the names that you are thinking for your business must not be a one that already exists in the MCA’s records. Also, check that the name you applied for is not a trademark under the specified class.

You can apply for the application for getting a name for your business through the RUN web service on the MCA’s website along with the fees which are Rs. 1000.

You can also apply for a business name directly in SPICe form. However, applying for a business name through RUN is a better option as it takes less time than the SPICe form method.

After the approval of the business name the Registrar of Companies {RoC} issues a Name Availability Letter with respect to approval for availability of the name for a proposed company which will be valid for 20 days from the date of approval. Within those 20 days, the company needs to file the SPICe form {INC-32} for getting their company registered. Otherwise, the company’s approved name will be canceled and all the pre-registration steps would have to be repeated again from the start. The full form of RUN is Reserve Unique Name.

• Go to the MCA website^[2] and download the RUN form and enter these details related to your company in it;
  • Entity type
  • CIN {if applying for a change in name by an existing business}
  • Proposed name {enter the proposed name and click on auto-check}
  • Comments {enter any comments or attach any file is required}
  • Then click on submit and pay the fees
  • If your proposed name gets approved you would receive an email and then you can go ahead and file the SPICe form.
• File the application for incorporation of the company: You need to file the SPICe form i.e. INC-32 that is an application for incorporation of a company with the Registrar of Companies. Also, you need to file the INC-33 {Memorandum of Association -MOA} & INC-34 {Article of Association -AOA}
• The DIN can also be obtained directly through the SPICe form and a maximum of 3 DINs can be obtained through the SPICe Form. Earlier, there was a separate provision for obtaining DIN and entities had to submit a separate form for getting {Director Identification Number} DIN.
• Additionally, you need to include the following attachments;
  • INC-9: Affidavit / declaration by first subscriber(s) and director(s) (on duly authorized Stamp Papers).
  • DIR-2: a declaration from first Directors along with Copy of Proof of Identity and residential address.
  • NOC from the owner of the property.
  • Office address proof (Conveyance/ Lease deed/ Rent Agreement etc. along with rent receipts)
  • Copy of the utility bills (not older than two months)
• Also, you need to provide the following information;
  • In case subscribers/ Director does not have a DIN, it is mandatory to attach: Proof of identity and residential address of the subscribers
  • Max 3 directors can apply for DIN through SPICe[After incorporation, for fresh director DIN can be obtained by filing form DIR 3]
  • Min 2 and Max 15 directors can be appointed
  • Min 2 and Max 200 shareholders can be appointed
  • SPICe MOA
  • SPICe AOA
  • INC 35 AGILE  [GSTIN, EPFO, ESIC]

How to Fill the SPICe Form

• Download the prescribed form i.e. SPICe form from the MCA website
• Fill all the required details in the provided fields
• Attach all the required documents
• There is an option for filling the SRN of the RUN you had applied for earlier. By filling the SRN you can pre-fill certain fields as per the details you provided earlier.
• Fill the MOA, AOA & SPICe Form linked together
• After filling all the three forms you have to go to the MCA portal and upload all the forms
• After submitting your forms you need to wait for approval of your company by MCA
• If your company does not get approved you can re-submit the forms. However, if your company gets rejected again after multiple tries you can ask for a refund of the submitted fees.
• Upon approval of your form, you would get the Certificate of Incorporation and you can start to carry-on your business.

Post-Incorporation Services Provided by Enterslice

After incorporation, there are numerous requirements to be fulfilled for a company. These requirements include;

• Drafting a Business Plan,
• Providing CFO Services,
• Filing Income Tax Return {ITR},
• Complying with all the compliances for the type of your entity, etc.

Takeaway

If you are thinking of starting a business and if you are looking for a company that can help you with incorporating your business, stop searching because Enterslice is the best option for you. The company incorporation procedure is now even more simplified with the SPICe form, so you wouldn’t face any difficulty after you have given the command to us. We expertise in incorporating all types of business entities so you can be assured and rely on us. Connect with Enterslice to know the complete Company Incorporation Procedure.