Private Limited Registration Made Easy
A private company registration in India is popular among micro, small and medium enterprises, including start-ups with high growth aspirations. It requires a minimum of 2 and a maximum of 200 members, a minimum paid-up capital of Re. 1, and restricts the transfer of shares. Private companies do not invite public subscription for their share capital and must include “Private Limited” in their name. Benefits include no public or government interference, no prospectus requirement, separate legal existence, and the ability to contract in its own name. Additionally, they are eligible for benefits under the Startup India Scheme, including tax exemptions for recognized start-ups.
Benefits of Private Limited Registration
- Distinct Legal Entity - The greatest benefit of private limited company registration is that it is treated as a single entity, making the company responsible for all debt payments. The company is liable for any shortcomings, and its members are not personally liable; they are only responsible for unpaid shares. This separate legal entity status safeguards the owners from being sued in case of any legal controversy.
- Limited Liability and Tax Savings - Registering a Private Limited Company offers various tax-saving opportunities. Salaries paid to directors are allowable expenses, and preliminary expenses like drafting the MOA and AOA, stamp duty, and printing documents are also deductible. Private Ltd Companies are taxed at a rate of 22% with a surcharge of 10% and cess of 4%, making the effective tax rate 25.17%, which is lower than the 30% tax rate for LLPs.
- Brand Image - Registering a Private Limited Company enhances the business’s brand image compared to operating as a sole proprietor. Large business firms generally prefer dealing with companies over sole proprietorships. Additionally, certain tenders or job works may require applications from registered companies.
- Easy Fundraising - A Private Limited Company has better options for raising funds. It can issue both secured and unsecured debentures, and banks and financial institutions prefer providing financial assistance to large private firms.
Eligibility For Private Limited Registration
- Minimum 2 Shareholder
- Minimum 2 Director
- One of the directors must be an Indian resident
- Minimum Authorised Share Capital to be Re.1
- Digital signature Certificate for 2 Promoters/ Directors
- The Director and shareholder can be the same person
- Director Identification Number (DIN) for all directors
- DSC (Digital Signature Certificate) for director and shareholder
Process for Proprietorship Registration
- Step 1
- Step 2
- Step 3
- Step 4
- Step 5
Application for Name Approval
The name approval process for private limited company registration is a crucial step. Two proposed names, listed in order of preference, along with the business objective/purpose and statutory fees, are submitted to the MCA. The proposed name should be unique and free of punctuation marks. If the MCA has any observations, a resubmission is required, which may delay the entire process. Once the name is approved, it remains valid for 20 days (including weekends or holidays), during which all other formalities must be completed.
Digital Signature Certificate Application
A Digital Signature is an online signature used for filing documents electronically. A Digital Signature Certificate (DSC) is required for all shareholders and directors for private limited company registration. This can be applied for concurrently with name approval, as there is no DSC requirement during the name application process. If directors or shareholders already possess a DSC, this step can be skipped.
Documents Preparation and Form Submission
After obtaining the DSC and name approval, the next step is to file forms like Spice + Part, Agile Pro, Spice MOA, Spice AOA, and INC 22 with the MCA. These forms contain essential information for private limited company registration, including details about the registered office, authorized and paid-up capital, shareholding pattern, directors, and shareholders. Supporting documents such as rent/title deed of the registered office and PAN cards are required.
Obtaining the Incorporation Certificate
Upon submitting all documents and verification by the Registrar of Companies (ROC), you will receive a Certificate of Incorporation within 7-10 working days. This certificate acts as a birth certificate for your company registration, marking the end of the registration process. It includes the company name, registered address, a 21-digit alpha-numeric Corporate Identity Number (CIN) approved by the MCA, and is notified on the registered companies list.
Opening a Bank Account
After receiving the Incorporation certificate for private limited company registration, a bank account must be opened in the company’s name. Documents such as the incorporation certificate, MOA, AOA, and other necessary documents must be submitted to the bank. Before commencing business, the proposed paid-up capital must be deposited, and INC-20A must be filled within 180 days since incorporation to the MCA to obtain the certificate of commencement.
Application for Name Approval
The name approval process for private limited company registration is a crucial step. Two proposed names, listed in order of preference, along with the business objective/purpose and statutory fees, are submitted to the MCA. The proposed name should be unique and free of punctuation marks. If the MCA has any observations, a resubmission is required, which may delay the entire process. Once the name is approved, it remains valid for 20 days (including weekends or holidays), during which all other formalities must be completed.
Digital Signature Certificate Application
A Digital Signature is an online signature used for filing documents electronically. A Digital Signature Certificate (DSC) is required for all shareholders and directors for private limited company registration. This can be applied for concurrently with name approval, as there is no DSC requirement during the name application process. If directors or shareholders already possess a DSC, this step can be skipped.
Documents Preparation and Form Submission
After obtaining the DSC and name approval, the next step is to file forms like Spice + Part, Agile Pro, Spice MOA, Spice AOA, and INC 22 with the MCA. These forms contain essential information for private limited company registration, including details about the registered office, authorized and paid-up capital, shareholding pattern, directors, and shareholders. Supporting documents such as rent/title deed of the registered office and PAN cards are required.
Obtaining the Incorporation Certificate
Upon submitting all documents and verification by the Registrar of Companies (ROC), you will receive a Certificate of Incorporation within 7-10 working days. This certificate acts as a birth certificate for your company registration, marking the end of the registration process. It includes the company name, registered address, a 21-digit alpha-numeric Corporate Identity Number (CIN) approved by the MCA, and is notified on the registered companies list.
Opening a Bank Account
After receiving the Incorporation certificate for private limited company registration, a bank account must be opened in the company’s name. Documents such as the incorporation certificate, MOA, AOA, and other necessary documents must be submitted to the bank. Before commencing business, the proposed paid-up capital must be deposited, and INC-20A must be filled within 180 days since incorporation to the MCA to obtain the certificate of commencement.
Documents Required for Private Limited Registration
| For Each Directors and Shareholders | For Address Proof of New Company | Additional Requirements For Foreign Nationals |
|---|---|---|
| Passport Size Photograph PAN Card* Aadhar Card* Voter ID/ Passport/ Driving License* Telephone /Electricity Bill/ Bank A/c Statement (Not older than 2 Months)* | Telephone /Electricity Bill/(Not older than 2 Months)* Title/Sale - Owned Property Rent Agreement - Rented Property NOC - Rented Property Click to generate NOC | Passport * Documents should be notarized or consularized or apostilled |
*Self-attested in PDF format
FAQ
A Private Limited Company is a type of business entity where the liability of members is limited to their shares. It requires a minimum of two shareholders and directors.
Some advantages include limited liability protection, separate legal entity status, ability to raise funds through equity shares, and credibility in the business market.
The process involves obtaining Digital Signature Certificates (DSCs), applying for Director Identification Numbers (DINs), applying for name approval, drafting and filing incorporation documents, and obtaining the Certificate of Incorporation.
Documents include identity and address proofs of directors and shareholders, proof of registered office address, Memorandum of Association (MOA), Articles of Association (AOA), and various incorporation forms.
There is no specific minimum capital requirement for Private Limited Company registration in India. The capital structure can be decided by the promoters.
The registration process typically takes 10-15 working days, subject to the timely submission of documents and government processing times.
Compliance requirements include filing annual returns, maintaining statutory registers, conducting board meetings, and adhering to tax and regulatory obligations.
Private Limited Companies are taxed at a rate of 22% with a surcharge of 10% and a cess of 4%, resulting in an effective tax rate of 25.17%.
Yes, a Private Limited Company can convert to a Public Limited Company, LLP, or any other legal entity by following the prescribed conversion procedures under the Companies Act, 2013.