INCORPORATION OF PRIVATE LIMITED COMPANY
Introduction
Private Limited Company is very prevalent route to set up a company in India to secure shareholders with a defined boundary between limited liability and correct ownership. Registering a limited liability company is becoming the best option for any startup as it provides the easiest way to raise money from investors.
Private companies play an important role in economic growth. The impact of regulatory oversight on a company's business costs is an important consideration when enacting legislation. Regulators are constantly striving to balance to achieve a reasonable level of oversight without incurring excessive compliance costs.
This is a type of incorporation that gives a company a legal personality independent of the company's owners, directors and shareholders. It provides essential services such as the ability to contract in your own name and the ability to protect the owner's personal assets from corporate obligations.
Why Should You Choose a Private Limited Company?
Legal status
The most important aspect of the private company is that it is incorporated as a company under the Companies Act. The status of another legal entity gives company the special advantage of limited liability. Members' liability is limited to the shares they hold, so company creditors can only sue the Company, not members or directors.
Easy to obtain funds
The corporate form always has a legal image in public. It is easy to raise funds through venture capital, angel investors, incubators, crowdfunding and more. Banks and financial institutions prefer to lend to a company rather than the individual. This makes it easier to raise funds from financial institutions and outsiders.
Easy incorporation
Incorporation of private company is comparatively easy. The member can be director of the Company.
Perpetual succession
The Private Limited Company has the feature of perpetual succession. Because the Private Limited Company is an independent legal entity, it is not affected by the death or other termination of one of its members and will survive any change in membership.
Mandatory Requirements
- At least Three(3) members, either individuals or body corporates.
- At least Two(2) Directors (individuals only) and one of them must live in India.
- Every director and subscribers of members shall have a Digital Signature Certificate (DSC).
- Private Company must have either “Private Limited" as the last word in its name.
PROCEDURE FOR INCORPORATION OF PRIVATE COMPANY
1. Obtain DSC of Subscribers
The first step is to obtain the Digital Signature Certificate of the proposed Director(s) and subscribers of the Private Limited. The reason for this is that all the forms need to be submitted online and require the directors and subscribers of Memorandum of the Private Limited. Following information/documents are needed for application of DSC:
i. Aadhaar Card
ii. PAN Card
iii. Photograph
iv. Email address
v. Mobile Number
2. Application for Name Approval
The next step while incorporating private limited company is to decide on the name of the Company. The name of the Company will be in the form of “ABC Private Limited”.
The name can be approved in the Form SPICe+ 32 application. Only one preferred name along with the significance of keeping that name can be given in the Form SPICe+ 32 application. If the name gets rejected, another name can be submitted by applying another Form SPICe+ 32 application.
Once the name is approved by the MCA we move on to the next step.
3. Preparation of MOA & AOA and Other Documents
We have to prepare the following documents which are required to be submitted to the ROC:
The Memorandum of Association (MoA) which are the objects to be followed by the Company or stating the business for which the company is going to be incorporated.
The Articles of the Association (AoA) lays down the by-laws on which the company will operate.
Proof of the proposed company's registered office as well as proof of ownership and NOC from the owner.
Declaration and Consent of the proposed Directors of Form INC -9 and DIR – 2, respectively.
A declaration by the professional certifying that all compliances have been made.
4. Filing of Forms With MCA
The SPICe Form, SPICe-MOA and SPICe-AOA along with the digital signatures of the Director and the professional (CA/CS/CWA) will be uploaded to the MCA site for approval. The PAN and TAN is generated automatically at the time of incorporation of the Company.
5. Issue of the Certificate of Incorporation, PAN, TAN, ESI & EPF Registration
On verification, the Registrar of Companies (ROC) will issue a Certificate of Incorporation and simultaneously PAN, TAN, ESI and EPF registration will be done for the Company.
Documents Required for Private Limited Company Registration
- Identity Proof such as Aadhaar Card, Driving License, Voter ID of all the directors and shareholders.
- Address Proof of all the proposed directors and shareholder of the company such as Electricity Bill/ Telephone Bill / Bank Account Statement.
- PAN card details of all the directors and shareholders
- Utility bill such as telephone, gas, water or electricity bill and rent agreement of the registered office as a residential proof of the business place. It should not be older than 2 months.
- An NOC or No Objection Certificate from the landlord of the business place.
- Digital Signature Certificate of the directors.
- Email ID and Mobile no. of directors and shareholders of the company.
- Passport size photograph of the directors and shareholders.
Note: In case of NRI or Foreign National, documents of Subscribers of Memorandum and Directors must be notarized or apostilled.