Shares of Private Limited Company cannot be dealt with publically. The personal asset of the shareholders and directors are separate from the Company. Private Limited Company Registration is regulated by the Companies Act, 2013.
A Private Limited Company is a corporation which is privately held for small business. The liabilities of the members is limited to the number of shares they have, respectively. Shares of Private Limited Company cannot be dealt with publically. The personal asset of the shareholders and directors are separate from the Company. Private Limited Company Registration is regulated by the Companies Act, 2013. The Ministry of Corporate Affairs acts as the regulatory body for registration.
All the aspects of Online Private Limited Company Registration are discussed in the article.
What is a Private Limited Company?
A Private Limited Company is a firm registered under the Companies Act, 2013. Private Limited Company Registration is a preferable legal structure for businesses in India. A private limited company holds many advantages over any other form of business entity in India as the liability of the members is limited. The government of India mandates registration of Private Limited Company with MCA.
The characteristics of Private Limited Company Registration
- Limited Liability
Registering a private limited company aids the shareholders with limited liability. In case the Company has loss or debt, the investments made in the Company will only be used to clear the obligations, and the personal assets of the shareholders remain untouched.
- Separate Legal Entity
The Company has a separate legal entity and has all the rights of an artificial person and can buy a property on its name.
- Easy Expansion
Registered Private limited Company is observed as a corporate entity that attracts various investors and venture capitalists. It helps the Company to increase and raise funds for the growth of their business.
- Enhanced Value in Market
A registered company is considered trustworthy compared to non-registered companies. Any information related to the registration of the Company can be obtained from the website of the Ministry of Corporate Affairs.
- Ease in the transfer of ownership
It is quite easy to get private limited company registration and thus to transfer their equity to new members and issue new shares.
- Perpetual Succession
Private limited companies are observed as a separate legal entity. They are different from the existence of the owners, that means they cannot be dissolved due to the death, retirement, or insanity of any of the member.
- More Credit Availability
The private limited Company raises loans with the help of financial institutions and banks due to their organized structure and strict regulations of the compliances.
Advantages of Private Limited Company Registration
In a Public Limited Company, instruction and possession of shares can be sold to the public in the open market. Whereas in a private company, stocks can only be sold or transferred to other people by choice of the owner of the shares. Shares of these companies are owned by originators, management, or private investors. Stocks are not allowed to be sold in the open market. Consequently, there is less number of shareholders, which states less difficulty and misperception in decision making and management.
Minimum number of shareholders
For any private company, a minimum number of shareholders essential are 2, while, for any public company, you require a minimum of 7 shareholders.
These formalities are sometimes costly as well as time-consuming. Private companies have a comparatively shorter list for legal formalities as compared to public limited companies.
Private companies are not subjected to any compulsion regarding disclosing financial information like public Companies are required to do.
Management and decision making
Management, as well as decision making, has become more complex and unclear in public companies as the number of shareholders to be consulted more. This procedure is excluded in a private company as the number of shareholders is limited.
Focus of management
Managers of the private limited Company are more focused on the short term and long term business plans.
Stock market pressure
Private limited companies are not hassled by the stock market, and you don’t have to worry about shareholder expectations and interference as long as they work within the law.
Long term planning
Private companies focus on long-term earnings.
Minimum share capital
There is no such minimum requirement of share capital. So there is no pressure of fund supplies.
Confidential information like executive compensation, legal settlements, and other essential information is secure in a private limited company.
What are the essential requirements for private limited Company registration?
The minimum requirements are:
- Minimum 2 members & a maximum of 200 members required.
- No minimum paid-up capital required
- Minimum 2 directors and a maximum of 15 directors
- Unique name
- Registered office.
What are the documents necessary for Private Limited Company Registration?
The documents required by directors and shareholders are:
- ID Proof
- Address Proof
- Passport size photograph
- Specimen signature
The documents required for the registered office:
- Address proof of the registered office
- NOC from the landlord.
What are the steps for Private Limited Company Registration?
- Company name selection
Finalize your Company’s legal name. The name should be unique and non-offensive, according to Company’s Act, 2013. You can check the availability of names through the MCA portal.
- Fill SPICe + Form
Fill the SPICe + form, which helps in the incorporation of a company. SPICe+ is a single application that helps in Name reservation, applying for DIN allotment, bank account opening, and registration of a new company.
- Preparation of MoA and AoA
The applicant should start the incorporation process by preparing the given documents:
- Objectives of the Company
- By-laws of the Company
- Declaration by professionals
- An affidavit signed by all the proposed subscriber
- Application for Incorporation
Once the documents are completed, the request for allotment of PAN and TAN are made.
- Incorporation certificate
After the documents are verified by the Registrar of Companies, the certificate of incorporation will be given for the Private Limited Company.
What are the Private Limited Company Registration post compliances?
The Company should obtain the following corporate matter for company post-registration compliance:
- Name of the Board
The Companies are obligatory to fix the name of the Company and location for the registered office.
The Company needs to publish the name of the registered office address of the Company on all letterheads, receipts, announcements, and other official records available for the Company.
- Share Certificate
The Company should provide share certificates to all the sponsors of the Company within two months from the date of formation.
- Statutory Register
All the companies are required to maintain a statutory register of the Company comprising information such as the register of members, a list of directors, charges, debentures, and other matters related to the shareholders and administration of the Company.
- Appointment of Auditor
Following the incorporation of a company, it is required by the Board of Directors to designate the first auditor of the Company as well as a Chartered Accountant within 30 days of formation.
Start-ups and growing companies prefer private limited company incorporation as it limits the liability of the shareholders. Private Limited Company registration can be done. with the help of Corpbiz as we have expert and experienced professionals to help you in the process and guide you through the procedure of private limited company incorporation.