The Corporations Act governs the creation of private companies. To register a private limited company, numerous adjustments have been made to the Companies Act. The 2014–2018 time frame saw the majority of significant developments.

Private Limited Company and its characteristics

In India, the Private Limited Company is the most common type of business entity. A Private Limited Company is a specific kind of business that places limitations on ownership and provides its stockholders with limited liability. The Private Limited Company's shareholders are also given legal protection.

The Ministry of Affairs has simplified the incorporation process for private limited companies, which has increased the ease of conducting business in India. The following are the traits of the private limited company:

• A Private Limited Company must have a minimum of 2 members and a maximum of 200 members in accordance with the regulations of the Companies Act, 2013.
• Each shareholder only has a small amount of liability. This implies that the shareholder is required to liquidate their assets to compensate the Company in the event of a loss.
• In the event of a member's bankruptcy, death, or insolvency, the Company continues to exist legally.
• There is no requirement to have a member index.
• For the incorporation of a Private Limited Company, only two directors are required.
• No need to publish the Company's prospectus.
• An absolute minimum subscription is required to operate the business.

Advantages of pvt ltd company incorporation

• The risk to personal assets is limited

A private limited company's stockholders have a certain amount of liability. In essence, this means that a shareholder will only be responsible for the company's debt to the extent of the contribution that he or she has made.

• A different legal entity

A Private Limited Company, or PLC, is legally distinct from its owner. As a result, the organisation will be accountable for all of its assets, liabilities, debts, and creditors. The owner cannot be sued by creditors to recoup their invested funds.

• Trustworthiness

When a company is designated as a Private Limited Company, its credibility multiplies. Under the Companies Act of 2013, if the firm is registered with the Registrar of Companies (ROC) is the only explanation for this. The MCA (Ministry of Corporate Affairs) can be used to check the specifics of a registered firm. All of the business's directors' information is provided at the same time the company is founded. As a result, the business will be very clear and hence be seen as more reliable.

• Raising the capital

It is simpler for business owners to sell stocks and raise money when they register their company as a private limited company or PLC. Additionally, it aids in business expansion while limiting liabilities. The owners of the business must, however, adhere to certain requirements in order to establish it as a Private Limited Company.

• Uninterrupted existence

Companies contain a provision called "perpetual succession" that enables continuous operation of the firm until it is formally dissolved. The loss of a member has no impact on the operation of the firm because it is a separate legal entity. It continues to operate despite a change in membership.

How to incorporate a Private Limited Company (PLC)

A number of compliances must be completed during the challenging process of private limited company incorporation. One of the below-mentioned methods can be used to establish a private limited company:

• Forming a new corporation in order to launch a new venture.
• Forming a company out of an existing firm (a sole proprietorship or partnership).

Steps of Private Limited Company incorporation

1. Obtain a Digital Signature Certificate (DSC)

A Digital Signature Certificate, or DSC, must be obtained from a certifying organisation that is acknowledged by the government in order to move forward with the registration procedure. A digital signature is necessary when submitting the documents linked to forming a firm. All of the forms need to have a valid digital signature because the registration process is online. A Class 2 or Class 3 DSC (Digital Signature Certificate) is required. The applicant's identification can be checked against the pre-verified database if they have already been pre-verified. Such verification instances will fall under DSC's Class 2 category. 

2. Obtain Director Identification Number (DIN)

The Director Identification Number, or DIN, must be obtained in order for someone to serve as a director of the company. A DIN can be acquired using one of two techniques. These are what they are:

• Filing SPICe: Each proposed director is given a Director Identification Number (DIN) at the time of filing the SPICe form (or INC- 32). The directors who don't have a DIN will be given one. However, under this procedure, only three directors may receive a DIN.

• Filing Form DIN 3: This is a choice for already-established businesses. The recommended director must supply his or her basic information, identity evidence like an Aadhaar card or PAN card, and address proof while submitting the DIN 3 form.

3. Select a name for the company

The company's unique existence is marked by its name. Any suitable name for the business may be chosen by the applicant as long as the following conditions are met:

• The corporation cannot be registered with a name that, in the judgement of the Central Government, is undesirable.
• If the members' liability is restricted, the company name must include the word "Limited" at the end.
• If a corporation is a private one, its name must finish with "Private Limited."
• The company name should not be similar to the name of another registered company.
• The company name shouldn't be the same as the name of another legally existing firm.

4. The availability of the name has to be checked

Once a name has been chosen, the applicant must obtain approval for the name through one of the following processes:

• Using Reserve Unique Name (RUN) to incorporate a company: The Ministry of Corporate Affairs (MCA) has introduced the Reserve Unique Name web service, also referred to as the RUN web service, for the purpose of incorporating a company. The RUN web service requires a Ministry of Corporate Affairs (MCA) account to utilise. Previously, RUN only offered one opportunity to apply for a name for incorporation. There were no second chances in the event of a refusal. To reserve a name under RUN, the Ministry has now approved the submission of two names as well as one re-submission (RSUB) with effect from 23 March 2018. However, it's best to carefully adhere to the instructions while choosing a name to prevent having the name rejected.

• Using SPICe (INC- 32) form to incorporate a company: This is a more affordable and advantageous method for incorporating a business. If the application is submitted using form SPICe or INC-32, the applicant may resubmit the same form if it is rejected. That also with no additional fees. Additionally, the applicant has the option of filing the form again if the name is denied both times. As a result, it is a more practical choice and affordable.

5. Fill up the form SPICe or INC- 32

The Ministry of Company Affairs has created the SPICe or INC-32 form as a straightforward method of electronically incorporating a company. One programme can accomplish the following tasks:

• Requesting the issuance of a DIN, or Director Identification Number
• Holding the company's name in reserve
• Establishing a new business
• TAN and PAN applications

6. Fill up e-MoA (INC- 33) and e-AoA (INC- 34)

The e-MoA and e-AoA forms must then be completed. The terms "e-MoA" and "e-AoA" stand for electronic memorandums of association and articles of association, respectively. The job of representing the company's charter falls to the e-MoA. On the other hand, the e-AoA is in charge of containing the company's internal norms and regulations. The subscribers to the MoA (Memorandum of Association) and AoA (Articles of Association) must digitally sign both papers.

7. Make an application for PAN and TAN

As previously indicated, form SPICe can also be used to apply for a PAN (personal account number) and a TAN (tax deduction and collection account number) (or INC- 32). Forms 49A and 49B must be submitted with the SPICe for PAN and TAN, respectively. When the SPICe form is submitted, the system will automatically produce these forms. The applicant must download the forms after they are generated in order to add a digital signature and upload them to the MCA portal. A Corporate Identity Number (also known as CIN), which is assigned following Ministry of Corporate Affairs (MCA) approval of the registration, will be given. The MCA interface allows for the tracking of this CIN.

Conclusion

The most common sort of corporate entity for incorporating a business is a private limited company. By rigorously following the government-mandated procedure and the rules for private limited company incorporation, the skilled and knowledgeable specialists at Online Legal India can assist you in the process of incorporating your private limited company. Our experts will make the best possible plans and guarantee the process's successful conclusion.