Table of Contents:

• What is a Private Limited Company?
• Characteristics of a Private Limited Company
• Requirements to register a Private Limited Company
• Benefits of a Private Limited Company
• Limitations of a Private Limited Company
• Documents required to register a Private Limited Company
• How to register a Private Limited Company?

What is a Private Limited Company?

A Private Limited Company is a business entity formed by a small group of individuals. It is registered with an objective and owned by shareholders. New start-ups and rising businesses usually opt for a Private Limited Company. Such a company is governed by the Ministry of Corporate Affairs (MCA).

Characteristics of a Private Limited Company:

A Private Limited Company is registered under the Companies Act of 2013 in India. A minimum of two members is required to register a Private Limited Company. The definition of Private Company under the Act is provided here to understand its basics.

Section 2 (68) of the Act defines a Private Company as:

“A Company having a minimum paid-up share capital as may be prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) except in the case of One Person Company, limits the number of its members to two hundred;
(iii) prohibits any invitation to the public to subscribe for any securities of the company”

Requirements to register a Private Limited Company

Members and directors: As per the regulation of Companies Act, 2013, there should be a minimum of two and a maximum of 200 members to get legal registration of a Pvt Ltd Company.

The following requirements are mandatory for the Directors:

• The Directors should have a DIN i.e. director identification number, issued by the Ministry of Corporate Affairs
• One of the directors must be a resident of India

Name of the company: Selecting a suitable name for the company is important and a technical task. The following aspects should be maintained while setting up the name:

1. Main name
2. Activity area
3. Mention of ‘Private Limited Company’ at the end.

Registered office address: the permanent address of the registered office should be sent to the Registrar of the company. This is the office where all the office formalities are carried out and all the documents are stored.

Obtaining other official documents:  For online submission of the documents, every company must have a digital signature certificate that used for authentication. All other certificates and documents by the Secretary, Chartered Accountant, Cost Accountant and other professionals are required.

Documents Required for Registering a Private Limited Company:

• ID proof: PAN card and passport of Indian and foreign directors
• Address proofs: Ration card or Aadhar card or driver’s license or voter ID
• Residence proofs: Bank statement or electricity bill of the company office premise
• Rental agreement from the Notary
• NOC from the property owner
• A copy of sale deed or property deed (for an owned property)

Benefits of a Pvt Ltd Company

For every business decision, there are advantages and disadvantages. If you’re opting for a private limited company, it’s best to educate yourself about it.

1. Limited Accountability: The only accountability in case of a Pvt. Ltd. Company is the amount invested by the shareholders individually. Their personal asset and the salary earned as employees are safe during cases of insolvency.

2. Tax Benefits: There are many schemes, rebates and policies in case Private Limited Companies and they can enjoy various tax benefits.

3. Easy Ownership and Share Transfer:  The procedures of selling or transferring shares or change of ownerships are very simple in this case.

4. Investor Friendly: Investors get easily interested in putting their money in a Pvt. Ltd. company.

Limitations of a Private Limited Company

1.Prolonged Legal Process: Private limited companies usually have to go through very prolonged legal procedures and regulations, according to the Companies Act.

2. Difficult to Liquidate: Due to the high legal compliance procedures, it’s not easy to find buyers if you want to liquidate your company.

3. Complex Accounting and Auditing Formalities: You need to keep authentic records of all your financial transactions. Income Statement, Balance Sheet and Statement of Cash Flows are needed to be generated annually. Audit reports have to be submitted to the Income Tax department. Any diversions in the records can lead to hefty fines and even legal proceedings

How can we help you?

Online Legal India ^TM helps you to get easy online registration for your Private Limited Company with zero hassle and splendid service quality. Our platform is trusted by more than 120000 clients all over India and the charges here for every service is very nominal.

Not only that, you can even get any company related services like GST Registration, Digital Signature Certificate, Trademark Registration, Winding Up, Annual Filling Compliance PLC and much more legal help under one roof. The expert team of legal guides are always there to assist you throughout the process until your need is met.

PLEASE NOTE: It is recommended to send 5-6 names for approval to the Registrar of Company (ROC) during registration. The submitted names should not hold any resemblance with the name of any other company.