Many new businesses opt to form a private limited company. A limited company, unlike a sole proprietorship that opens in a new window or a partnership that opens in a new window, is a legal entity in its own right.
It has a distinct structure and more complicated requirements, such as various tax and legal obligations opening in a new window. The primary distinction between going it alone as a sole trader and forming a limited company is that a limited company has special legal status.
A limited company is defined by the fact that it is incorporated (formally formed and registered with Companies House) and that it issues shares to its shareholders. Limited liability companies can be either private or public.
In contrast to a publicly traded company, whose shares are traded on the stock exchange, a private limited company does not trade its shares publicly and is limited to a maximum of 50 shareholders.
A private limited company is often a local retailer, such as a shop or restaurant, with no national presence. A large corporation, such as a chain of retailers or restaurants, is an example of a public limited company with shares that anyone can buy and sell.
Because there is no minimum capital requirement to incorporate a limited company other than the issuance of at least one share, the majority of private limited companies are small.
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The Process for Registering a Private Limited Company
The registration of PLCs is governed by the Ministry of Corporate Affairs (MCA) under the Companies Act of 2013. It is concerned with the proper operation of the law’s rules and regulations. MCA Fees for registration forms are determined by two factors: stamp duty and normal form filing fees. Because Stamp Duty varies according to authorized capital and state of incorporation, the minimum form fees for PLC registration begin at INR 2000.
The four-step process starts with applying for a Digital Signature Certificate (DSC) and submitting the SPICe+ forms. Let us take it one step at a time.
Request a Digital Signature Certificate (DSC)
According to the Ministry of Corporate Affairs, every director and shareholder of a private limited company must obtain a Digital Signature Certificate (DSC) (MCA). This DSC will be used on all documents for securely filing e-forms, as required by the Information Technology Act of 2000. The first step is to obtain DSC to securely submit electronic documents.
DSC is obtained from the Certification Agencies Controller (CCA). The minimum validity period is one year. However, the validity period can be extended to two years.
To apply for DSC, each applicant must provide the following personal information:
- Passport-size photographs
- PAN (Permanent Account Number)
- Aadhaar Card
- Phone Number
- Email Address
If one or more directors or shareholders are foreign nationals, their documents must be notarized and apostilled.
Request a Name Reservation (SPICe+ Part A)
You’ve probably already considered a few names for your company. Choose the best two to complete the SPICe+ Part A form, which is used to reserve a unique company name for your new private limited company. You will need the assistance of practicing professionals to complete and submit this form. You have two name options in the first round.
The fields on the SPICe+ Part A form are as follows:
- Company Structure: Choose ‘Private Limited Company’ from the list of available company structures. Producer Company, Unlimited Company, Section 8 Company, IFSC Company, Nidhi Company, and other business structures are also available.
- Company Classification: This section indicates whether a company is public, private, or one person. We go with ‘private’.
- Company Type: Select whether you want the company to be limited by shares, limited by guarantee, or have unlimited shares. The most common is to limit the company to shares.
- Company Sub-category: With the assistance of a practicing professional, select the appropriate sub-category.
- Primary industrial activity: What industry will you be working in? The MCA has assigned distinct codes to the major divisions. Choose the one that best suits your company with the assistance of a practicing professional.
- Main division description: This is where you explain your business idea and specify the purpose of the products and/or services that you will offer to your customers in detail.
- Proposed company name: You can propose two names here that you’d like to keep as your company name.
And there you have it! The MCA will approve your SPICe+ Part A form within 2-3 working days of submission. If both of your suggested names are rejected or questioned, you will be given a second chance to file for two additional company name options of your choosing.
If all four of your name choices are rejected, you must resubmit the SPICe+ Part A form. Come up with very distinct brand names and check company name availability ahead of time. Before submitting the form, check the MCA portal to see if a company with a similar name is already registered.
Once the names have been approved, the SPICe+ Part B form will be made available to you so that you can continue with the company incorporation process.
Filing the Proposed Company’s Details (SPICe+ Part B)
The SPICe+ Part B form is where you fill in the most important information about your company. Ensure that all pertinent information is provided to the practicing professional. SPICe+ Part B must be filed in eight parts:
- Capital Details: To begin, you must provide information about the total capital that you are bringing into the business, which is commonly referred to as authorized share capital. Also, provide the correct information about the shareholders’ subscribed share capital.
- Registered Office Address: Next, provide the address of the office from which the company will operate, as well as contact information and an email address.
- Subscriber and Director information: Provide the DIN (Director Identification Number) of each company director. If you don’t already have one, you can get one from a practicing professional.
- Stamp Duty: Every state and union territory calculates government charges to register a company based on your authorized capital and registered address. The practicing professional will assist you in determining the exact amount of Stamp Duty payable.
- Application for PAN (Permanent Account Number) and TAN (Tax Deduction Account Number): Your company requires PAN and TAN accounts to conduct business and file government taxes.
- Attachments: Upload the necessary documents in the proper formats as attachments for further verification. The documents required will be listed, but make sure you gather the most important ones ahead of time, such as a utility bill, proof of the first director and shareholder’s identity and residential address, director consent, and NOC (No Objection Certificate) from the owner of the registered address, and so on.
- Proclamation: We’re almost done. Simply provide your digital signature to confirm that you are abiding by the Companies Act 2013.
- Professional Declaration and Certificate: At the end of the SPICe+ Part B form, practicing professionals such as CA, CS, or CMA who are assisting you with the company registration process will be required to provide their digital signatures.
Create and submit the Incorporation Form
The practicing professional will draft and file an Incorporation Form following the important clauses of the SPICe+ MOA (Memorandum of Association). Let’s go over the clauses quickly and briefly!
SPICe+MOA (Memorandum of Agreement)
- Name clause: You must include your company’s chosen name as well as the words “Private/Pvt Limited” after the name. The registered office clause specifies the state in which your company was formed.
- Object clause: This is the most important clause because it requires you to mention the main object, that is, your idea for dealing with business activities. The liability clause establishes that the member’s liability is limited by shares.
- Capital clause: Your authorized capital as well as the company’s share capital are mentioned. Subscriber clause: You must include the first shareholder’s information as well as the number of subscribed shares.
After that, subscribers and professionals affix the DSC and submit it to the MCA for approval.
Features of Private Limited Company
Every private company has distinguishing characteristics that set it apart from others. The following private limited company characteristics differ from the key features of a public limited company:
- There is no minimum capital requirement.
- The company must have at least two employees and a maximum of 200. This feature, however, does not apply to one-person businesses.
- They are not permitted to freely transfer shares to the general public.
- The words private limited must be added to the company names. The meaning of Pvt Ltd adds this definition to the company’s name.
- A private limited company has several legal advantages.
What is a Certificate of Incorporation of a Private Limited Company
A Certificate of Incorporation India Private Limited company, also known as a COI, is an authoritative report or legal document issued by the Ministry of Corporate Affairs once an organization has successfully enrolled with them. The COI demonstrates that the organization is currently registered with the Registrar of Companies (ROC). The COI issued includes a date that represents the date the organization is considered to be registered. It would then be able to start its business and get to work. It is the promoter’s obligation or duty to apply for a COI.
A Private Limited Company’s Certificate of Incorporation includes the following information:
- The abbreviation for the corporation’s name
- A mission statement for your company
- The address of the corporation’s registered office and the name of the registered agent for that address
- The number of shares of stock authorized to be issued, as well as a description of the different types of stock that the Company may issue if more than one type exists.
- The incorporated corporation’s name and address
Private Limited Company Examples
- Anand Automotive Pvt Ltd: Anand Automotive Pvt Ltd was established in 1961 and is based in New Delhi, India. Anand is a global leader in the production of high-quality automotive products. Anand Automotive Pvt Ltd has 23 global alliances and 19 companies located around the world. The company offers a wide range of solutions to the Indian automotive industry. The company is a leading manufacturer and supplier of automotive components in the United States. It is one of India’s top ten private limited companies. Our premium plans provide you with access to the company’s CEO, CFO, and other key executives.
- T V Sundram Iyengar & Sons Pvt Ltd: T V Sundram Iyengar & Sons Ltd is a holding firm. It was established in 1911. Through its subsidiaries, the company distributes automobiles and spare parts, sales and service support for garage equipment, and sales and service products for off-highway applications. TV Sundram’s services are available throughout India. It is one of India’s top ten private limited companies. If you want to contact the company’s decision-makers, Fundoodata’s premium plan is best for you.
- Mother Dairy Fruit & Vegetable Pvt: Mother Dairy Fruit & Vegetable Pvt Ltd was established in 1974. The company’s headquarters are in Noida, Uttar Pradesh. It is one of India’s top private limited companies. It sells ice cream, ghee, paneer, pickles, and a variety of other products under the umbrella brand Mother Dairy Fruit & Vegetable Pvt Ltd. The company’s initial focus was primarily on Delhi, NCR. It later expanded its operations to other cities. Get the Fundoodata premium plan to learn more about the company, such as turnover, employee numbers, key executive details, and much more.
Conclusion
Creating a private limited company is a multi-step process that is best started by companies with years of experience and extensive skill sets. Whatever firm you choose for private limited company registration in India, make sure it supports the acquisition of a digital signature and an identification number.
To ensure comprehensive coverage, you may be tempted to choose a startup-friendly service provider that provides extensive assistance throughout each stage of company registration in India.
Over the years, the Instaspaces team has provided insightful advice and services to clients in India. The company fosters a working environment in which professionals are encouraged to advance and their internal interactions are guided by mutual respect, appreciation, and recognition.
InstaSpaces believes that establishing your business requires only a few simple steps. We provide hassle-free and quick company formation services. Whatever your reason for forming a company, InstaSpaces will provide you with professional company formation services. Limited liability companies, Private limited companies, or limited companies, or the firms assist you in determining which is right and best for your business.
If you are planning to start a private limited company in India, let InstaSpaces be your trusted partner. Contact us today to learn more about our services and how we can help you achieve your business goals.
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