Overview of Private Limited Company Registration

A Private Limited Company registration in India, stands as a separate legal entity that is owned by private shareholders. In such companies, the liability is limited only to the share capital, and the shares cannot be freely gifted to the public. It is the most popular structure opted for the creation of a startup or MSME because it offers a perfect balance of protection and a reputable business name, along with excellent fundraising opportunities.

A private company is defined under section 2(68) of the Companies Act 2013. The articles of association of a private company provide restrictions on the transfer of shares; a private company cannot have more members, generally not exceeding 200, whereas a private company cannot invite the general public to subscribe to its securities. A private company enjoys a separate existence in law; therefore, a private company can acquire properties and be a subject of litigation.

A minimum of two members/ two directors (which can be the same) need to be present in case of a Private Limited Company, and "Pvt Ltd" is to be suffixed at the end of the name (for instance, ABC Tech Pvt Ltd). The ownership of shares is private, and there is no listing on any stock exchange, offering extra-strong control over it.

Benefits of Private Limited Company Registration Online 

The Private Limited Company Registration in India is of enormous advantage to most individuals. Some of them are given below: 

• Limited Liability: The shareholders’ own liability is safeguarded in such corporations; their liability is limited only to the unpaid face value of their stocks, despite the fact that the company can suffer tremendous losses.

• A Separate Legal Entity: A separate entity has been defined as one that has a life independent of those who own/pertain to it. It has the capacity to obtain resources, enter into an agreement, and exist irrespective of any change in the owners/directors.

• Perpetual Succession: It refers to the continuity of the company despite the change that may come about due to death, resignation, or transfer of shares. It provides continuity to the business and helps create lender confidence.

• Enhanced Credibility: The fact that it is a Companies Act incorporation enhances customer, supplier, and investment credibility. It proves to be a lucrative affair for most corporations and many departments of the government to have a deal with a Pvt Ltd company.

• Easy availability of funding: Raising stocks, finding an angel or venture capitalist, or securing a loan is relatively easier in Pvt Ltd Companies than in proprietorship or partnerships. Even banks and finance bodies label them as well-organised loan applicants.

• Division of Ownership and Management: The owners of the business are the shareholders of the company. The directors of the company are the management of the firm that controls the daily operations of the firm. It enables the professional control of the firm.

• Share Transfer Facility (Internal): Though there is some restriction regarding trading shares externally, it is very easy to transfer shares among members or to fresh members, as per the articles of association. It is easier to reorganise.

• Without Minimum Authorised Capital: Presently, there is no need for minimum authorised capital to be allocated during the incorporation stage for the formation of a Private Limited Company, so that the founders with initial smaller capital can be encouraged to develop it subsequently. In addition to that, it also facilitates the determination of share capital value.

Procedure of Private Limited Company Registration in India

The process of Private Limited Company registration online is done through the MCA website and is facilitated through the SPICe+ Form. Step by step process is given below: 

• Acquire Digital Signature Certificates (DSCs) - All proposed directors and subscribers need to apply for a DSC, which is required for signing the incorporation deed through the MCA Portal online.
• Director Identification Number (DIN) Application- It should be noted that the DIN for proposed directors is generally required to be processed through the SPICE+ form, although it is also possible to use DINs already available.
• Reservation of names - Choose distinct business names and check their availability; the name approval is accomplished by way of Part A of SPICe+ or at the same time as formation in most cases. The name must conform to the Companies (Incorporation) Rules and should be accompanied by “Private Limited.”
• Prepare draft MOA and AOA (e-MOA & e-AOA) - Memorandum of Association (INC-33), which specifies the main objects and extent up to which a company can carry on its operations, and the Articles of Association (INC-34), which lays down matters concerning the internal affairs of a company, such as transfer of shares and holding meetings, are filed in e-form along with SPICe+.
• Prepare and attach documents of incorporation- Documentary requirements related to identity/address proof of directors and shareholders, proof of registered office, declarations, and consents, among others, have to be attached to SPICe+ (INC-32). Professional certification is also required in most cases through a CA/CS/CMA.
• Online form upload - SPICe+: Submit SPICe+ application annexed with forms like AGILE-PRO-S (for GST, EPFO, ESIC, Bank Account), etc., on the MCA portal after payment of governmental fee as well as stamp duty fee.
•  PAN and TAN Assignment - Also, PAN and TAN are issued via the same SPICe+ system, and this is automatically allotted after approval.
• Verification and approval by ROC- The application is checked by the Registrar of Companies (ROC), and on finding the application valid, the Registrar of Companies issues a Certificate of Incorporation with a Corporate Identity Number (CIN).
• Post‑incorporation compliances- Open a current account with the bank in the name of the company, infuse share capital, issue share certificates, and maintain the statutory registers and accounts.
• Commencement of business- After meeting the first requirements, assuming the necessity to file the Commencement of Business statement, the business can commence.

Required Private Limited Company Registration Documents 

Depending on the state/profession, the list of Private Limited Com[pany registration documents may have changed, but on the whole, ten important documents are required for such company registration are given below: 

• PAN card of all Directors & Shareholders. 
• Identity of Directors/Shareholders: Ration card/Aadhar card/(Voter ID)/Passport/Driving License - only one of these.
• Signature of Directors/Shareholders, Ration card/Aadhar card/(Voter ID)/Passport/Driving License - only one of these. 
• Address proof for Directors/Shareholders: Bank statement, electricity bill, water bill, gas bill, telephone bill, but not more than two months old.
• Passport-sized photographs of all the directors/shareholders. 
• Registered office address proof: copy of the latest electricity or other utility bill, property tax receipt, or similar document showing the owner’s name. 
• Ownership proof/NOC for office/Rented premises: Sale Deed document, if owned, or Rental Agreement document, along with NOC from the owner.
• Prepare Draft Memorandum of Association (MOA) indicating the main objects of the company.
• Draft Articles of Association (AOA) related to the rules of management as well as the rights of the shareholders.
• Declarations and Consents: Consents of directors (DIR-2), Declaration by subscribers and first directors, and Professional declaration (from CA/CS/CMA) related to the complying conditions.
• Email ID & Mobile no. of all Directors/Shareholders for sending DSC, OTPs & MCA Messages.

Private Limited Company Registration in India is a well-articulated and fully online process that helps entrepreneurs get themselves a special legal identity with the highest degree of protection as well as creditworthiness. Being equipped with the attributes of limited liability, perpetual succession, as well as better sourcing of funds in the capital market, it is one of the most suitable forms for start-ups as well as small businesses being carried out in India.