Private Limited Company is one of the most opted business structures in India to start a business. It is the most prevalent and popular type of corporate legal entity in India. The Companies Act, 2013 and the Companies Incorporation Rules, 2014 provides the provisions related to registration of Private Limited Company in India. Minimum two shareholders and two directors are required for registering a Private Limited Company. However, most entrepreneurs remain unaware of the legal compliance for registration of a Private Limited Company. There are some formalities involved in Private Limited Company registration in India. Here is the list of formalities:
How many numbers of Directors and Shareholders are required?
The basic requirement to register a Private Limited Company is that there must be a minimum 2 directors and 2 shareholders in the company. However, the directors and shareholders can be the same person. A maximum of 200 members can be shareholders and a maximum of 15 members can be directors of a Private Limited Company at any given time.
One of the directors of a Private Limited Company has to be an Indian Citizen. The other directors can be a foreign national. The shareholders can be natural person or an artificial legal entity. Hence, a company can be owned by two corporate, who are domiciled in India or abroad.
Director Identification Number (DIN):
As per Section 153 of the Companies Act, 2013, it is mandatory for every person who is proposed to be a director of the Private Limited Company to have a DIN in their name. Director Identification Number (DIN) is an 8 digit unique code assigned to every director upon registration with the Ministry of Corporate Affairs.
Digital Signatures Certificate:
A digital signatures certificate is the electronic form of a physical signature. It is a form of identity proof of the individual or business for online or electronic transactions. A digital signatures certificate is used for the online filing of ITR, business incorporation, filing annual returns, e-tenders etc. It must be obtained for the proposed directors of the company. A digital signatures certificate is required for attesting the incorporation application and a Private Limited Company cannot be incorporated without it.
RUN Name Approval:
A private Limited Company must have a valid name and it must be approved by the Ministry of Corporate Affairs before it can be registered. Upto 2 names can be provided. In case of rejection, an opportunity is provided for re submission of the form with 2 more names. A company can submit the company name that adheres to the guidelines prescribed under the company laws in India.
Memorandum of Association and Articles of Association:
After the approval of the name of the company, Memorandum of Association and Articles of Association are drafted. These lays down the objectives and goals of the company, the manner in which its functions will be performed and the rights and duties of the directors, shareholders and employees of the company.
Private Limited Company Incorporation Application:
After obtaining the digital signature and director identification number, the application can be submitted in SPICe form with the Ministry of Corporate Affairs. There is no requirement for obtaining RUN name approval for submission of SPICe form. However, if the name of the Private Limited Company is not available, the incorporation documents need to be submitted again later.
What other documents are required for registration of Private Limited Company?
There are several other documents that are required for registering a Private Limited Company:
- PAN card of all directors
- Identification proof such Aadhaar Card, Voter ID or Driving License of all directors.
- Permanent address proof like bank passbook or latest utility bill of all directors.
- Address proof of proposed registered office of company like NOC with the utility bill from the owner in case of property taken on rent and sale deed with an electricity bill if property is owned by the director.
- Passport size photographs of all directors.
- Objects of the proposed company in detail.
Conclusion:
It is important to be well informed about the basic before diving into a registration process. Most of the startups prefer to choose the legal structure of Private Limited Company due to less complication involved in its incorporation and management. The documents and other requirements of Private Limited Company registration are very less as compared to many other leading business structures. A Private Limited Company is a type of company that features several advantages such as limited liability, easy incorporation, and high degree of flexibility, separate legal existence and many more.
-Kiranpreet Kaur
Associate at Aggarwals & Associates, S.A.S. Nagar, Mohali
