Private Limited Company
A private limited company is an association of not less than two and not more than fifty members, whose liability is limited. The transfer of shares is limited to its members and not allowed to invite the general public to subscribe to its shares or debentures.
Registration of Private Limited Company Minimum requirements
- Minimum 2 Shareholders & Minimum 2 Directors
- The directors and shareholders can be same person
- Minimum Share Capital shall be Rs. 100,000 (INR One Lac)
- DIN (Director Identification Number) for all the Directors
- DSC (Digital Signature Certificate) for one of the Directors
- Private Limited Company registration process: Estimated Registration Time Frame 4-6 weeks
Private Limited Company Features
- Private limited company has an independent legal existence. The Indian Companies Act, 1956 contains the provisions regarding the legal formalities for setting up of a private limited company.
- Private limited company is relatively less cumbersome to organize and operate as it has been exempted from many regulations and restrictions, such as:
- Pvt. ltd company need not file a prospectus with the registrar
- Pvt. ltd company need not obtain the certificate for commencement of business
- Pvt. ltd company need not hold the statutory general meetings nor need it file the statutory report
- The liability of private limited company members is limited
- The shares allotted to company members are also not freely transferable between them. Pvt. ltd companies are not allowed to invite public to subscribe to its shares and debentures
- Pvt. ltd company enjoys continuity of existence i.e. it continues to exist even if all its members die or desert it
FAQ
DSC is a legally recognized method of signing documents electronically. A digital signature is a type of asymmetric cryptography used to simulate the security properties of a handwritten signature on paper. Digital signature schemes normally give two algorithms, one for signing that involves the user’s secret or private key, and one for verifying signatures that involves the user’s public key. The output of the signature process is called digital signature.
Digital signature certificates are used by programs on the Internet and local machines to confirm the identity of a third party.
Digital signatures have often confused with scanned copies of a physical written signature, which do not have any legal backing for authentication of electronic documents.
DIN is an identification number issued by the Ministry of Corporate Affairs, Government of India, to Directors of a company or Designated Partners of an LLP.
For obtaining DIN, an online application has to be submitted to the Ministry of Corporate Affairs with a copy of Identity and Address Proof of the Applicant and a declaration by the applicant. The Online DIN Application has to be signed by a Practicing Company Secretary / Chartered Accountant / Cost Accountant.
List of Documents acceptable as Identify and Address Proof
|
Documents |
Identity Proof | Address Proof |
| PAN Card (Mandatory for Indian Nationals) | Yes | No |
| Passport (Mandatory for Foreign Nationals) | Yes | Yes |
| Driving License | No | Yes |
| Voters ID | No | Yes |
| Telephone Bill / Electricity Bill / Bank Account Statement |
MOA is the charter document of a company. A company is created by registering a memorandum.
MOA contains the name of a company, the state in which the registered office of the company is located, objectives, and its authorized capital. The MOA will be subscribed by the initial promoters of the company in their own handwriting. They will also have to write their name, father’s name, residential address, occupation and the number of shares they agree to subscribe in the company. The MOA should also bear the signature of the witness who knows the subscribers.
The details of subscribers to the MOA cannot be amended or changed at any point of time during the life of the company, as it constitutes the document giving birth to a company. Subsequent changes in the shareholding or directorship of the company should be reflected in its internal records and will not affect the subscriber details in the MOA
AOA is the bylaws of a company and can be filed along with the incorporation document.
AOA contains rules and regulations for the management of a company’s internal affairs and conduct of its business. It defines the relationship of company between its members and directors and relation between members and directors. It also describes powers of directors. Further, the AOA describes the rights and duties of its members as well as the duties and responsibilities of its directors.
In case of a private limited company, the AOA will contain the restrictions of transfer of shares, if any. Also, AOA usually contains the names of first directors of a company.
The AOA will be subscribed by the initial promoters of the company in their own handwriting. Promoters will have to write their names, father’s name, residential address, and occupation. The AOA should also bear the signature of the witness who knows the subscribers.
The details of subscribers to the AOA cannot be amended or changed at any point of time during the life of the company, as it constitutes the document giving birth to a company. Subsequent changes in the shareholding or directorship of the company should be reflected in its internal records and will not affect the subscriber details in the AOA.
CIN is the number allotted to a company registered in India by the Ministry of Corporate Affairs, Government of India.
CIN is a 21-digit number that contains the information such as status (listed / unlisted), NIC code of business activity, state of registration, year of registration, private or public and the sequential registration number in the respective state
Unlike private companies, a public company cannot start its business after getting the certificate of incorporation. It has to obtain a certificate of commencement of business from the ROC.
The ROC will issue the certificate of commencement of business after a public company files the ‘Statement in Lieu of Prospectus’ (SLP).
SLP is required by a public company for obtaining the certificate of commencement of business. It contains the details of first shareholders, directors, the amount of capital brought in, the details of auditors and preliminary expenses for company incorporation etc.
If you have all the documents in order, it will take no longer than 15 days. However, this is dependent on the workload of the registrar.
All directors must provide identity and address proof, as well as a copy of the PAN Card (for Indian Nationals) and Passport (for foreign nationals). No-objection Certificate must be submitted by the owner of the registered office premises.
Yes, so long as the annual compliances are met, the private limited company will continue to exist. If you do not comply with the requirements, it will go dormant, until it is struck off the register altogether.
Yes, a private limited company must hire an auditor, no matter what its revenues. In fact, an auditor must be appointed within 30 days of incorporation. Compliance is important with a private limited company, given that penalties for non-compliance can run into lakhs or rupees and even lead to the blacklisting of directors.