Private company registration
Establish a Private limited company and get PAN and TAN too
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Introduction
Private company registration is the process of legally establishing a company that is privately owned and operated by a group of individuals. It is governed by the Companies Act, 2013 and administered by the Ministry of Corporate Affairs (MCA) in India. A private company is characterized by limited liability, private ownership, and a restriction on the transfer of shares.
What is a Private Limited Company?
A private limited company is a type of company that is privately held by a group of individuals or entities. The ownership of the company is divided into shares, and the shareholders are liable only to the extent of their shareholding. The company is registered under the Companies Act, 2013, and must have a minimum of two directors and two shareholders. A private limited company can have a maximum of 200 shareholders, and the shares cannot be traded publicly.
Advantages of a Private Limited Company
• Limited liability:
The liability of the shareholders is limited to their shareholding in the company. The personal assets of the shareholders are not at risk in case of any legal action against the company.
• Separate legal entity:
A private limited company is a separate legal entity from its owners. The company can enter into contracts, sue or be sued in its name, and own assets.
• Easy access to funding:
A private limited company can raise funds through equity shares or by issuing debentures. It is easier for a private limited company to raise funds from investors as compared to other forms of business entities.
• Better credibility:
A private limited company has better credibility in the market as compared to other forms of business entities. It is easier for a private limited company to build trust with customers, suppliers, and investors.
• Tax benefits:
A private limited company is eligible for various tax benefits, such as deductions for research and development expenses and depreciation on assets.
Eligibility for Private Company Registration
To be eligible for private company registration in India, the company must fulfill the following criteria:
1. Minimum Number of Members:
A private company must have a minimum of two members and can have a maximum of 200 members.
2. Directors:
A private company must have a minimum of two directors. One of the directors must be a resident of India.
3. Unique Name:
The name of the private company must be unique and not similar to any other company or LLP.
4. Registered Office:
A registered office must be maintained by the company from the date of incorporation.
5. Authorized Capital:
A private company must have a minimum authorized capital of INR 1 lakh.
6. Digital Signature Certificate:
The company’s directors must have digital signature certificates issued by a licensed certifying authority.
7. Director Identification Number:
The directors must also have a Director Identification Number (DIN) issued by the Ministry of Corporate Affairs.
Meeting these criteria is necessary to register a private company in India.
Documents Required for Private Company Registration
To register a private limited company in India, you will need to submit the following documents:
1. Identity proof:
Directors and shareholders need to provide a PAN card, passport, voter ID or driver’s license.
2. Address proof:
Documents such as passport, voter ID, Aadhaar card or utility bills must be provided as proof of address.
3. Photographs:
Passport-sized photographs of all directors and shareholders are required.
4. Proof of registered office address:
A copy of the rental agreement or sale deed along with a no-objection certificate (NOC) from the owner of the property must be submitted.
5. Memorandum of Association (MOA):
This document includes the company’s name, its registered office, its objectives, and the liability of the members.
6. Articles of Association (AOA):
This document includes the rules and regulations that govern the internal management of the company.
7. Form DIR-2:
This form provides the consent of the directors to act as directors of the company.
Step-by-Step Guide to Private Company Registration in India
Step 1: Obtain Digital Signature Certificate (DSC):
The first step in the process of private company registration in India is to obtain a Digital Signature Certificate (DSC). A DSC is an electronic form of signature that ensures the authenticity of the documents submitted to the MCA.
Step 2: Obtain Director Identification Number (DIN):
The next step is to obtain a Director Identification Number (DIN) for all the proposed directors of the company. A DIN is a unique identification number assigned by the MCA to each director.
Step 3: File an Application for Reservation of Name:
The third step is to choose a unique name for the company and file an application for reservation of name with the MCA. The name should not be similar or identical to the name of an existing company or trademark.
Step 4: Prepare and File the Incorporation Documents:
After obtaining the DSC, DIN, and name approval, the next step is to prepare and file the incorporation documents with the MCA. The following documents need to be filed:
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Form INC-32 (SPICe)
- Form INC-33 (eMOA)
- Form INC-34 (eAOA)
Step 5: Pay the Required Fees and Obtain Certificate of Incorporation:
Once the incorporation documents are filed, the required fees need to be paid to the MCA. After the payment of fees, the MCA will scrutinize the documents and if everything is in order, it will issue a Certificate of Incorporation. This certificate is the conclusive evidence of the existence of the company.
Cost of Private Company Registration
The cost of private company registration in India varies depending on various factors such as the authorized capital, stamp duty, professional fees, and other expenses involved. Here are some of the expenses that one can expect while registering a private limited company:
1. Professional fees:
To register a private limited company, you need to hire a chartered accountant who will help you with the registration process. The professional fees for their services will vary depending on the experience and expertise of the professional.
2. Stamp duty:
The stamp duty for private company registration also varies from state to state. The stamp duty is usually a percentage of the authorized capital of the company.
3. Other expenses:
There are several other expenses involved in the registration process, such as the cost of obtaining a digital signature certificate (DSC) and the cost of name reservation.
The total cost of private company registration in India can range from Rs. 15,000 to Rs. 30,000 or more, depending on the factors mentioned above.
Conclusion
Private company registration in India can be a time-consuming and complex process. It is advisable to seek the help of a professional such as a chartered accountant or a company secretary to ensure that the process is smooth and error-free. Private companies have several benefits such as limited liability, ease of management, and the ability to raise capital. Private companies also have certain restrictions such as a restriction on the transfer of shares and a maximum number of members. It is important to consider these factors before deciding to register a private company in India.
