How to register a Private Limited Company
There are a total of 8 formats in which any of the legal entities are formed. These include proprietorship, partnership, limited liability partnership (LLP), One person company (OPC), Private limited, Public limited, society and trust. Private Limited is a standard format for all businesses. The best part of private limited is that management and ownership can be differentiated in this format. This is the biggest advantage of this format which completely suits the beginning of any startup.
What is a private limited company?
Basically, a private limited firm refers to a company that is held privately to run small or any mid-sized businesses. The members’ liability in this type of company is restricted to the number of shares he or she holds. The shares cannot be traded publically by any of the members.
Characteristics of Private Limited Company
In order to start a private limited company, at least 2 people are mandatory and as per the Companies Act, 2013 the maximum 200 people can be accommodated.
Each shareholder’s liability is limited in the company. This means that in any case if there is any sort of losses to the company, the shareholders are responsible to sell the assets in order to bear the losses.
In case of death or bankruptcy of any of the members of the company, it keeps on running forever. It leads to the perpetual succession of the firm.
The private companies have the benefit over the public companies since they do not require having an index of the members. The public companies need to mandatorily have the index of the members.
A private company can start its operations with two directors on board.
A minimum of Rs 1 lakhs is required as the paid-up capital for starting the operations of the private company.
Prospectus refers to a detailed statement stating all the affairs of the company to be issued for the public. For a private company, there is no need to show any prospectus since it is not liable to invite the public for subscribing to the shares.
Minimum subscription refers to the amount that is received by the company and that is 90% of the total shared issued within a specified time period. If a company is not capable of receiving this amount, then they are not able to commence their operations anymore.
It is compulsory to have the word private to be used after the name of the company. It is good to have a catchy name that can attract the customers and the name should be powerful enough to leave a print in viewers’ minds. But you need to make sure that the name chosen is completely unique and is not copied from anyone else.
Steps to Private Limited Company Registration Once you have come up with the name of the company, you need to follow the below steps:
- Initially, you need to apply for the digital signature certificate (DSC) and the director identification number (DIN).
- Next, you need to apply for the check of name availability i.e. to check that the name that you have chosen will be allotted to you or not.
- You can then file the MOA (memorandum of association) and AOA (article of association) in order to register for the private limited company. MOA is the document that holds all the fundamental data that is required for the incorporation of the company. AOA is another document that contains all the regulations and rules that are responsible for governing the company.
- The next step is to apply for the TAN and PAN of the company.
- After this, the RoC will issue the certificate of incorporation along with TAN and PAN.
- Finally, you can open the current account in the bank in the name of the company.
Documents required to set-up a private limited company
All the documents required for setting up the private company are as mentioned below:
- Short company description along with the business description
- Share capital amount and a proposed ratio in order to hold shares
- City name where the office is located
- PAN Card of the shareholders and the directors
- Address proof of the office including the telephone bill and electricity bill etc.
- Address proof of the shareholders and the directors including the passport, voter if and driving license, etc.
- Copy of the latest telephone bill or electricity bill for the directors.
- Complete details of the occupation of the directors and the shareholders.
- The email addresses of the shareholders and the directors.
- If the property is available on rent then a copy of the rent agreement has to be submitted along with a no-objection certificate issued from the landowner.
- Non-acceptance affidavit
- Subscriber sheet for AOA and MOA.
- Company PAN Card
- A nationality proof to be provided in case you are a foreign national subscriber.
Role of company objectives in MOA and AOA and type of objectives
In most of cases, the startups which get failed don’t know there right audience and hence they keep different types of objectives for different audiences. But it is always recommended to have one objective with one audience and design product and service accordingly. This is logical enough and also legally it is required to have one objective only.
Role of auditor
Whenever a private company is run, it has three major contributors who are responsible for major operations: directors, stakeholders, and auditors. Stakeholders are responsible for funding, directors have to manage the affairs in such a way that profits are increased and the auditor is responsible for managing the financial pictures of the company. The auditor makes sure that everything related to funds is managed correctly and that the shareholders are aware of all the financial management done by the company directors. As per the MCA, it is compulsory to appoint an auditor within 30 days of the setup of the company.
Sometimes a question might come in people’s minds that if three different people are hired for the company more cost will be involved. So as a startup it is good that the owner can work both as a director as well as the shareholder.
Frequently asked questions
Do we need to get the renewal done every year for the private limited company?
The registration process needs to be done just once. There is no need for any renewal anytime. But, it is required to do compliance every year. In case compliance is not done, the company can be strike off and once this happens, you will be restricted to become the director in any of the companies. Hence, make sure that whether your company has sales or not still you are doing compliance on a regular basis.
Can a minor person be the director or shareholder of a company?
Since the director is a responsible person so a minor cannot hold this position but yes he can be a shareholder but dividends and profits will be given to his or her parents or guardians.
Who will bear the share losses?
Since the company owners are the shareholders so they will bear the losses but yes the responsible person will be the director
Is it costly to build a private module?
In today’s time as a simple private company setup is so is the cost which is not that high. There is no fee charged by MCA on capital up to 10 lakhs RS. There are myths in people’s minds that lots of compliances are required and it is difficult to set up a private entity but this is not true. Once you give a name to a private company, the audience starts getting trust in you and trust is very important to run your business.
Once a company is formed, how to proceed further to get leads?
This is a digitalized world and hence you need to find out places where more customers can be found. It is good to have a digital aura setup for your company. Get an effective website build for your company. Also, it is recommended to have an ISO certification done so that the customers can trust your services. Also, have a GST registration done, get a trademark and get catchy contents written for your products and services. This is good to generate good leads. Before doing all this, it is good to build a prototype and make all the changes at the initial level.
Getting a private company registration is not a tough task. To get more details, you can get in touch with India’s best Business management consultant in Delhi like NeuSource the where you will get complete help in getting the entire set-up done. The NeuSource Startup Consulting Services in India helps you to become a successful entrepreneur and generate good leads for your business.
"Any time is a good time to start a company.” Neusource indulge in providing business consultancy services which help startups to accomplish their desired results as a TAJ EXPRESS. If you’re passionate about something and you work hard, then neusource is the right choice for you.