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Private Limited Company

Setting up a business in India often involves choosing a private limited company as a preferred option. This structure offers shareholders limited liability protection while placing specific ownership constraints. In contrast, in the case of an LLP, partners oversee the management. Private limited company registration allows for a clear distinction between directors and shareholders.

At FinHub Advisors Pvt Ltd, we offer a cost-effective service to facilitate the seamless registration of your company in India. We handle all legal formalities, ensuring strict compliance with the Ministry of Corporate Affairs (MCA) regulations.

What is a Private Limited Company?

A private limited company is a type of business structure that limits the liability of its shareholders and restricts the right to transfer shares. In a private limited company, ownership is typically held by a small group of individuals or entities. The key features include limited liability for shareholders, a separate legal identity, and the ability to raise capital by issuing shares. Private limited companies are governed by the Companies Act and have “Pvt Ltd” or “Private Limited” in their official names. They are commonly chosen for their flexibility, scalability, and legal protection for shareholders.

Types of Private Limited Companies?

• Company Limited by Shares: Shareholders’ liability is limited to the nominal share amount mentioned in the Memorandum of Association.
• Company Limited by Guarantee: Member liability is limited to the amount of guarantee specified in the Memorandum of Association. This guarantee is invoked only during winding up.
• Unlimited Companies: Members of unlimited companies have unlimited personal liability for the company’s debts and liabilities. However, they are still considered a separate legal entity, and individual members cannot be sued.

Advantages of Private Limited Companies

• Limited Liability: Shareholders in a private limited company enjoy limited liability, protecting their assets from business debts. Their liability is typically restricted to the amount unpaid on their shares, providing financial security.
• Separate Legal Entity: A private limited company has a distinct legal identity, separate from its owners. This separation enables the company to enter into contracts, own assets, and engage in legal proceedings in its name.
• Access to Capital: Private limited companies can raise capital by issuing shares to private investors. This facilitates fundraising for business expansion without relying solely on loans or personal investments.
• Perpetual Existence: The Company continues to exist irrespective of changes in ownership. The perpetual existence ensures stability, allowing for long-term planning and business continuity.
• Credibility and Trust: The “Pvt Ltd” or “Private Limited” designation enhances the company’s credibility and fosters trust among customers, suppliers, and partners. It signals a formal, legally recognized business structure.

Disadvantages of Private Limited Companies

• Compliance Burden: Face regulatory demands, including financial reporting, filings, and audits.
• Complex Setup: Process and cost for managing are higher than more superficial structures.
• Share Limits: Restricted share transfers; max 200 shareholders in India.
• Public Disclosure: Financial info is publicly viewable, impacting privacy.
• Exit Complexity: Selling or leaving is more complicated than with other structures.
• Slower Decisions: The involvement of shareholders and directors may slow choices.

Requirements for Registering a Companies in India

Directors and Members:

A minimum of two directors and 2 members are required for Private Limited Company Registration in India, as per the Companies Act of 2013.

Directors must have a Director Identification Number (DIN) issued by the Ministry of Corporate Affairs (MCA).

At least one director must be an Indian resident, having spent 182 days in India in the previous calendar year.

Company Name:

When selecting a name for a private limited company, it should reflect the principal activity of the business.

Company Registration Process:

Registering a company in India involves a four-step process:

Step 1: Acquire a Digital Signature Certificate (DSC)

Every director and shareholder must secure a Digital Signature Certificate (DSC) issued by the Controller of Certification Agencies (CCA). This involves providing essential details such as passport-sized photos, PAN, Aadhar Card, phone number, and email address. Foreign nationals should also furnish notarized and apostilled documents if applicable.

Step 2: Director Identification Number (DIN)

Obtain a Director Identification Number (DIN) if you intend to be a director in the company. DIN is essential for directors and needs to be provided in the registration form.

Step 3: Name Reservation for the Company (SPICe+ Part A)

Begin by completing the SPICe+ Part A form to secure a unique company name. This entails selecting the company type, class, category, and sub-category, specifying the primary division of industrial activity, and offering a comprehensive business description. You’ll need to propose two names for approval.

Step 4: Submission of Company Details (SPICe+ Part B)

Provide comprehensive information concerning capital, registered office address, subscriber and directors’ details, stamp duty, PAN and TAN application, and necessary attachments. Ensure compliance with the Companies Act 2013 and obtain digital signatures from assisting professionals.

Step 5: Preparation and Submission of Incorporation Forms (SPICe+ MOA and AOA)

Draft the Memorandum of Association (MOA) and Articles of Association (AOA) containing crucial company details. Obtain digital signatures from subscribers and professionals before submitting these documents to the MCA for approval.

Additionally, file the AGILE-PRO-S form to register for GST, EPFO, ESIC, a bank account, and a shop and establishment license (which may be state-dependent).

Certificate of Incorporation

Upon successful document verification, the MCA will issue the Certificate of Incorporation (COI) with the Company Identification Number (CIN), PAN, and TAN.

Register Your Company through FinHub Advisors Pvt Ltd

Registering your company is seamless and efficient with FinHub Advisors Pvt Ltd. Our expert team navigates the intricate process, ensuring compliance with all legal requirements. From choosing a unique business name to obtaining the Certificate of Incorporation, we streamline each step. With personalized guidance, precise documentation, and timely submissions, FinHub Advisors Pvt Ltd accelerates your journey to official recognition. Trust us for hassle-free company registration, leveraging our expertise to transform your business aspirations into a legally recognized and transparent entity. Experience the ease of company registration through FinHub Advisors Pvt Ltd and embark on your entrepreneurial journey with confidence and compliance.

Documents Required For Private Limited Company?

• PAN Card (PAN is mandatory for all Indian Directors)
• Passport (Passport is mandatory for Foreign Directors or Shareholders)
• Aadhar Card (Aadhar is mandatory for all Indian Directors)
• Bank Statement (Latest Bank Statements of the Directors and Shareholders)
• Latest Electricity Bill (Latest Electricity Bill for the registered office premises)
• Latest Telephone Bill (Latest Telephone Bill for the registered office premises. Electricity Bill is preferred)
• Board Resolution Authorising Investment (If the proposed shareholder is another company or legal entity)
• Investing Company Address Proof (If the proposed shareholder is another company or legal entity)
• Passport Size photo (Passport sized photo of the Directors and Individual Shareholders)