A private limited company is owned by non-governmental organizations or a small number of shareholders existing in a company. Private companies don’t trade or offer their share to the general public rather, the private stocks are traded and owned by the company. Being a privately held business entity, it is controlled by private stakeholders, and the liability being arranged with limited partnership and extends to the number of shares held by them.
Shareholders aren’t liable to go beyond the value of their shares. With that, starting a private company isn’t easy as it seems there are many things to consider. From the documentation, registration, to formation, each step requires enough attention and care.
Private Ltd Company Registration with Legalmart
Private limited company registration requires a lot of documentation, formality and a few legal considerations too. Since your business has little or no good knowledge about registration, it may be intimidating to begin with the process. Having Legalmart by your side allows you to keep legalities in check. All the professionals are being pre-screened to offer outstanding experience along with keeping your personal and business information private.
We offer a seamless registration and pride ourselves to deliver quality and safety service with customer satisfaction guaranteed. Quick and easy registration, with picking the correct name, drafting the company’s constitution and offering you proper control over your business. Everything will be done online without having to go anywhere.
Benefits of Private Ltd Company
- Members: For a private company, there are specific criteria for number of members to be present to make the entity formation possible. A minimum of 2 to a maximum of 200 members or shareholders are required for a private company formation. This means that private companies can have a long list of members to enjoy the benefit and to grow together. The criteria of the member list are referred to and as per the companies act 2013, before registration of the company is performed.
- Limited Liability: In a private limited company, the shareholder or members experience the liability to be limited. Which states, in case a company faces loss due to any circumstance, the shareholders or members are liable to sell their own assets. This is for the repayment for the losses; however, the personal and individual asset of the shareholders are protected and doesn’t come at a risk. Therefore, the members can feel safe and secure since it doesn’t affect their personal asset at any cost, only the asset being invested in the firm.
- Tax Benefits: A private limited company have a greater advantage for tax payments since it has a very tax-efficient businesses structure. Since limited companies pay the corporation tax on their profit for a specific rate, the directors can quickly reduce the personal tax as well as national insurance contribution. Often, the easiest way of saving tax in a private limited company is by giving salary to the directors. This is done by paying themselves a mixture of both, salary along with dividends. Overall, they pay taxes only on the taxable profit along with getting the exempting from higher personal income tax rates.
- Restricted Trade of Shares: In this type of firm, the member or shareholder’s liability is only limited to the nominal share amount; this is specifically mentioned in the Memorandum of Association (MOA). This means the shareholder won’t be held liable or even asked further to pay for more than the share capital they have brought and invested in the company. Along with that, if the shareholder of a private company plans to sell some shares, then the existing shareholders will be the first ones to be offered these shares. In case of refusal or denial to act, the shares can be transferred to a third party.
- Separate Legal Entity: Private limited company in the court of law is a separate legal entity. This means the assets and liabilities in the business are not similar or the same as the asset and liabilities of the director of the business. Both of which is considered different and therefore managers are the one responsible for the company’s success. Along with that, they are also answerable for the firm’s loss. This means that the company continues in perpetual succession, even if all the member dies, the company becomes insolvent, or penniless, it still exists in the eye of law.
- Borrowing Capacity: The best part of a private limited company is it requires a share capital of merely 1,00,000, and that too isn’t compulsion or pressure for fund requirement. Moreover, a private company can derive money from the member up to 100% of their cumulative paid-up share capital, security premium account and free reserves of the firm. This is done only after taking the shareholder’s approval, which required passing an ordinary resolution in a general meeting. The best part is that a private limited company can borrow the money from any other company without considering any limit. However, it should be compliant with the companies act 2013 and pass the board resolution.
- FDI Allowed: FDI is permitted to 100% in most sectors and can be made through various equity instruments too. Indian private companies can issue shares like equity, preference, convertible debenture. However, a Private limited company’s equity share issued under FDI has to be at a fair value. This creates tremendous interest amongst foreign companies to set up their base in India, leading to the free flow of capital across countries.
Read More About: “GST Registration”
Eligibility Criteria of Private Ltd Company Registration
To have a successful registration process of the Private limited company. There are eligibility criteria that need to be followed to make the process smooth and quick.
- Minimum of 2 adult people required to act as the directors of the firm.
- The number of members must be about 2 to 200.
- Each director must possess a Directors Identification Number (DIN).
- Minimum of 2 directors and maximum of 15 directors.
- One director should be Indian national; other directors can be foreign nations.
- Two people are required to handle and take responsibility by acting as a shareholder.
Documents Required for Private Ltd Company Registration
Directors: Indian Nationals
One of the most important, extremely crucial and must have documented is DIN. This means that, out of many directors, at least one director must be an Indian citizen and should prove it. In simple words, one of the directors must possess Indian resident proof and be an Indian citizen to incorporate a Private limited company. For evidence of their nationality, they must submit a PAN card, passport or driver’s license, election ID or Aadhar ID. In addition, the proposed director must submit the Bank statement, electricity bill or phone bill as proof of the third residency in India.
- Apply for DIN (Director Identification Number) for each director.
- Scanned Passport size photographs of directors.
- Scanned copy of Pan card of directors.
- Scanned copy of latest bank statement/ telephone or mobile bill/ electricity or gas bill.
- A scanned copy of Aadhar card/voter I-card of directors.
- Directors’ email id and phone number.
- Specimen of Digital Signature of the Directors.
- Proof of registered office address (If rented or If self-owned).
How to Register a Private Ltd Company Online
Here are the steps that can help in registering for a private limited company online.
Digital Signature Certificate (DSC)
DSC are the digitalized or electronic format of physical or paper certificates. It can be presented electronically to prove your identity, and can be signed online, passed on digitally for anyone to access your information. A digital signature is highly crucial, to begin with, and the proposed Directors of the company needs to obtain it. It is used for the signing of the company’s incorporation application. However, it is not used for securing name approval. Thus, one can work parallelly on the name approval process along with incorporation.
Director Identification Number (DIN)
It is also known as the DIN number, which features a unique identification 8-digit number; this is required to represent the company’s directors. DIN is an identification number, a compulsory and must to have proof of the director. Therefore, it is a must to be obtained by anyone who wishes to become the company’s director. One can file the DIN form 3 and fill in basic details with identification proof like PAN card, Aadhar Card, address proof etc. DIN can also be applied within the Spice form and for a maximum of 3 directors.
Registration on the MCA Portal
You need to log in to the Ministry of Corporate Affairs portal and fill in the form. There will be steps and procedures to guide you for form filling. Go through the form and keep your documents ready before filing since you will be required to input the data. Registration for private limited companies on the MCA portal is a part and an important part too. The MCA portal basically allows individuals to open their company’s bank account and witness reduced paperwork or service time. A private limited company can make the most of this feature to quickly access their bank account of the company with some of the major Indian banks.
Certificate of Incorporation
This is again one crucial legal documentation required at the time of the formation of your company. It acts as a license to form a company, issued by the state government and measured by shares contributed by the shareholder. Last will be the certificate of incorporation that you will receive; it holds to be an essential document. It consists of the name of the company, business statement, registered office details, number of shares that are issued and authorized. It is obtained after a DIN, name approval, MOA and AOA procedures are completed.
Why did you Choose Legalmart?
Just like picking the proper company structure for your business proves to be a crucial element. Choosing the right firm for registration plays equally essential, in fact, the first step to a successful start. Every business is required to register itself as a mandatory part of legal compliance.
We offer an extremely cost-effective and completely online registration process. You won’t be required to leave your home or do any additional work to burden yourself. We handle the entire registration process in no time.
Our experts offer the finest help and sound decisions to make a smoother experience for you. We have a list of satisfied customers and a dedicated team for each customer to make sure your time frame with us is worth it.