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Private Limited Company
India has witnessed a huge rise in the number of startups in the market today. Private limited companies have extra security and their liability is limited to a greater extent. Private limited company registration is the oldest legal registration structure held for businesses in India. Companies like reliance, Mother dairy, Parle products etc are all private limited companies that have existed for ages.
When these companies get involved in the stock market then they transition from private limited to limited, under stock market listings. Private limited registration is a proper company registration done under the ministry of corporate affairs and it gives you the right to do business anywhere in India or around the world.
Under private limited registration, your company becomes a separate entity. As a consequence company gets separate personal loans and taxes. Unlike the public limited company, the Shares of Pvt ltd company are not shared publicly.
There are certain pre-requisites to register a company as a private limited. Only if the company meets the pre-requisites it can be registered. According to Halsey: “A private limited company is a privately-held business entity held by private-stakeholders. The liability arrangements in these is that of a limited partnership, wherein the liability of stakeholder extends only up to the number of shares held by them”.
As per the companies act of 2013, section 2(68) defines that the private company has a minimum paid-up share capital prescribed, and which by its articles
- Restricts the right to transfer its shares
- Except in case of one person company, limits the number of its members to two hundred
- Prohibits any invitation to the public to subscribe to any securities of the company.
Characteristics of private limited company registrations
After understanding private limited registrations, it’s important to know and understand their characteristics. Following are the few characteristics of a private limited company registration
1. MINIMUM MEMBERSHIP:
Initially, for a company to be registered under private limited there is a minimum requirement of two people as directors of the company. Private limited company registrations can be held for all kinds of small businesses in India. The range of members required for the private limited registered company is from a minimum of 2 to a maximum of 200.
2. LIABILITY IS LIMITED
Private limited registration is an independent body both in terms of monetary and legal grounds. There should be a minimum of two shareholders in which at least one of them should be Indian and the other can be foreign. The liability of each shareholder or partner is limited in a private limited company. If the company is going through loss under any circumstances then shareholders can sell their assets for the payment. However, the personal assets of the shareholders are not at risk.
3. LEGAL BODY
A private limited company is a separate legal entity. The company keeps existing in the eyes of law within the cases of death, bankruptcy and insolvency in it. The company despite going through severe losses results in perpetual succession, which means it exists in the corporate forever.
4. ASSOCIATE INDEX
Private limited companies should have at least two directors for passing down the operational instructions in the company. Unlike a public company, a private limited company don’t have to keep an associate index of their members. The associate index should be maintained in the case of public companies.
5. MINIMUM SUBSCRIPTION:
The minimum paid-up capital of the private limited company is ninetieth of the shares issued at intervals at exact intervals of time. If the company cannot receive the ninetieth number then they can’t start more business. While the company cannot receive a minimum subscription the shares of private limited companies are assigned to public companies.
Benefits of private limited company registrations
There are several advantages of a private limited company
1. OWNERSHIP
In a private limited company sense of ownership is more because of less number of shareholders. Most of the ownership is owned by investors, stakeholders and founders where they have the liberty to sell and transfer their assets. In a private limited company, shares are not shared in an open market, that’s why there’s less confusion and complexity in management.
2. LIMITED LEGAL FORMALITIES
Although private limited companies have separate legal formalities, they don’t have to struggle with expensive legal battles like public companies. Legal formalities are expensive and time-consuming which can be complex for public companies as they’ll have long lists. But private limited companies will have shorter lists of legal formalities.
3. FOCUS ON MANAGEMENT AND DECISION MAKING
The focus on management in a private limited company is less when compared to a public company. The decision making is done quickly with less hassle compared to other registrations. There’ll be also less confusion in making decisions.
4. STOCK MARKET
Fortunately private limited companies need not be listed under stock markets. The founders don’t have to worry about shareholders expectations and their interference. As long as the company abide by the rules of law no shareholder or partner needs to interfere. But in the case of public companies, shareholders can exert excess pressure on the company to increase earnings.
5. MORE PREFERENCES ON LOANS FROM FINANCIAL INSTITUTIONS
A private limited registered company is legally dissolved and has perpetual succession without any interference from shareholders or investors. This convenience attracts many financial institutions to work and invest funds in private limited companies.
Company registration process (step by step guide)
A successful start-up with 50 members is eligible for private limited registration. The process is not a complex one instead keep reading to find out.
Following is the process of private limited registration:
- The first step of the process is to attain a digital Signature certificate (DSC) and Director Identification Number(DIN)
- The second step is to then check for the availability of name and apply the name.
- The third step is to File for both MOA and AOA to register the private limited company.
- Fourth step is to apply for both TAN and PAN of the company
- Step five your certificate of corporation can be issued by RoC by both PAN and TAN
- And the final step is to open a bank account on the company’s name
These are the simple steps to follow to get your company private limited registered. With this, you’ll be able to start your own company successfully.
Documents required for company registration
There are certain documents required for private limited registration of the company. And those are the following members:
- Id proof of the person is required such as the pan card and passport of Indian of both foreign and directors respectively.
- Address proofs of the registered company like adhaar cards, Ration card, driver’s lisence or voter ID is required. You’ll require address proofs of the company along with the shareholder’s address proof like ration card, passport, voter id, etc
- You’ll also require duplicate copy of the latest electricity bill, telephone bill and mobile bill both for the directors and shareholders.
- Occupational details of the directors as well as shareholders
- Email addresses and passport size photos of the directors, shareholders.
- In case of the rental property you need to submit a copy of rent agreement with the No objection certificate (NOC) for the landlord.
- Non-acceptance certificate affidavit.
- To change the original subscribers from NOC to MOA
- You require MoA and AoA
- Pan card of both the directors and the company.
- A sales copy of deed or property deed.