Private Limited Company Incorporation
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The Companies Act 2013 governs a company’s incorporation. The Company’s Act is a piece of legislation that unifies and updates the legal framework for companies and specific other entities. It encompasses the whole of India. The administration of the Limited Liability Partnership Act of 2008, the Insolvency and Bankruptcy Code of 2016, the Companies Act of 2013, and the Companies Act of 1956 is a concern of India’s Ministry of Corporate Affairs.
Private limited companies are the preferred form of business for start-ups and companies with ambitious growth plans in India. As a registered company, the business is separate from its owners in terms of its legal identity.
In a private limited company, a person may serve as both a shareholder and a director. The number of unpaid shares they own limits their obligation as shareholders or members of a private limited company.
For registration, there must also be a minimum of two directors and subscribers/shareholders.
Establishing a private limited corporation
According to Section 2 (68), a private business is one that has the minimum permissible paid-up share capital and whose bylaws:
- Limits the transferability of its shares.
- Limits the membership of the group to 200, except in one-person companies.
- Prohibits any public request to subscribe to any firm’s securities.
Basic Requirements
A private limited company cannot be incorporated unless it is an organization of two or more people with a legitimate purpose. The Registrar of Companies may decline to register the company if the purpose, that is, any of the objects, is unlawful or if it contravenes the provisions of the Companies Act 2013.
The procedure for forming a private limited company is:
1. Getting a Digital Signature Certificate
A digital signature, also known as an electronic signature, is a secure way to sign documents that are backed by a digital certificate, providing proof of your identity. It is necessary at the time of online document submission. It also helps to confirm the security and authenticity of the documents. The documents for the company’s incorporation must also be digitally signed.
2. Director Identification Number (DIN)
The Director Identification Number (DIN) for the proposed directors of the private limited company is required in order to register a private limited company. The prospective directors of the company are also given a DIN, an exclusive 8-digit number, by the Central Government. Use Form DIR-3 to submit a DIN application.
3. Seeking the Name
The firm’s promoters should select one or more acceptable names for the proposed private limited company in order of preference to allow the Registrar flexibility in assessing if the name is available. The phrase “Private Limited” must also appear at the conclusion of the company name. The name should not be offensive or the same as the name of an LLP or corporation that is already registered on the MCA site. Moreover, the name must not be unlawful under the “Emblems and Names Act, of 1950.” After obtaining the correct names on the prescribed form, the registrar will review the submission and give approval. For a private limited company, getting name approval typically takes 3-5 working days.
4. Application for Private Limited Company Incorporation
The following documents must be provided for the incorporation of a private limited company:
- Authorized Share Capital: ******* shares @**each.
- Proposed Name.
- Subscribed/Paid-Up Share Capital: ***** Shares @ ** each, along with the proposed names of shareholders and their respective shareholdings
- Proof of registered address of the proposed company
- If GST applied at the time of incorporation – Rent agreement with NOC.
- If GST is not applied at the time of incorporation – The utility bill is not older than 2 months along with NOC.
- The proposed name of the first subscriber to the memorandum
- Proposed name of the authorized signatory.
- Details of companies in which the proposed director holds the position of director
Documents required for each proposed director (self-attestation)
- PAN (pdf format)
- Aadhar (pdf format)
- Driving Permit (in pdf format)
- Bank Statement (pdf format) (not older than 2 months)
- Passport-size photo (jpg format)
- Contact number
- Email id
- DIN (if allotted)
- Digital Signature Certificate (for Memorandum Subscribers and Authorized Signatory)
The documentation that the potential directors must prepare and sign
- DIR-2 Consent to Act as a Director
A statement confirming compliance with the criteria and obligations of the Act. A person named in the articles of incorporation as a director, manager, or secretary of the company must sign this declaration, as must an advocate of the Supreme Court or High Court, an attorney or pleader with the right to appear before the High Court, a secretary, or a chartered accountant engaged in full-time practice in India.
5. Private Limited Company’s Incorporation Certificate
After filing the above documents and paying the necessary fees, the Registrar of Companies would issue a certificate certifying that the business is officially established. As of the incorporation date specified on the certificate, the firm also acquires legal independence from the incorporators.
