Private Limited Company
Ideal for Startups or Foreign Companies who wish to set up a base in India. You can raise unlimited capital from up to 200 members. PLCs are amongst the most popular forms of business structures in India.
What is a Private Limited Company?
A private limited company is the most common and popular type of legal entity in India. The registration of a private limited company is governed by the Companies Act 2013 and the Incorporation Rules 2014. To register a private limited company, a minimum of two shareholders and two directors are required.
Requirements to start a PLC
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A minimum of two natural persons are required to be a director of the company.
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One of the directors of a private limited company must reside in India.
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The other directors may be foreign nationals.
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Two people are required to act as shareholders of the company. Shareholders can be natural persons or body corporate.
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Name for the proposed company.
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Minimum share capital.
Registration Process
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RUN Name Approval​
The approval of the business name is to be decided by the Ministry of Corporate Affairs. Up to 2 names can be provided. In the case of the two names being rejected, the MCA allows for the resubmission of 2 other names. The name must be approved by the MCA under the Companies Act 2013. Name availability can be checked in the below link:
https://www.mca.gov.in/mcafoportal/showCheckCompanyName.do
However if you are sure about the name's availability, there is no need to file a separate application for name approval, one can file for direct application for company formation along with name approval application.
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Digital Signature
Digital Signature is an electronic signature used for signing the incorporation application electronically. Digital signatures must be issued to the proposed directors of the company. An electronic signature is required to sign the incorporation application. However, an electronic signature is not required for name approval. Therefore, this digital signature process can run in parallel with the name approval process. If the shareholders are different than the Directors, then digital signature must be obtained for such Shareholders as well.
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Director Identification Number
Director Identification Number (DIN) application will be filed along with company formation application. DIN will be allotted once the application for company formation is approved.
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Filing for Incorporation
Once the name is approved by the MCA, incorporation process can begin. Application normally takes up to 5 working days for approval.
List of Documents Required for the Registration of a Private Limited Company
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Directors/Shareholders Documents:
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PAN Card of the Shareholders / Directors
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ID Proof – Voter’s ID / Passport / Driving License / Aadhaar
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Address Proof – Latest Bank statement with transactions / Telephone bill / Mobile Bill not older than 60 days
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Passport Size Photograph
Registered Office Documents:
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Address Proof of the Premises:
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Rental agreement or Lease agreement if the premise is rented / leased
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Latest tax paid receipt / Sale deed if the premise is owned by any of the Directors
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Latest Electricity bill / Telephone bill / Gas bill
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NOC from the owner of the premise.
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If the proposed Director/shareholder are foreigners, read here to know the documents required https://www.setupcompany.online/post/registration-of-foreign-subsidiary-and-taxation.
What other registrations can be obtained along with Company Registration?
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Company Registration is done at a Govt. department called Centralized Registration Center (CRC). Along with company registration one will get the following additional Registrations:
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PAN and TAN.
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Professional Tax if company is getting registered in Karnataka state.
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GST.
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Provident Fund.
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Employee State Insurance.
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Bank account number. (To activate the bank account, one should contact a bank and submit KYC documents post company formation).
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Director Identification number for Director, if they do not have one.
Reasons to register a PLC
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Separate Legal Entity
A company is a legal entity and a legal person established under the Act. As a result, a company has a wide range of legal capacities like owning property and incurring debts. Members (shareholders / directors) are not personally responsible for the company's debts.
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Uninterrupted Existence
A company has "perpetual succession", which means uninterrupted existence until it is legally dissolved. A company is a separate legal person, and is not affected by the death or departure of any member and continues to exist, regardless of the change of ownership.
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Easy Transferability
Business ownership can easily be transferred by transferring shares. Signing, filing and transferring the application for transfer of shares and share certificates is sufficient to transfer ownership of the business. In a PLC, the consent of other shareholders may be required to make the transfer of shares.
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Owning Property
A company is a legal entity that can buy, possess, enjoy and transfer assets in its name. Assets owned by a business can be machinery, buildings, intangible assets, land, residential properties, factories, etc. No shareholder can claim the company's assets - as long as the company is in business.
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Limited Liability
Limited liability is the state of being only liable for a limited amount of the business's debts. Unlike a sole proprietorship and partnership, in a limited liability company the liability of the shareholders for the debts of the company is limited to the equity they invest in the company.
What is next after Company Registration?
There are certain additional compliances to be made after the company's formation. For more details on this you can read the article here-https://www.setupcompany.online/post/steps-after-company-registration
For any assistance for company formation, post compliance including accounting and tax compliances please write to vighnesh@bclindia.in