Private Limited Company Registered in DILLI HAAT — INA-Delhi
Table of Contents
- What is a Private Limited Company?
- Characteristics of a Private Limited Company
- Requirements to start a Private Limited Company
- Advantages of Private Limited Companies
- Disadvantages of Private Limited Companies
- List of Documents Required for Private Limited Company
- How to register a Private Limited Company?
- Charges to register a Private Limited Registered in DILLI HAAT — INA-Delhi
- Frequently Asked Questions
What is a Private Limited Company?
What is a Private Limited Company?
As the startup landscape continues to flourish, individuals embarking on entrepreneurial ventures should familiarize themselves with various business registration options, including sole proprietorship, limited liability company (LLC), and private limited company.
This article delves into the nuances of private limited companies, highlighting their advantages over public counterparts. Private companies enjoy advantages such as greater control over long-term investment strategies, confidentiality regarding share values and financial data, and enhanced operational freedom and flexibility.
Characteristics of a Private Limited Company
Characteristics of a Private Limited Company
Having understood what a private limited company entails, it’s crucial to grasp its defining characteristics:
- Membership: To establish a private limited company, a minimum of two shareholders is mandatory. However, due to its smaller scale, there’s a maximum cap on membership set at 200 individuals. Additionally, the company must have at least two directors overseeing its operations.
- Limited liability structure: In this type of company, the liability of each member or shareholder is restricted. Consequently, even in scenarios of financial loss, shareholders are only liable up to the extent of their shareholding. Their personal assets remain safeguarded and aren’t subject to risk.
- Separate legal entity: A private limited company enjoys the status of a distinct legal entity, enduring in perpetual succession. This implies that regardless of the demise of all members, or even if the company faces insolvency or bankruptcy, it maintains its existence in the eyes of the law. The company’s lifespan is perpetual, unaffected by the lives of its shareholders unless dissolved through a formal resolution.
- Minimum paid-up capital: Compliance with a minimum paid-up capital requirement is essential for a private limited company, no minimum paid-up capital is required. However, this capital threshold may vary, subject to adjustments prescribed by the Ministry of Corporate Affairs (MCA) periodically.
Requirements to start a Private Limited Company
Requirements to start a Private Limited Company
Each business structure comes with its own specific prerequisites for incorporation. Here are the essential requirements for registering a private limited company:
- A private limited company must have a minimum of two and a maximum of 200 members, as stipulated by the Companies Act 2013.
- Directors must meet the following criteria:
- Each director must possess a Director Identification Number (DIN) issued by the Ministry of Corporate Affairs.
- At least one director must be a resident of India, meaning they should have resided in India for at least 182 days in the previous calendar year.
- Selecting a company name is a crucial step. A private limited company’s name must incorporate three elements:
- Main name
- Business activity
- Designation as ‘Private Limited Company’ at the end.
- It’s important to note that the desired name may not always be available, as no two companies can share the same name. Therefore, during registration, multiple name options (usually 5–6) must be submitted for approval to the Registrar of Companies (ROC), ensuring they don’t closely resemble existing company names.
- Upon registration, the company must provide the permanent address of its registered office to the registrar. This address serves as the primary location for the company’s operations and document storage.
- Companies intending to submit documents electronically must acquire a digital signature certificate to verify document authenticity.
- Additionally, if the company employs professionals (such as a company secretary, chartered accountant, or cost accountant) for various activities, certifications from these professionals may be necessary.
Advantages of Private Limited Companies
Advantages of Private Limited Companies
Limited Liability: Within a private limited company, the concept of limited liability prevails, ensuring that the members of the company are shielded from the risk of losing their personal assets. In case of company failure, shareholders are only obligated to sell their assets to meet financial obligations.
Fewer Shareholders: In contrast to public companies, which necessitate a minimum of seven shareholders, a private limited company can commence with just two shareholders, providing greater flexibility in its formation.
Ownership Flexibility: With shares owned by investors, founders, and management, a private limited company grants owners the freedom to transfer and sell their shares to other parties, facilitating fluidity in ownership arrangements.
Continuous Existence: As previously mentioned, a private limited company maintains its legal entity status until officially dissolved. Consequently, the company persists even in the event of a member’s demise or departure, ensuring uninterrupted operations.
Disadvantages of Private Limited Companies
Disadvantages of Private Limited Companies
One drawback associated with a Private Limited (Pvt Ltd) company is the intricate compliance procedures involved in its closure. This process frequently becomes excessively complex and time-consuming, posing challenges for those seeking to shut down the company.
List of Documents Required for Private Limited Company
List of Documents Required for Private Limited Company
The documentation necessary for a private limited company includes:
- Identification Proof:
- PAN card for Indian directors
- Passport for foreign directors
2. Address Proofs (Any of the following):
- Ration card
- Aadhar card
- Driver’s license
- Voter ID
3. Residence Proofs:
- Bank statement
- Electricity bill of the premises
4. Notarized Rental Agreement
5. No Objection Certificate (NOC) from the property owner
6. Copy of the Sale Deed or Property Deed (for owned property)
How to register a Private Limited Company?
How to register a Private Limited Company?
Once you’ve settled on a name for your company, proceed with the following steps:
- Apply for a Digital Signature Certificate (DSC).
- Apply for the Director Identification Number (DIN).
- Apply for name availability.
- File the e-Memorandum of Association (eMoA) and e-Articles of Association (eAoA) to register the private limited company.
- Apply for the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) of the company.
- Upon approval, the Registrar of Companies (RoC) will issue a Certificate of Incorporation along with PAN and TAN.
- Open a current bank account in the name of the company.
Following these steps will enable you to establish your own private limited company. It’s advisable to seek guidance from knowledgeable individuals to ensure a smooth journey towards growth.
Charges to register a Private Limited Registered in DILLI HAAT — INA-Delhi
Charges to register a Private Limited Registered in DILLI HAAT — INA-Delhi
Frequently Asked Questions
What are the disadvantages of a private company?
It restricts the transferability of shares < the stock exchange rate cannot be quoted < there is a limit to the number of shareholders < and there is a tedious compliance process
Is a private company better than a public one?
Private companies have the upper hand over public companies concerning investment in long-term strategies, keeping the values of their shares and financial figures discreet, freedom, and flexibility of operations.
How many people can form a private company?
In a Private Company, a minimum of 2 directors and 2 members are required. All these members have limited liability and the maximum number of Members has increased from 50 to 200.
How much does it cost to form a private limited company?
The cost of establishing/registering a Pvt Ltd Company generally varies from INR 6,000 to INR 30,000, depending upon the number of Directors, members, the authorized share capital, and professional fees.
What is compulsory for a private limited company?
Under Section 134, all private companies must hold an annual general meeting. These companies are required to hold their meetings within six months of closing their Financial year.
What are the rules for a Private Limited Company?
It should have a minimum of 2 Directors and 2 Members < The company members should hold an annual general meeting < The maximum number of Members cannot exceed 200
