Procedure for Registration of Private Limited Company
Procedure for Registration of a Private Limited Company in India
Introduction to Private Limited Company
Private Limited Company is one of the most popular forms of corporate legal entities in the world. Governed by the Companies Act, 2013 and the Companies Incorporation Rules, 2014, a minimum of two shareholders and two directors are required to incorporate a private limited company. The process for incorporating a company has been changed and simplified by the Ministry of Corporate Affairs.
Prerequisites of Registering a Private Limited Company
In order to register a private limited company, a minimum of two adult persons designated as Directors are required. A minimum of two and a maximum of fifteen Directors are required for a private limited company. A minimum of two Directors should be an Indian Citizen and an Indian Resident whereas the rest of the Director(s) can be a Foreign National.
- Two persons who could be a natural person or an artificial legal entity are required to act as a shareholder of a company.
Requisite Documents for a Private Limited Company Registration
The proposed directors of a company would require to submit the following documents as identity evidence while registering a Private Limited Company:
(a) Permanent Account Number for Indian Nationals.
(b) Passport for Foreign Nationals.
The following proof of address documents are required to be submitted by the Directors:
(a) In case of Indian Nationals, documents such as Passport or Election ID or Ration Card or Aadhaar ID or Driver's License are required to be submitted.
(b) Whereas for Foreign Nationals, documents such as Residence Card or Bank Statement, Passport or Driver's License are required to be submitted.
The following proof of residence documents (not older than 2 months) are required to be submitted by the proposed Directors:
(a) Indian Nationals are required to submit document such as a Bank Statement or Electricity or Phone Bill which has their residence details mentioned.
(b) Foreign Nationals are required to submit document such as a Bank Statement or Electricity or Phone Bill.
If a company's shareholder is a company located in India or abroad, following are the documents that are required to be submitted:
- Company's address proof.
- Company Incorporation Certificate.
- Board Resolution Authorising investment in the company.
Company Incorporation Procedure in India
Following are the Procedure for Incorporation of Company in India:
Reserve Unique Name Approval
A company has to take name approval from the Ministry of Corporate Affairs for the proposed names. A company can provide upto 2 names for approval from the MCA. In case both the names gets rejected, the company will be given opportunity for re-submitting the forms with 2 more names. The proposed name must be acceptable to the Ministry of Corporate Affairs as per the Companies Act 2013. It takes approximately 1-4 business days for the name to be approved by the Ministry of Corporate Affairs. A Name Reservation Application for a Private Limited Company is to be made in e-Form INC-1 for which a nominal fee would be charged. The appointed authority would then search for the availability of the proposed business name before filing the application. The Registrar of companies India can have 100% authority to approve or reject the name.
Following are the guidelines one needs to adhere to while deciding on a name for the company:
- The name must be easy to spell and remember.
- The name should be short and simple.
- The name should not contain any word that breaches the public policy or which is prohibited.
- The proposed name should not infringe any registered Trademark.
- The name should not be identical or similar to any existing registered company or LLP.
The Digital Signature Certificate
A company has to obtain a Digital Signature Certificate for the proposed Directors of the company which is required at the time of signing the Incorporation Application. The process of obtaining the Digital Signature can simultaneously be done while applying for company name approval. It is also to be noted that the Digital Signature is not required while the company is obtaining name approval. It approximately takes 1-4 business days for obtaining a Digital Signature. An e-MOA and e-AOA are required to be filed by affixing Digital Signature Certificates( (DSC), whereas, directors can obtain the Director Identification Number (DIN) through an online application.
The Director Identification Number
Obtaining the Director Identification Number is one of the most important steps to be performed in the process of incorporation of company. DIN is a unique identification number which is assigned by the Ministry of Corporate Affairs. The Director Identification Number is valid for lifetime unless it is surrendered or withdrawn. The Director Identification Number is required during the company incorporation procedure.
Submission of Company Incorporation Application
- Once the Digital Signature is obtained, the company incorporation application can be submitted in Simplified Proforma for Incorporating Company Electronically (SPICe) Form with the Ministry of Corporate Affairs.
- Required stamp duty and government fees are to be paid while submitting the application during the business registration process.
- The same application also processes the application for PAN and TAN. After the company incorporation procedure is completed and once the application submitted along with the SPICe forms are reviewed and verified and if the Registrar finds it satisfactory, the Certificate of Incorporation is issued with the date of incorporation along with the Permanent Account Number (PAN) of the company which will be attested by the seal and signature in electronic form.
It is important for any business or private limited company or startup to have their business registered in order to enjoy the benefits which are provided by the government. Today, company incorporation in India is required to be done by entrepreneurs and businesses in order to establish their company and build good relations in the business arena.