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Step by Step Private Limited Company Registration Process and Documents as per Companies Act, 2013 in India | Jordensky
A group of persons known as shareholders owns a private limited company, a sort of corporate structure. This kind of business is officially recognised as a separate legal entity from its owners and is registered with the government. This indicates that the business is able to sign contracts, hold property, and file or defend legal actions in its own name.
The shareholders' limited liability protection is one of the key advantages of forming a private limited company. This means that the shareholders' personal assets are shielded and they are only held accountable for the money they placed in the firm if the company is sued or declares bankruptcy.
A Private Limited Company also has the advantage of being viewed as a more reliable and trustworthy business structure, which can make it simpler to draw in clients and investors. It's crucial to carefully assess whether a Private Limited Company is the best business structure for your purposes because setting up and maintaining one might also result in higher costs and regulatory constraints.
When registering a Private Limited Company, a number of legal requirements must be complied with. Included among these are
Private Limited Companies are governed by a number of tax laws and rules. For instance, if their yearly sales surpasses a specific threshold, they are required to register for a Goods and Services Tax (GST) number. Additionally, they have to submit annual financial reports and tax returns to the government. Additionally, Private Limited Companies are eligible for a number of tax breaks and incentives, including deductions for R&D costs.
In order to avoid fines and legal problems later on, it is crucial to make sure that all eligibility requirements, binding legal obligations, and taxes rules are followed while forming a Private Limited Company.
Below is the exhaustive list of documents required for Private Limited Company registration in India
1. Director Identification Number (DIN) - A special identifying number given to each corporate director. The director must present identification documentation such an Aadhar card, PAN card, or passport if they lack a DIN.
2. Digital Signature Certificate (DSC) - A digital signature is required to digitally sign and submit documents online. The DSC is available via certification organisation.
3. Memorandum of Association (MOA) - A written statement of the goals, pursuits, and range of operations of the organisation.
4. Articles of Association (AOA) - The company's internal operations, management, and decision-making procedures are governed by the Articles of Association (AOA), a document that sets forth those guidelines.
5. Proof of Registered Office - Documents showing the registered office address, such as a lease or a sale deed, as well as utility bills like your water or energy bill, are proof of the registered office.
6. PAN Card - A essential document needed for tax purposes is the Permanent Account Number card.
7. TAN Card - To deduct or collect tax at source, you must have a Tax Deduction and Collection Account Number, or TAN Card.
8. Certificate of Incorporation - This document, known as a certificate of incorporation, attests to the company's registration with the Registrar of Companies (ROC).
9. Bank Account Opening Documents - Documents needed to open a bank account in a company's name include a board resolution, identification documents for authorised signatories, proof of address, and the company's PAN and TAN card.
The Directors Identification Number, or DIN, has eight digits. Each candidate who is chosen to serve as a director of the company must submit an application in E-Form DIR 3 as per Section 153 of the Companies Act, 2013. However, the SPICe Form will be used to submit requests for the designation of DINs to the anticipated initial directors of new organizations.
A passport-sized photo, a copy of the applicant's PAN card, and a self-attested copy of their address proof are needed for DIN.
Digital Signature Certificates serve as a secure digital key that verifies the certificate holder's identity. A digital certificate can be used to sign papers electronically, access data or services online, and validate one's identity. The MCA has made it simple to register a corporation online, thus each subscriber's DSC is necessary. The e-MoA and e-AoA must both have the subscribers' and witnesses' digital signatures.
Identification evidence, a PAN card, proof of address, and attesting officer proof are essential documentation for DSC.
Using the linked link, confirm that the organization's chosen name is present on the MCA website.
The RUN webservice also allows the planned name of the organization to be stored. For booking a name for a new organization or changing the name of any existing organization, RUN (Reserve Unique Name) is an easy-to-use web administration. In addition, the applicant must submit an RUN application along with payment of the applicable fees to reserve the desired organization name, which will then be handled by the Central Registration Center (CRC).
In addition, the proposed name of the organization may be Memorandum of Association (MoA),which refers to the company's founding document. A corporation's connection with shareholders is outlined in this formally approved document, which was created during the creation and registration procedure. It also outlines the purposes for why the company was established.
The internal management of a firm is outlined in the Articles of Association (AoA). It specifies the responsibilities, privileges, and authority of the company's management. Similar to that, it is a legally recognised document created as part of an organization's formation and registration process to characterize its relationship with investors and to specify the goals for which the firm has been established.
The SPICe Form (INC-32) is used for single applications for name reservations, new company incorporations, DIN allocation applications, PAN applications, and TAN applications. Additionally, this e-Form is accompanied by supporting documents like a MoA and AoA, a list of the Directors and Subscribers, etc.
The firm will be registered and its CIN assigned once the e-Form has been reviewed and deemed complete. Additionally, potential directors who don't already have a valid DIN are provided one. Additionally, three directors are permitted to submit applications for the allocation of DIN using this integrated form when forming a firm. Additionally, the company would be awarded a PAN and TAN.
The SPICe Form must be submitted to the Registrar of Companies with the following supporting documentation:
Application for a GST number, ESI and EPF registration, and Employees Provident Fund (EPF)registration are made using Form AGILE. Similarly, startups can apply for a GSTIN, an Establishment Code supplied by EPFO, or an Employer Code provided by ESIC through an e-form if they want to register their businesses with SPICe(INC-35).
Companies that were incorporated under the MCA using the SPICe application can use this procedure. Similar to this, various application categories for GSTIN (such as Tax Collectors, Tax Deductors, Casual Taxable Individuals, ISDs, and so forth)should continue with the current process of signing up through the shared platform for GST registration.
To apply for a GSTIN, Establishment code, or Employer code at the time of organizational consolidation is optional, though.
Within 30 days of incorporation, companies are required under Section 12 of the Companies Act of 2013 to provide the Registrar of Companies with their registered office address. Moreover, the confirmation of the enlisted office must be documented in form No. INC.22 together with the requisite expenses asper Rule 25 of the Companies Incorporation Rules, 2014.
Along with the supporting documentation, the Form INC 22 must be filed with the:
A registration document listing the addresses of the company's registered offices;
According to Section 12(3), the Companies Act, 2019, each organization shall hold
Additionally, have a copy of the equivalent available at the entrance to the location where its commercial operations are conducted. It should be displayed there in prominent location with legible lettering in both English and the local dialect of the area in question.
In all business letters, letterheads, billheads, notifications, and other official publications, the organization must have its firm name, registered office address, Corporate Identity Number, phone number, email address, fax number (if any), and website address (if any) printed.
According to Section 10A of the Companies Act of 2013, a company with a capital share that was formed after the start of the Companies (Amendment) Ordinance, 2019 is not permitted to launch a business or exercise any authority unless:
Within 180days of the company's incorporation, a director notifies the Registrar that each subscriber to the memorandum has granted permission for their shares to be acquired by them as of the creation date of such a statement. This declaration is confirmed in INC 20A Form along with any fees that may be agreed upon.
Additionally ,the organization submitted an INC 22 Form to the Registrar in order to certify its registered business status (which we have just discussed in Step 7).
Each organization must appoint an individual or a firm as an auditor at its first annual general meeting, who will maintain the position from the conclusion of that meeting until the conclusion of its sixth annual general meeting, as required by Section 139(1) of the Companies Act, 2013.
An organization can be successfully incorporated and founded by taking the processes outlined above. Similar to this, the organization achieves the status of a distinct legitimate body following incorporation.
In general, setting up a private limited business can be difficult. It is crucial to obtain professional assistance and be knowledgeable about the rules and processes of the law in order to overcome these difficulties.
One of a Private Limited Company's main benefits is that the responsibility of the shareholders is restricted to the amount of share capital they have contributed. In the event that the firm suffers losses or incurs liabilities, the shareholders' personal assets are not put at risk.
When compared to other business formats, Private Limited Companies have a more reputable and professional image. This could aid the business in luring in new investors, clients, and collaborators.
Due to their distinct legal identities, Private Limited Companies find it simpler to obtain funding from a variety of sources, including banks, financial organisations, and investors. Due to their restricted liability protection for shareholders and increased operational transparency, private limited companies are more likely to attract investors.
A Private Limited Company's continued existence is unaffected by the passing away or retirement of any of its shareholders or directors. It has a perpetual succession, so even after the founding shareholders and directors have left the business, it can still exist.
Private Limited Companies are subject to a number of legal and administrative obligations, including filing yearly returns, holding board meetings, and keeping accurate accounting records. For small firms, this may be both time-consuming and expensive.
Private Limited Companies cost more to start and maintain than other company structures. Registration fees, legal fees, and yearly maintenance expenses must be paid. They could also need to hire a business secretary, which increases their costs.
Private limited companies have limitations on share transfers, which may reduce the shares' liquidity. Shareholders may be required to complete specific procedures before transferring their shares, and they are unable to transfer their shares to anyone at will.
Differences between Private Limited Companies, Sole Proprietorships, and Partnership structure in India
In a sole proprietorship, the business owner is held personally accountable for all debts and commitments made by the company. All partners in a partnership are responsible for the debts and obligations of the partnership jointly and severally. In a private limited corporation, the shareholders' liability is capped to the value of their equity stake.
A partnership is owned and operated by two or more people, as opposed to a sole proprietorship, which is owned and managed by one person. Shareholders control a Private Limited Company, and a board of directors oversees daily operations.
Because a sole proprietorship and a partnership are not distinct legal entities from their owners, the owner's personal assets may be confiscated in order to satisfy business debts. The assets of a Private Limited Company are distinct from the personal assets of its shareholders and are treated as a separate legal entity from the shareholders.
The owner of a sole proprietorship has total authority over the company and is the decision-maker. In a partnership, the decision-making and management duties are divided among the partners. A board of directors that answers to the shareholders oversees daily operations in a private limited company.
The sole proprietor or partners in a partnership are in charge of securing financial support for the company. When forming a Private Limited Company, the business can attract capital by issuing shares and other securities.
Que - What advantages do Private Limited Companies have in India?
Ans - A few benefits of a private limited business are as follows:
Que - What is the Pvt. Ltd. Company's minimum turnover and capital need in India?
Ans - In contrast to a one person company, a private limited company has no restrictions on capital or turnover.
Que - What is the tax rate for a Private Limited Company?
Ans - A tax rate of 30% of total income is applied to private limited enterprises having a previous-year total turnover of less than 400 crores.
Private limited company that had a total annual revenue of > 400 crores are subject to a 25% income tax.
A private limited corporation is also required to pay income tax surcharge, education cess, and secondary and higher education cess in addition to regular income tax.
Que : What are the minimum requirements to incorporate a Private Limited Company in India?
Ans : To incorporate a Private Limited Company in India, you need a minimum of two directors and two shareholders. The directors and shareholders can be the same individuals.
Que : What is the minimum amount of capital required to start a Private Limited Company in India?
Ans : There is no minimum capital requirement to start a Private Limited Company in India
Que : How long does it take to incorporate a Private Limited Company in India?
Ans : The time taken to incorporate a Private Limited Company in India can vary depending on factors such as the availability of documents and the workload of the Registrar of Companies. It can take anywhere from 10-15 days to a few weeks.
Que : Can foreign nationals or companies invest in a Private Limited Company in India?
Ans : Yes, foreign nationals or companies can invest in a Private Limited Company in India subject to the Foreign Direct Investment guidelines of the Indian government.
Que : What are the annual compliance requirements for a Private Limited Company in India?
Ans : A Private Limited Company in India is required to file annual returns and audited financial statements with the Registrar of Companies. It is also required to hold annual general meetings and maintain statutory records.
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