Private Limited Company Registration in India

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Private Limited Company Registration in India

As India’s economy continues to thrive, Private Limited Companies stand out as the preferred choice for entrepreneurs aiming to establish their dream businesses. This preference is largely due to their appealing features, including limited liability for owners, separate legal entity status, ease of initiation, and accessibility to funds compared to other business structures and credibility in the market.

Check out the following list of advantages and disadvantages of Private Limited Companies before diving in:

Advantages of a Private Limited Company

Easy to get Funded

Private Limited Companies can raise capital by issuing shares to a small group of private investors, venture capitalists, angel investors etc., allowing for expansion and investment.

Separate Legal Entity

A Private Limited Company is a separate legal entity, capable of owning assets in the name of company, entering contracts, and being sued or suing in its own name and liabilities separate from those of its owners.

Lower Tax Rates

In comparison to other business entities such as Partnerships and Proprietorships, Private Limited Companies typically enjoy relatively lower tax rates. Reputation: For a private limited company, there will be more credibility in society and also even employees will be more willing to join.

Limited Liability

Shareholders' liability is limited to the amount unpaid on their shares. This means that if the company faces financial difficulties, creditors and other parties can only go after the company's assets, and not the personal assets of the shareholders.

Perpetual Existence

The company continues to exist despite changes in ownership or the death of shareholders, ensures that the company's operations and contracts are not affected. This stability and continuity enable the companies to maintain its business operations and contractual agreements seamlessly over time.

Better to consider before stepping in

More Compliances

Private Limited Companies must adhere to the regulatory requirements, including regular filings, board meetings, and audits. Additionally, anyone can access the filed company financials by paying a nominal fee to MCA.

Expensive

Setting up and maintaining a private limited company is more costly compared to simpler business structures like sole proprietorship or partnership.

Limitations on Share Transfer

Shares in a private limited company cannot be freely traded on the stock exchange, can be transferred subject to specific restrictions.

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FAQs

A Private Limited Company is a type of business structure in India that offers limited liability to its shareholders and restricts the transfer of shares. It is a separate legal entity from its owners.

 

  • Limited liability protection for shareholders
  • Separate legal entity status
  • Ability to raise capital through equity
  • Perpetual succession
  • Enhanced credibility and trust
  • Minimum of 2 and a maximum of 200 shareholders
  • Minimum of 2 directors (at least one must be a resident of India)
  • Registered office address in India
  • DIN (Director Identification Number) for all directors
  • DSC (Digital Signature Certificate) for one of the directors
  • PAN card and Aadhaar card of all directors and shareholders
  • Address proof of all directors and shareholders (passport, voter ID, driving license, etc.)
  • Passport-sized photographs of directors and shareholders
  • Proof of registered office address (rental agreement, utility bill, etc.)
  • No objection certificate (NOC) from the owner of the registered office

The registration process usually takes between 10 to 15 working days, depending on the timely submission of documents and government processing time.

 

The cost varies based on professional fees, government fees, and other charges. It typically ranges from INR 6,000 to INR 30,000.

 

Yes, a foreign national or an NRI can be a director and shareholder in a Private Limited Company in India, provided they meet the necessary requirements and compliance.

 

There is no minimum capital requirement to start a Private Limited Company in India. However, authorized capital is usually INR 1 lakh.

 

Yes, a foreign national or an NRI can be a director and shareholder in a Private Limited Company in India, provided they meet the necessary requirements and compliance.

 

Yes, a Private Limited Company can be converted to other business structures such as a Public Limited Company, LLP, or OPC, subject to compliance with the Companies Act, 2013, and other relevant regulations.

 

There is no minimum capital requirement to start a Private Limited Company in India. However, authorized capital is usually INR 1 lakh.

 

While it is not mandatory, it is advisable to hire a professional (chartered accountant, company secretary, or lawyer) to ensure compliance with all legal and regulatory requirements during the registration process.

 

  • Filing of annual returns with the Registrar of Companies (RoC)
  • Conducting and recording annual general meetings (AGMs)
  • Maintaining proper books of accounts
  • Filing income tax returns and other statutory filings
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