Private Company Registration

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Private Company Registration

Private Company Registration in India

A private limited company is a company that offers limited liability, or legal protection for its shareholders but that places certain restrictions on its ownership.

A company is considered as a separate legal entity having perpetual succession, with liability of shareholders limited to the capital being contributed by them.

Hence, a shareholder is not personally liable for the debts of the company. It provides credibility to business in the eyes of financial institutions, suppliers and potential clients.

As it makes easier for companies to get loans at favorable terms from banks or convincing potential clients while entering into deals. Private Company Registration in India is compulsory for starting business in company form of organisation.

Eligibility for Private Company Registration in India

Minimum Two Person

Minimum two person are required for private company registration in India.

The same two people can become shareholder and director of the company simultaneously.

However, maximum 200 people can become shareholder in the private company.

No Minimum Capital

Capital requirement of private company depends upon the need of the business and statutory no minimum capital is required for private company registration in India. 

However, Minimum authorized and subscribed share capital required for private company is Rupees 1 lakh.

One Resident Director

Among director, one person must be resident Indian.

Unique Name

The name of the private company should be unique and should not be similar to the any existing company name or trademark.

Documents Required for Private Company Registration in India

Identity Proof (Directors and Shareholders)

  • PAN Card for Indian Nationals (Mandatory)
  • Passport for Foreign Nationals (Mandatory)
  • Proof of nationality for Foreign Nationals
  • Proof of Identity (Voter ID/Passport/Driving License) (any one)
  • Resolution of the board of company / LLP for authorization of director/partner
  • Passport Size Photo

Address Proof (Directors and Shareholders)

Bank statement / Electricity / Telephone / Mobile bill) (not older than two months) (any one)

Registered Office Proof

  • Conveyance/ Lease deed/Rent Agreement etc. along with rent receipts (any one)
  • Copy of the utility bills (Telephone / Gas / Electricity bill) (not older than two months) (any one)
  • NOC from Landlord

Digital Signature

DSC form (physically signed)

Procedure for Private Company Registration in India

Private Company Registration in India

Reserve Name of Company

The first step in incorporation is to reserve/approve the name of company.

The proposed name selected should do not contain any word which is prohibited under Companies Act, 2013.

An approved name is valid for a period of 20 days from the date of approval, for a new company.

It is permitted to apply for two proposed names and one Resubmission (RSUB) while Reserving Unique Names for companies through the RUN web service.

Take DSC of Director and Subscribers

Section 18 of the Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically.

This is the only secure and authentic way that a document can be submitted electronically.

As such, all filings done by the companies under MCA21 e-Governance programme are required to be filed with the use of Digital Signatures by the person authorised to sign the documents.

Acquire DSC – A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian Information Technology Act, 2000.

Register DSC – Role check for Indian companies is to be implemented in the MCA application. Role check can be performed only after the signatories have registered their Digital signature certificates (DSC) with MCA.

Approval of Other Regulators, (if required)

Proviso to Rule 12 of the Companies (Incorporation) Rules, 2014 provides that in case pursuing of any of the objects of a company requires registration or approval from sectoral regulators such as Reserve Bank of India, Securities and Exchange Board, registration or approval, as the case may be, from such regulator shall be obtained by the company before pursuing such objects and a declaration in this behalf shall be submitted at the stage of incorporation of the company.

Preparation of Documents & E-Application

Documents like Memorandum of Association, Articles of Association & other supporting incorporation documents and E-form for filing online application are prepared in house and then it is filed online on the portal of MCA21.

According to Section 7 of the Companies Act, 2013, all documents related to incorporation shall be filed before the Registrar, in whose jurisdiction registered office of a company is proposed to be situated. A Registrar may have jurisdiction over several states or only a part of a state.

Get Certificate of Registration, PAN and TAN

On receipt of the aforementioned documents, the office of the Registrar of Companies will scrutinise them and if they are found complete in all respects, the Registrar will register the company and generate a CIN. If the Registrar finds any defect or deficiency in any of the documents or forms, the Registrar will send an electronic communication pointing out the defects and after the deficiencies are removed, the Registrar will register the company.

After the registration of the company, the Registrar will issue under his hand and seal of his office, the Certificate of Incorporation in the name of the company and send it electronically. One may also take printout of the Certificate of Incorporation generated online. The date mentioned by the Registrar in the Certificate of Incorporation shall be the date of incorporation of the company, on which date the company will be considered to have come into existence as a legal entity separate from its subscribers.

The Certificate of Incorporation shall be in Form INC-11 of the Companies (Incorporation) Rules, 2014 and the Certificate Information shall mention permanent account number of the company where if it is issued by the Income Tax Department.

Open Bank Account

After getting the Certificate of Registration, private company can apply for opening a current account into bank for handling day to day transactions.

Advantages of Private Company Registration in India

Limited Liability of Shareholder

Liability of shareholders of the private company in India are limited only up to the shares subscribed by them and should not be personally liable for the debts of the company in case company are unable to pay its liabilities.

Separate Legal Entity

Private Company legal entity are separate than its shareholders / promoters.

Perpetual Existence

Private Company existence will go for ever and its existence will not be effected by the death of shareholders, directors or transfer of shares to others.

Capacity to Sue and to be Sued

Private company can take legal action against another and also other person can take legal action against private company separate from directors, shareholders & promoters.

Ownership of Property

Private company can sale, purchase and own the property like individual.

Borrowing Recognition

Companies are more recognized in terms of financial assistance /borrowing from banks and financial institution rather organization which are not company form of organization

FAQ to Private Company

What is Private Company?

“Private company” means a company having a minimum paid-up share capital as may be prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred.
Where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member.
Persons who are in the employment of the company and persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company

What is “Authorised Capital” or “Nominal Capital”?

“Authorised capital” or “Nominal capital” means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company;

What is “Board of Directors” or “Board” in relation to a company?

“Board of Directors” or “Board”, in relation to a company, means the collective body of the directors of the company;

What is “Books of Account” for purpose of company?

“Books of account” includes records maintained in respect of—
(i) all sums of money received and expended by a company and matters in relation to which the receipts and expenditure take place;
(ii) all sales and purchases of goods and services by the company;
(iii) the assets and liabilities of the company; and
(iv) the items of cost as may be prescribed under section 148 in the case of a company which belongs to any class of companies specified under that section;

What is called-up capital?

“called-up capital” means such part of the capital, which has been called for payment;

What is Chief Executive Officer?

“Chief Executive Officer” means an officer of a company, who has been designated as such by it;

What is meaning of director?

“director” means a director appointed to the Board of a company;

What is financial statement?

“financial statement” in relation to a company, includes—
(i) a balance sheet as at the end of the financial year;
(ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year;
(iii) cash flow statement for the financial year;
(iv) a statement of changes in equity, if applicable; and
(v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv):

The financial statement, with respect to One Person Company, small company and dormant company, may not include the cash flow statement;]

What is Issued Capital?

“Issued capital” means such capital as the company issues from time to time for subscription.

Who are key managerial personnel?

“key managerial personnel”, in relation to a company, means—
(i) the Chief Executive Officer or the managing director or the manager;
(ii) the company secretary;
(iii) the whole-time director;
(v) such other officer, not more than one level below the directors who is in whole-time employment, designated as key managerial personnel by the Board; and
(vi) such other officer as may be prescribed]

Who is Managing Director?

“Managing director” means a director who, by virtue of the articles of a company or an agreement with the company or a resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of managing director, by whatever name called.

The power to do administrative acts of a routine nature when so authorised by the Board such as the power to affix the common seal of the company to any document or to draw and endorse any cheque on the account of the company in any bank or to draw and endorse any negotiable instrument or to sign any certificate of share or to direct registration of transfer of any share, shall not be deemed to be included within the substantial powers of management.

Who are member?

“Member”, in relation to a company, means—
(i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company, and on its registration, shall be entered as member in its register of members;
(ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company;
(iii) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository;

What is Paid-up share capital?

“Paid-up share capital” or “Share capital paid-up” means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paid-up in respect of shares issued and also includes any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called;

What is share?

“Share” means a share in the share capital of a company and includes stock.

What is Subscribed capital?

“Subscribed capital” means such part of the capital which is for the time being subscribed by the members of a company;

What is Whole-time director?

“whole-time director” includes a director in the whole-time employment of the company;

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