Private Limited Company Registration in India

Under section 2(68) of the Companies Act, 2013, a Private Limited Company is defined as a company that:

• Has a minimum paid-up share capital as prescribed.
• Restricts the right to transfer its shares.
• Limits the number of its members to two hundred, excluding:
• Persons who are currently in the employment of the company.
• Persons who, while being members of the company, were in the employment of the company and have ceased to be members after their employment ceased.
• In the case of One Person Company, where two or more persons hold shares jointly, they shall be treated as a single member.
• Prohibits any invitation to the public to subscribe to any securities of the company.

Requirements Of A Private Limited Company

A company must fulfill the following conditions to be registered as a Private Limited Company:

• Minimum 2 shareholders and 2 directors
• The shareholders can either be individuals/ companies/ or any LLPs but the Director must be an individual only.
• The shareholders don't have to become the Directors and as obvious, it isn't necessary that Directors need to be shareholders in the company.
• There are no minimum requirements for authorized as well as paid capital.

Features of a Private Limited Company

• A Private Limited Company is a separate legal entity and works independently under its brand name.
• A Private Limited Company continues to exist even in cases of bankruptcy, death, insanity, or change in membership.
• A minimum of two directors is required to form a private limited company and out of them, one must be an Indian citizen.
• The maximum number of members a Private Limited company can accommodate is 200.
• Private Limited Companies need to be operated with a minimum paid-up capital of around 1 lakh.

How to Register A Private Limited Company?

The registration process for a Private Limited Company is easy and convenient. Here is a step-by-step guide on how to register a Private Limited Company:

• Visit FilingLounge click on the Business Formation tab and select Private Limited company from the drop-down menu
• A form containing basic details regarding the applicant's name, mobile number, email ID, address, state, and the amount of capital is to be filled up and Submitted.
• Pay the required fee by choosing among the various payment options available.
• Our executives will assist you with a call shortly to carry out the application process to the next level.

The Documents Required For Registering A Private Limited Company.

The following list of documents is required when an individual stakeholder is applying for registration of a private limited company:

• PAN card of the would-be Director
• Any of the self-attested valid address proof such as Electricity Bill/ Mobile Bill/ Bank account statement (not older than two months)
• Aadhar card
• Valid ID proof such as a Passport/ Driving License/ Voter ID card

In case the Company is a corporate body and the stakeholder is not an individual, the following list of documents is required:

• Photocopy of the PAN card with a seal and signature of the Authorized person.
• Letter of Consent from the Board
• Any of the Address proofs such as Electricity bill/ mobile bill/ Bank Account statement not older than two months.
• Address proof of the Office is also required to be submitted.

Note:The documents have to be self-attested copies and should be properly scanned. Also, all the bills should not be older than two months.

Advantages of a Private Limited Company

• Perpetual succession- Private Limited companies follow the policy of perpetual succession and therefore, the company once formed, continues to exist irrespective of the change in ownership, death, or even bankruptcy.
• Limited Liability- Private Limited companies are created to limit the liability of the shareholders/ directors. In cases where the company faces financial crunches, the director’s shares are frozen and safe.
• Equity funding- As the shares of the shareholders and the directors are separate in a Private Limited Company, the company can opt for equity funding and raise the capital input by selling shares.
• Great Borrowing power- Private Limited Companies come with low risk and therefore seem more approachable to banks and other financial institutions when it comes to lending money. The companies can issue shares, debentures, and funds to generate capital, and hence, they seem more favorable and less risky.
• Endless expansion opportunities- Private Limited Companies enjoy multiple opportunities when they are trying to expand within the country or even outside the borders. The scope of expansion is quite large and even foreign companies are on the lookout for private companies to invest their capital in.
• Great credibility- Private Limited Companies have to provide a lot of information available to the registrar and therefore, a lot of information lands in the public domain and is available to everyone. This transparency increases the credibility of the company to a greater extent.

The Pitfalls of Registering a Private Limited Company

Registering a Private Limited Company comes with several benefits, such as limited liability, separate legal identity, and easier access to capital. However, there are also several pitfalls that potential business owners should be aware of before deciding to register their company as a Private Limited Company. These pitfalls include:

• There can be a conflict of interest between shareholders and directors.
• The various legal formalities associated with the registration of Private Limited Companies can be quite overwhelming and complying with all the government rules and regulations can cause a burden for some.
• Private Limited Companies need to provide all their details open to the general public, therefore, nothing remains personal.
• The transfer of shares in a Private Limited Company is restricted by its articles of association. This can make it difficult for shareholders to exit the company or sell their shares without the consent of other shareholders.
• The process of registering a Private Limited Company is more complex compared to other business structures such as sole proprietorships or partnerships. It involves various legal and procedural requirements.

Conclusion

We at FilingLounge assist you in registering your Private Limited Company with utmost ease. We have a team of experienced professionals to take care of all the requirements including the documentation and ensure timely support and proper management. Please Follow our Facebook page for regular updates.