Private Limited Company

PRIVATE LIMITED COMPANY

A Private Limited Company (PLC) is one of the most common types of legal entityin India. Private Limited Companies are governed by the Companies Act, 2013 and require a minimum of 2 Directors and 2 Shareholders with one of the Directors being an Indian Resident and Indian Citizen.

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NATURE PRIVATE LIMITED COMPANY REGISTRATION

To register a company in India, the following are minimum requirements:

2 Directors – 1 Person should be an Indian National and Indian Resident
2 Shareholders – The Directors can be shareholders
Registered Office in India

BENEFITS OF INCORPORATING A PRIVATE LIMITED COMPANY

Limited Liability- Private limited companies are a separate legal entity to their shareholders and directors. In a private limited company, the liability of each member or shareholder is limited.
No Minimum capital- A private limited company can be started with zero paid up capital as there is no minimum capital required for incorporating a private limited company.
Perpetual Succession- According to company law, perpetual succession means that the company continues its existence even if any owner or member dies, goes bankrupt, exits from the business and transfers his shares.
Builds Credibility-The particulars of the company are available on public database, which helps builds credibility and brings transparency to the operation of company.

DOCUMENTS FOR ONLINE COMPANY REGISTRATION

For Indian nationals and foreign nationals, the documents required differ a bit. The following documents are required from Directors/Shareholders:

FOR INDIAN NATIONALS

Copy of Pan Card, Aadhaar Card of all the directors and shareholders.
Passport size photograph
Self-Attested copy of Identity Proof: Voter ID, Passport or Driving License.
Self-Attested copy of Address Proof: Mobile Bill/ Telephone Bill/ Electricity Bill/ Latest bank account Statement (All should not be older than 2 months).
Digital Signature Certificate.

FOR FOREIGN NATIONALS

In case of foreign directors and members, all their documents should be notarized and apostilled.

1. Passport
2. Passport size photograph
3. Proof of Address: – Driving License/ Residence Card/ bank Statement with the last page of the recent transactions/ Utility Bill not older than 2 months.
4. Digital Signature Certificate.

PREREQUISITS FOR INCORPORATING A PRIVATE LIMITED COMPANY

There should be a minimum of two Directors to form a Private Limited Company, of which 1 Director should be a Resident Indian citizen
The maximum allowed Directors in a Private Limited Company is 15
In a Private Limited Company, a minimum of 2 members and a maximum of 200 Members (shareholders) are allowed
There is no minimum limit of Paid-up capital to form a Private Limited Company but the Authorized capital of minimum Rs. 1 lakh is mandatory
ID Proofs of the Director – PAN card, Passport, Addhaar Card
Registered Office address proof – Rental agreement or Sale Deed and No Objection Certificate from the property owner

CAPIATL REQUIREMENT TO START A COMPANY

A company can be started in India with a very minimum amount of capital. There is no fixed amount and the shareholders of the company being incorporated can determine the capital they wish to contribute. While setting up the capital structure of the company, the following are some of the concepts to be kept in mind:

Face Value of Share: The face value of a share is the price per share with which the company is incorporated. Normally, the face value of share is Rs. 1 or Rs. 10 or Rs. 100 or Rs. 1000 or Rs. 10,000.

Authorised Capital: Authorised capital is the total value of shares a company can issue to shareholders. Normally, all companies are incorporated with an authorized capital of Rs. 1 lakh or Rs. 10 lakhs. If a higher authorized capital is required, the company would be required to pay additional fees to the Ministry of Corporate Affairs. The authorised capital of a company can be increased at any time after incorporation.

Paid-up Capital: Paid-up capital of a company is the number of shares issued to shareholders for which they have paid or deposited money to the company. Paid-up capital of a company cannot be more than the authorized share capital of the company.

PRIVATE LIMITED COMPANY COMPLIANCES

Once a company is registered in India, various compliances must be maintained from time to time to avoid penalties and prosecution. The following are some of the compliances a company would be required to complete after company registration:

Auditor Appointment: All companies registered in India must appoint a practicing and licensed Chartered Accountant registered with the ICAI within 30 days of incorporation.

Director DIN KYC: All persons who hold a Director Identification Number (DIN) – which is allocated during the incorporation process must complete DIN KYC each year to validate the phone and email address on record with the Ministry of Corporate Affairs.

Commencement of Business: Within 180 days of incorporation, the company must open a Bank Current Account and the shareholders must deposit the subscription amount mentioned in the MOA of the company. Hence, if the company was to be incorporated with a paid-up capital of Rs. 1 lakh, then the shareholders must deposit Rs. 1 lakh in the Company’s bank account and file the bank statement with the MCA to obtain a commencement of business certificate.

MCA Annual Filings: All companies registered in India must file a copy of the financial statements with the Ministry of Corporate Affairs each financial year. If a company is incorporated between January – March, the company can choose to file the first MCA annual return as a part of the next financial year’s annual filing. MCA annual return consists of Form MGT-7 and Form AOC-4. Both these forms must be digitally signed by the Directors and a practising professional.

Income Tax Filing: All companies must file an income tax return using Form ITR-6 each financial year. Income tax filing must be done for each financial year before the due date – irrespective of the incorporation date. The income tax return of a company must be digitally signed using one of the Director’s digital signature.