PRIVATE LIMITED COMPANY

Private limited Company is the most common class of company. It is the most recognized legal entity for doing business option in India. A Private Limited Company can be registered with minimum 2 directors and not more than 50 directors. Legally formed company has various benefits which can be availed by the directors. Private Limited Company with limited liability means directors at the time of default can not be held liable for personal asset.

WHO IS PROMOTER?

Incorporation of A Private Company has to be started with defining promoters as they are the person who does the preliminary work which is necessary and incidental for the formation of a company such as, promotion incorporation, flotation and they try to obtain investments in the company in the form of subscribers.

Promoters are defined under Section 2(69) of the Companies Act, 2013 as an individual who:-

• Is named as a promoter in the prospectus 
• Control affairs of a company
• Advice and/or direct the Board of Directors.

In nutshell, we can say promoters are the person who originally had an idea of forming a company and they are the sole reasons for which the company is incorporated.

STEP-BY STEP PROCESS FOR APPLYING ONLINE FOR INCORPORATING PRIVATE LIMITED COMPANY

Reservation Of Name

• The first and foremost step for the incorporation of a Private Limited Company is started by applying a suitable name for the Company. Name can be applied online through web service available at www.mca.gov.in by usingReserve Unique Name (RUN) serviceby signing in through workspace service.
• After receipt of an application by the registrar, if all the information and documents furnished are correct and accurate, the registrar may accept an application and reserve a name for 60 days. That means after the name is being approved, the Name Approval Letter is allotted to the applicant with name reserved for 60 days.
• A company is not allowed to be registered with the name:
  • Which too nearly resemble or is similar to the name already registered as a Company, LLP or registered under Trademark Act. • Such words or symbols which are prohibited by Central Government from time to time

Application For The Allotment Of Director Identification Number (DIN)

• For allotment of DIN, online application is made to the Central Government in the form of DIR-3 with necessary documents properly scanned as an attachment. Following documents are required to be submitted:
  • Passport size Photograph • Identity Proof • Address Proof
• Now directors can directly apply for DIN in Form No. INC-32 (SPICe) at the time of the Incorporation of a Company.Maximum three directors can apply for DIN through SPICe forms.

Application for Incorporation

Further after name approval, the next step is to apply for registration of a company. Application for incorporation has to be made online through the MCA portal using three linked forms with the necessary attached documents stated above. It's a simplified method for incorporating a company electronically (SPICe):

• Form INC-32 (SPICe)
• Form INC-33 (SPICeMoA)
• Form INC-32 (SPICeAoA)

Certificate of Incorporation

• On and from the date of receipt of the application, Registrar based on information and documents provided will scrutinize the forms. After that registrar will provide a Certificate of Incorporation (CoI) if all the necessary details are accurate.
• COI shall mention the Date of Incorporation as well as Permanent Account Number (PAN).
• After the incorporation company is expected to keep and maintain copies of all the necessary documents in a registered office.

DOCUMENTS REQUIRED

Necessary information and/or documents are needed to be submitted online through these forms stated above are:

• Memorandum of Association (MoA) & Article of Association (AoA) with brief details of the Company Name, Capital, Registered Office signed by all the subscribers or promoters.
• A duly signed declaration that has to be given by an advocate, Chartered Accountant, Cost Accountant or Company Secretary in Practice.
• An affidavit in form INC-9 which is a declaration by subscribers and first directors which state no- conviction of any offense and/or they are not found guilty of any fraud/ misfeasance/or any breach of duty.
• Address of its registered office where it has to be situated
• Complete details of each subscribers and first directors such as Full Name, Fathers Name, DIN number (If already allotted to them), Date of Birth, Present Address, Permanent Address along with Address proof such as Electricity Bill, Bank Statement, or any Mobile bill (Any One amongst these three), and Identity Proof such as Voter ID, Passport or Driving License (Any One amongst these three).
• If any of the directors already hold directorship in any other company apart from the Proposed Company in which being appointed, such interest in other entities has to be attached as a declaration.

REQUIREMENT FOR COMPANY REGISTRATION

Minimum requirements with which company can be formed are:

• Minimum 2 persons to act as a director
• Minimum 2 shareholders.
• Earlier the concept of minimum capital of 1 Lakh has been removed now.
• Every director must have valid DIN number.
• At least one of the directors should be resident.

ADVANTAGES OF FORMATION OF PRIVATE LIMITED COMPANY

Following are the benefits that are enjoyed by owner of Private Companies:

• Private Limited Company can hold and own property on its name and also incur debt reason being it has its own legal capacity.
• Directors are not held liable for debts incurred by company because company is a separate legal entity.
• Unless a company is dissolve it can be continued without any interruption because it is not affected by death of any member. Perpetual succession is a benefit of private limited company.
• Liability of members is limited to the extent of shares subscribed by them. During winding up they are liable only for amount unpaid on their shares.
• A company can sue and be sued on its own name.
• A private company enjoys better source of funds such as it can issue debentures, accept deposit from its own member, also financial institutions and banks gives easy loans.

NEW SECTION-10 (DECLARATION BEFORE COMMENCEMENT OF BUSINESS)

• Companies incorporated after the commencement of companies (amendment) ordinance, 2018 and having a share capital has to file form INC-20A online for the verification of registered office. This section says those companies incorporated on or after the 2nd day of November 2018 (02.11.2018) has to file a declaration by its directors within one eighty days (180) days of incorporation in Form- INC-20A.
• This declaration is filed to obtain a certificate of commencement of business.
• Bank Statement having all credit entries has to be attached to the form as a supporting document.
• If there is any default in filing this form within due date, the following penalty is revealed
  • Company: Rs.50,000/- • Director in default: Rs. 10,000/- per day up to Rs.1,00,000/-