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A private limited company is a type of business in which shares are not available for public trading and ownership is limited to a small number of shareholders. Here, a shareholder’s responsibility is capped at the amount they invested in the business; there may be as many as 200 shareholders. There is no public market for the shares. The Register of Companies (ROC) oversees the company’s registration and activities. For incorporation, the directors must provide their Digital Signature Certificate (DSC) and Director Identification Number (DIN). The MCA site is where documents such as the Articles of Association (AoA) and Memorandum of Association (MoA) must be submitted. Following registration, the website will feature the company’s information and the incorporation certificate will be provided by the Ministry of Corporate Affairs (MCA).
One of the primary advantages of registering a Private Limited Company is the Limited Liability Protection it offers to its shareholders. In this business structure, the liability of shareholders is restricted to the amount of capital they have invested in the company. This means that if the company faces financial losses or legal challenges, the personal assets of the shareholders remain protected and cannot be used to settle business debts.
A Private Limited Company is recognized as a separate legal entity from its owners or shareholders. This means the company itself is an independent body, capable of owning assets, entering into contracts, borrowing money, and conducting business in its own name. The shareholders and directors of the company are not personally liable for the company’s debts or legal obligations, ensuring that their personal assets remain protected.
Perpetual succession is one of the key features of a Private Limited Company, ensuring that the company continues to exist regardless of changes in its ownership or management. Unlike partnerships or sole proprietorships, a Private Limited Company is treated as a separate legal entity from its owners. This means that the company’s existence is not affected by the death, retirement, insolvency.
One of the key advantages of registering a Private Limited Company is the ease of raising capital. As a Private Limited Company, you can attract funding from various sources, including venture capital, angel investors, and financial institutions. Investors prefer this structure due to its legal recognition, transparency, and limited liability protection.
One of the key advantages of registering a Private Limited Company is the ability for the company to own, acquire, and transfer property in its name. As a separate legal entity, a Private Limited Company can hold real estate, intellectual property, machinery, or any other assets without tying them to the personal assets of its shareholders or directors. This feature provides legal protection for personal property and enhances business credibility.
Shares in a private limited company can be easily transferred from one person to another without affecting the business's activities, in contrast to public limited businesses. This increases flexibility for shareholders and draws additional investment interest. In a Private Limited Company, shares can be transferred by simply filing share transfer forms and updating the company’s records, subject to the restrictions mentioned in the Articles of Association.
Before registering a Private Limited Company in India, certain eligibility criteria must be met to ensure compliance with the regulations under the Companies Act, 2013. Below are the key requirements for setting up a Private Limited Company:
Minimum Number of Directors
Registering a Private Limited Company is a structured process that requires fulfilling specific legal and compliance requirements. Here’s a comprehensive checklist to guide you through the process of registering your Private Limited Company in India.
Directors:
At least two directors are required, and one of them must be an Indian resident. The maximum number of directors allowed is 15.
Shareholders:
A minimum of two shareholders is required, and a maximum of 200 shareholders is allowed. Directors can also be shareholders.
Capital Contribution:
There is no minimum capital requirement, but a nominal amount (e.g., ₹1 lakh) is typically recommended as the starting capital.
Company Name:
The name should be unique and must not conflict with an existing registered company or trademark.
Registering a Private Limited (PVT Ltd) Company in India requires a set of documents to comply with legal and regulatory requirements. ACCOTALE ADVISORY PRIVATE LIMITED provides expert assistance to ensure a seamless registration process. Below is the list of essential documents you’ll need:
Proof of Address (for Indian Nationals):
Any one of the following is accepted:
Bank Statement (not older than 2 months)
Utility Bill (Electricity, Water, or Gas – not older than 2 months)
Telephone Bill or Mobile Bill (not older than 2 months)
PAN Card:
A valid PAN card is mandatory for all Indian directors and shareholders.
Proof of Identity (for Indian Nationals):
Any one of the following can be submitted:
Passport Voter ID
Aadhar Card Driving License
In India, private limited companies are categorized based on various factors, including their purpose, size, and ownership structure. Here are the main types of private limited companies:
The most typical kinds of private limited companies are these.This kind of business has equity in the form of shares. Additionally, the amount of unpaid shares caps the liability of the shareholders.
This kind of business lacks equity capital. Members of the firm agree to contribute a certain amount to the company's assets in the event that the business is wound up.
The members' liability is unrestricted in this category. This kind is unusual since it exposes its members to more danger.
An OPC is a private limited company with a single shareholder. It provides the benefits of limited liability and a separate legal identity, but with the simplicity of being owned.
Registration – FAQs
A Private Limited Company is a type of business entity that is privately owned and limits the liability of its shareholders to the amount of shares they hold. It cannot offer its shares to the general public and has a distinct legal identity separate from its owners.
Limited Liability: Shareholders’ liability is limited to their shareholding, protecting personal assets from business liabilities.
Separate Legal Entity: The company is a separate legal entity, meaning it can enter into contracts, own property, and sue or be sued in its own name.
Increased Credibility: A private limited company often has more credibility with clients, suppliers, and financial institutions.
Minimum of Two Directors: The company must have at least two directors, who must be individuals.
Minimum of Two Shareholders: The company must have at least two shareholders, who can be the same as the directors.
Registered Office: A physical address in India where the company’s records are maintained.
Identity Proof: PAN card, passport, or Aadhar card of the directors and shareholders.
Address Proof: Utility bills, rental agreement, or property deed for the registered office.
Incorporation Documents: Memorandum of Association (MOA) and Articles of Association (AOA), which outline the company’s objectives and internal rules.
The registration process typically takes 10-15 working days, depending on the completeness of the documentation and the speed of approval from the Registrar of Companies (ROC).
Yes, a Private Limited Company can be converted into a Public Limited Company by fulfilling the required legal formalities and obtaining approval from the Registrar of Companies.
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