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Brief of Private Limited Company Registration

Starting an enterprise involves a lot of research and analysis, but as much effort it takes, the outcomes can be very fruitful. The very first step of starting any business is choosing the kind of business. There are various kinds of companies to start a business. Private limited companies in India and abroad are the most preferred and recommended company for startups. It is one of the most convenient forms of legal structure for business with multiple benefits that might not be available in other kinds of companies. Private limited company registration and regulation is done by The Companies Act, 2013.

Further, there shall be a minimum of 2 Directors and a maximum of 200 shareholders at the time of incorporation. All the members and directors of the private limited company shall be competent as per law, i.e., such a person shall be above 18 years of age and have a sound mind. The name of every private limited company must end with " Pvt. Ltd".

Moreover, the share division of a shareholder depends on their capital investments in that company.

All private limited companies are required to get themselves registered under the Companies Act, 2013. As per the latest change, such registration shall take place online only, and a hard copy must be submitted before the registering authority. The registration of a private limited company can be done via the Ministry of Corporate Affairs’ official website, i.e., https://www.mca.gov.in.

Eligibility criteria for Private limited company registration in India

  • The minimum number of directors is 2
  • The maximum number of directors is 15.
  • The maximum number of shareholders is 200.
  • One resident Director resides in India for at least 182 days in a financial year.
  • All the directors and members of the company shall be above 18 years of age and have a sound mind.

Advantages of Private limited company registration in India

Critical advantages of Private limited company registration in India are as follows:

  • A private limited company has a separate legal status ;
  • There is an easy entry and exit ;
  • The company has perpetual succession;
  • Foreign direct investment is hugely attracted to private companies;
  • A good startup business option;
  • The shareholders have limited liability;
  • Private companies have significantly less public interference, thus flexibility and autonomy ;
  • Has the right to sue and be sued;
  • Has no minimum paid-up capital requirement;
  • A private limited company can easily avail easy loans by the bank or any financial assistance;
  • Purchase and sale of a property can be made in the name of the company;
  • Creates a brand name in the market and goodwill;
  • Easy funding and borrowing from investors;
  • The shares are easily transferred to any member of the company.
Private Limited Company Registration

Liabilities of Registered private limited companies in India

  • A private limited company is required to hold an annual general meeting every financial year.
  • A private limited company shall appoint a statutory auditor.
  • All the financial statements and board meeting reports are to be submitted by the company.
  • Must file an income tax return every financial year

Features of Private limited companies

Key features of a private limited company are:

Features of Private limited companies

Unique Name

The name of a private limited company must be a unique and meaningful one. The name can be protected under intellectual property rights.

No renewal process

Once a company is incorporated, there is no requirement for renewal. The company remains registered till its dissolution.

Suffix " PVT. LTD"

All the registered private company's names must end with " Pvt. ltd".

No minimum capital

As per the latest amendment in the Companies Act,2013, there is no minimum paid-up capital requirement.

Registered Office

Every private limited company must have a registered office, and proof of such office is to be provided to the registering authority at the time of registration.

Documents Required for Private Limited Registration

A. Documents required for registration of a Private Limited Company in India are as follows:
  1. Passport size photograph of the directors/ members
  2. Copy of Aadhar card/driving license/passport
  3. Residential proof of all the directors of the company
  4. If any director is an NRI(Non-resident Indian), a copy of the passport is necessary.
  5. Copy of PAN card
  6. Copy of educational qualifications of the directors
  7. Contact number, email id, and the current designation of the directors
  8. The DIN( Director's identification number ) of all the directors
  9. Consent from the directors in the form of DIR-2
  10. The name of the company is to be submitted to the registrar's office.
B. Documents For Registered Address
  1. Proof of registered office the applicant is required to submit the notarized copy of the lease/ rent agreement along with the evidence of paid rent amount for at least a month before applying.
  2. Copy of the MOA or AOA.

Procedure for Private limited company registration in India

Following are the steps to be followed to Private limited company registration in India:

Procedure for  Private limited company registration in India
Prepare/ Obtain a DSC( digital signature certificate)

The DSC application form is filled with the required details and, most importantly, a digital signature of the relevant authority.

Apply for DIN ( Directors Identification Number)

The directors are required to fill Form DIR -3 and submit it to the registrar's office along with the requisite fees and any document as required. The Director will get a significant DIN number.

Name Approval of the Company

It is done via filling out the RUN ( Reserve Unique Name) form along with requisite fees is done before the ROC( Registrar of Companies)

Apply for a certificate of incorporation of the company.

Apply for the certificate of incorporation.

Filing of SPICE( Inc 32)

As per the latest amendment in the Act, along with all the required information, the digital signature is required to be done by the authority. Through this form SPICE 32, the following are the things a company can apply for at once:

  1. Name reservation
  2. Incorporation
  3. Directors Identification Number
  4. TAN
  5. PAN
  6. EPFO
  7. ESIC
  8. GSTIN
File for e-MOA and e-AOA

It can be done via form no. Inc 33 and Inc 34, along with the digital signature of the subscribers of the company to be incorporated

Fill the form 49a for PAN and 49b for TAN.

Filing both the forms properly is mandatory.

Obtain a CIN

Upon successfully filling forms, the MCA( Ministry of Corporate Affairs) will approve the registration and allocate a CIN ( Corporate Identity Number). The applicant can track the status using this number.

Comparison of Private limited companies with other kinds of company

Public company
  1. The minimum number of members is seven at the time of incorporation.
  2. The shares in a public company are transferable to the general public.
  3. The minimum paid-up capital of a public company is Rs 5 lakhs.
  4. There should be at least three directors in a public company.
  5. Proprietorship Firm
    1. It is an unincorporated entity.
    2. There is a sole owner of such a firm.
    3. The rights and liabilities of the owner and the firm are the same, i.e.; the owner is liable for the actions done in the firm's name.
    4. The firm must file for a single income tax return since the owner and company are the same.
    Limited Liability Partnership Firm
    1. Entity where partners have limited liability.
    2. There are mutual rights and liabilities of the partners as per the agreement between the partners or as prescribed by the law.
    3. Partners are shielded from joint liability.
    4. Such a firm, upon registration, acquires separate legal status and perpetual succession.
    One person Company
    1. The minimum paid-up capital requirement is Rs 1 lakh.
    2. There is only one shareholder as a member of such a company.
    3. Such a shareholder must be a natural person and a resident and citizen of India.
    4. They are not under the obligation of conducting annual general meetings.
    Partnership Firms
    1. A partnership firm is regulated by The Indian Partnership Firm Act, 1932.
    2. There should be at least two partners to start this kind of business.
    3. All the partners are agents for each other.
    4. There must be an agreement between the partners to share their profits and become partners in the firm.

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Frequently Asked Questions

Section 2 ( 68) of the Act defines private companies. It provides as follows:

" private company" means a [company having a minimum paid-up share capital [Omitted] as may be prescribed, and which by its articles],—

  1. restricts the right to transfer its shares;
  2. except in case of One Person Company, limits the number of its members to two hundred:

    Provided that where two or more persons hold one or more shares in a company jointly, they shall, for this clause, be treated as a single member:
    Provided further that—

    1. persons who are in the employment of the company; and
    2. 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
  3. prohibits any invitation to the public to subscribe for any securities of the company;"

The registration procedure was earlier in both online and offline mode. But now, the process is entirely online in nature.

No, a private limited company has perpetual succession and is independent of the existence of its members.
The number of members of a private limited company shall not exceed more than 200.
The minimum requirement of members is two in a private limited company.
Yes, an NRI can become a director of a private limited company in India.
Yes, a private limited company must appoint a statutory auditor.
There is no minimum paid-up capital requirement for private limited companies as per the latest amendment in the Companies Act,2013.
No, it cannot be converted. The Companies Act,2013 does not have any provision for such conversion.
Any name can be picked for a private limited company. However, such a name has to be approved by the registering authority and should be unique.
MOA stands for Memorandum of Association, and AOA stands for Articles of Association. They are the stepping stones of a company. These public documents entail the goal and purpose of such a company. Any act done beyond the scope of these documents will be ultra vires.
Yes, it is a must.
Yes, all the directors in a company shall have their Director's identification number.
One can check the status in the MCA portal.
The company is only required to be incorporated at the beginning. It remains incorporated till the company is dissolved.

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