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7 Key Decisions to be taken before Private Limited Company Registration

Before one starts the process of private limited company registration following are the key points which promoters must consider and analyze its pros and cons as these decisions shall have a long-term impact on the business.
7 Key Decisions To Be Taken Before Private Limited Company Registration

Table of Contents

Documentation Required to Register Your Company

However, if there is no foreign shareholder/director then the process is simpler and could be completed with relatively less documentation. You may read the process of private limited company registration posts in our learning center to have a thorough understanding of the entire process of registration. Further, you may like to read the documentation required to register your company.

A number of shareholders and their shareholding

Minimum 2 and maximum 200 shareholders can form a Private Limited Company and they need to decide shareholding which can be in any ratio however at least 1 share should be held by every shareholder.

Number of Directors and their residential status

The minimum number of directors in a private limited company needs to be 2 and however, the number of directors can be increased beyond 15 by passing a special resolution in the shareholders meeting. Out of which at least one should remain a resident of India throughout the financial year in terms of section 6 of the Income Tax Act.

Nature of business

A company can be formed for any lawful activity, However, we need to clearly draft the main activity for which the company is being formed. The promoters should restrict the activity to one class of business only. Please refer to the business classification.

Capital of Company

The requirement of capital depends on the funding requirement of a particular business; the registration fee also depends on the capital of the company. This can be increased at any time by following laid down procedures. A private Limited company having capital less than 50 lac is considered a small company that is exempt from some of the compliance of companies act | Refer Exemptions available to small companies.

Registered Office

The Company must have a physical address where the registered office can be situated. The company must maintain its books of account and other statutory records at the registered address of the company. The registered address of the company can be maintained at the residential address as well, However, before using premises for commercial activity the regulations should be checked from the local municipality about land use permissions.

Name of the Company

An applicant is advised to provide six unique names in order of preference with their significance for consideration of the registrar of companies (ROC). The name approval is done by following a set of laws, rules, and guidelines issued by the ministry of corporate affairs. The approval of name availability is a discretionary power vested with the registrar of companies. The name should not be similar to an already registered company or trademark.

In the circumstances no one including us can guarantee that a particular name shall be made available to you, hence insisting on a particular name is not in the spirit of the law and should be avoided.

About Setindiabiz

Setindiabiz is an organized team of experienced CA, CS, & Lawyers, duly supported by a pool of trained accountants & paralegal staff that provides quality & affordable compliance services to startups & small businesses in India. The views, statements and recommendations expressed in this article or post are only for the sole objective of providing information, and it does not constitute professional advice or recommendation of the company. Neither the author nor the company or its affiliates accepts any liability for any loss or damage arising from any information in this article or any actions taken in reliance thereon.
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