7 Key Decisions to be taken before Private Limited Company Registration

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Reading Time: 3 minutes| (Last Updated On: October 1, 2019)

7 Key Decisions to be taken before Private Limited Company Registration

Before one start 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

7 Key Decisions to be taken before Private Limited Company Registration

Is there any foreign shareholder or director?
If the answer is yes, then the sector-specific cap on foreign investment must be checked. It is noteworthy that in most of the sectors FDI is allowed under automatic route except sectors like media, insurance, agriculture, telecom, education, medical, power, defense, etc. The documentation of foreign directors/ shareholders outside India, you may refer to the documentation for foreign promoter/director. The process of company registration with Indian promoters and that of with foreign promoters is quite different. Hence you are advised to have a consultation with us.

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 process of private limited company registration post in our learning center to have a thorough understanding of the entire process of registration. Further, you may like to read documentation required to register your company.

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 director in a private limited company needs to be 2 and however, number of Director 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.

Company Registration

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Nature of business:

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

Capital of Company:

The requirement of capital depends on 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 which 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 registered office can be situated. The company must maintain his 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 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 law, 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.

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