A private limited company is formed by declaring a corporate entity separate from its owners. It is a legal procedure and the second step in the formation of a corporation. Promotion is the first step in forming a company, followed by incorporation. It is the process of incorporating your company with the registrar of companies by filing various documents such as a memorandum of association, articles of association, and so on. Its main advantage is that it protects the owner’s interest in the company’s liabilities. For the registration, you are required to fulfill some requirements for Private Limited Registration which are mentioned below.
The ownership of a Private Limited Company is held by individual and non-individual business entities that buy and possess its shares. The Companies Act, 2013 prescribes a minimum and maximum limit of shareholders for private limited companies as 2 and 200 respectively. These shares can be held by resident Indian, Non-Resident Indian, and foreign entities. The shares of a Private Limited Company can only be traded in a private manner with investors, that is to say, that the shares of a private limited company cannot be traded on public platforms like stock exchange markets and are not open for sale to the general public.
The maximum limit of directors, however, is restricted to 15. Each director of a private limited company should have a DIN, i.e., Director Identification Number allotted by the Ministry of Corporate Affairs, without their appointment as directors is not possible. Additionally, before being appointed as a director, a consent from him to act as a director of the company must be taken and the same must be intimated to the ROC in Form DIR 2.
Collectively, all directors of a Private Limited Company form the Board of Directors which is responsible for key managerial decisions of the company.
Directors of a private limited company must be individuals, whether foreign or resident to India. However, the Companies Act, 2013 mandates that out of all directors of the company, at least one should be resident in India. An individual is considered to be a Resident Director if he has resided in India collectively for more than 182 days in the previous calendar year. Note that no body corporates can be appointed as a director in a private limited company.
A private limited company’s name is one of its most important components of its identity. The company’s name is made up of three parts: the name, the activity, and the phrase “private limited company”. All private companies must end with the phrase “private limited company”, according to Companies Act, 2013. Besides, the Companies Act and a few other laws lay down an elaborate and definitive set of guidelines for selecting a valid name for the company.
Although, there is no prescribed minimum limit of capital for a Private Limited Company, the shareholders must infuse some amount of capital for the smooth running of the company. Moreover, the Companies Act provides that a private limited company cannot operate at zero paid up capital beyond 6 months from the date of its incorporation.
2 thoughts on “Requirements for Private Limited Registration in India”
In need of pvt registered pvt funder’s in india.
Hello Rajneesh, Thank you for visiting setindiabiz.com and raising the query. As the answer to this question requires more information from you, hence request you to kindly send an email to firstname.lastname@example.org with details of your query along with your call back number at +91 9899600605. We would be glad to help.