What is a Private Limited Company?
Types of Private Limited Company
Private Companies under the Companies Act can be classified into a Private Limited Company, a One Person Company, and a Small Company. The categorization is based on the number of shareholders and investment limits in the companies. We have clearly explained the difference between all these structures below.
- Private Limited Company: Private Limited Companies are established and incorporated under the Companies Act of 2013. The minimum number of shareholders required to set up a Private Limited Company is 2. However, their maximum limit is capped at 200. Both individuals and non-individual entities can become shareholders in a Private Limited Company. They can either be Indian or Foreign entities. There is no restriction on the nationality of these shareholders.
- One Person Company: A One Person Company is a special type of Private Limited Company. The Companies Act restricts the number of its shareholders to 1. This sole owner is entitled to 100% shareholding and profits of the One Person Company. Moreover, unlike a Private Limited Company, the shareholder of a One Person Company must be an Individual Indian Citizen who is above the age of 18 years. Recently, the Government has removed the restriction previously placed on Non-Resident Indians to establish an OPC. So, both Indian Residents and Non-Residents can incorporate an OPC in India.
- Small Company: A Small Company is a Private Company established and operated with limited capital under Section 2 (85) of the Companies Act. As per the recent amendments of the Ministry of Corporate Affairs, a small company cannot have a capital investment exceeding Rs.4 crores. Even if an upper limit is prescribed by the Government, the same would not exceed Rs.10 crores. The definition also places restrictions on the turnover of a small company. The turnover of a small company cannot exceed Rs.40 crores. Further, if a greater limit is prescribed by the Government, the same cannot exceed Rs.100 crores.
Company Registration Process in India - A Stepwise Guide
Step 1: Acquire DIN & DSC of Promoters
Step 2: Select & Reserve Company Name
Step 3: Draft MOA & AOA
Step 4: File SPICE Plus Application
Step 5: Get Company Registration Certificate
Documents Required in Company Registration Process
- Documents of Promoters: Promoters are the first shareholders and directors of a Company who have an interest or contribution in its foundation. All these promoters are required to submit a few personal documents for company registration. These include their PAN cards, Adhar Cards, latest utility bills as Address Proofs, and passport size coloured photographs.
- Documents of the Registered Office: Registered Office of the Company is the address with which the company gets registered or incorporated. The Proof of Address of this location has to be submitted for company registration. You can provide utility bills in the name of the company for this purpose. Make sure that such bills are recent and not older than 2 months from the date of application. Aside from this, the office property owner must issue a No Objection Certificate in the Company’s name.
- Legal Drafts & Forms: Legal Documents like the Company’s Memorandum of Association (MOA) and Articles of Association (AOA) also have to be drafted and submitted for Company Registration. While MOA contains the basic and foundational legal details of the company, AOA documents all of its internal rules and regulations. These documents must be stamped, notarised and signed by all the shareholders. Other than these, DIR-2, INC-9, and INC-14 forms have to be submitted. DIR-2 confirms the director’s consent to act as the same in the company. INC-9 and INC-14 contain declarations by first directors and a practicing professional respectively.
Time Taken for Company Registration Process in India
Overall Cost of Pvt Ltd Company Registration Process in India
The overall cost of Pvt Ltd Company Registration Process in India depends on several factors. These include the Registration Fees charged by the ROC, the Professional Charges of your Company Registration consultant, Stamp Duty applicable in the state, and the cost of acquiring additional documents like DSC and DIN. All these factors must be taken into account while paying the Company Registration Fees in India.
- ROC Fees for Name Approval: Getting the Company’s name approved by the ROC is an important prerequisite for company registration. The ROC fees for the same is fixed at Rs.1,000.
- ROC Fees for Registration: The ROC or Government fees for Company Registration depends on the company’s authorised capital. To extend support to small companies, the Government has eliminated any application fees requirement up to the authorised capital of Rs.15 lakhs. Beyond this limit, Company’s have to pay a fixed fee of Rs. 500 for Registration to the ROC.
- Stamp Duty Payable: Stamp Duty will be payable on getting legal documents like Company’s MOA and AOA stamped by a Public Notary. It differs for different states.
- Cost of Acquiring Class 3 DSC: Class 3 DSC of the authorised director is required for Company Registration. The cost of acquiring DSC depends on the Certified Agency you’re filing the application to and the validity of DSC you’re applying for. Different Certified Agencies charge different fees for issuing DSCs. Additionally, DSCs with higher validity periods cost more.
- Cost of Acquiring DIN for Directors: DIN Application for Directors is filed in Form DIR-3 which has a fixed application fee of Rs.500.
Compliances Post Company Registration Process
- Obtain Company’s PAN & TAN: You receive the Company’s PAN and TAN immediately after the company registration process is complete. There is no need to apply for the same separately.
- Open the Company’s Bank Account: Within 30 days from the date of incorporation
- GST Registration: Get GST Registration as soon as the company becomes liable to pay GST
- Shops & Establishment Act Registration: Within 30 days from the date of incorporation
- Professional Tax Registration: Within 30 days from the date of incorporation, if applicable in the state.
- 1st Board Meeting: Within 30 days from the date of incorporation
- 1st Annual General Meeting: Within 90 days from the date of incorporation.
- Appointing of First Auditor: Within 30 days from the date of incorporation
- Allotment of Stamped Share Certificates to all shareholders: Within 60 days from the date of incorporation
- Declaration for Business Commencement (INC-20A Filing): Within 180 days from the date of incorporation