guide for private limited company registration

Guide for

Private Limited

Company

Registration

©

CompaniesInn Solutions Private Limited Company Registration Number (CIN):U74140KA2015PTC079385

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Guide for Private Limited Company Registration © www.companiesinn.com 2

Table of Contents

11 PPrriivvaattee LLiimmiitteedd CCoommppaannyy .................................................................................................................................................................................................................................... 33

22 AAddvvaannttaaggeess ooff PPrriivvaattee LLiimmiitteedd CCoommppaannyy .............................................................................................................................................................................. 44

2.1 Limited Liability ........................................................................................................................................ 4

2.2 Perpetual existence .................................................................................................................................... 4

2.3 Contracting Capacity ................................................................................................................................ 4

2.4 Professional Management ........................................................................................................................ 4

2.5 Protection of Personal Asset .................................................................................................................... 4

2.6 Credibility .................................................................................................................................................. 5

33 RReeqquuiirreemmeennttss ffoorr CCoommppaannyy RReeggiissttrraattiioonn ................................................................................................................................................................................ 55

3.1 Members, Directors and Capital ............................................................................................................. 5

3.2 Digital Signature Certificate (DSC) ......................................................................................................... 5

3.3 Director Identification Number (DIN) ................................................................................................... 6

3.4 Company Name ........................................................................................................................................ 6

3.5 Company Objects ...................................................................................................................................... 7

3.6 Registered Office ....................................................................................................................................... 7

44 DDooccuummeennttss RReeqquuiirreedd ffoorr RReeggiissttrraattiioonn ............................................................................................................................................................................................ 77

4.1 Proposed Directors .................................................................................................................................... 7

4.2 Shareholders (If the Shareholder is not a proposed Director) ..........Error! Bookmark not defined.

4.3 Registered Office Address ....................................................................................................................... 8

4.3.1 At the Time of Incorporation ................................................................................................................................................ 8

4.3.2 After Incorporation ................................................................................................................................................................ 8

55 CCoommppaannyy IInnccoorrppoorraattiioonn && PPoosstt IInnccoorrppoorraattiioonn PPrroocceessss .................................................................................................................................. 88

5.1 Company Incorporation Process ............................................................................................................. 9

5.1.1 Digital Signature Certificate (DSC) ...................................................................................................................................... 9

5.1.2 Director Identification Number (DIN) ................................................................................................................................ 9

5.1.3 Company Name Application ................................................................................................................................................ 9

5.1.4 Execution of Company Incorporation Documents .......................................................................................................... 10

5.1.5 Submission of Incorporation Documents to ROC ............................................................................................................ 10

5.1.6 Certificate of Incorporation from ROC .............................................................................................................................. 10

5.2 Post Incorporation Process ..................................................................................................................... 10

5.2.1 Verification of Registered Office Address ......................................................................................................................... 10

5.3 Timeline for Company Incorporation Process .................................................................................... 11

66 CCoommppaannyy RReeggiissttrraattiioonn FFAAQQ .......................................................................................................................................................................................................................... 1111

Guide for Private Limited Company Registration © www.companiesinn.com 3

1 Private Limited Company

It is the most common incorporated business organization in India. A Private Limited

Company is more flexible than a Public Limited Company as many of the restrictive

provisions of Companies Act are not applicable to Private Limited Companies.

It is generally called as a 'Private Company'. A private limited company is registered

with the below mentioned features and restrictions:

a) Minimum and maximum number of shareholders in a private company is 2 and

200, respectively

b) There is no Minimum Capital Requirements.

c) Minimum number of directors are 2

d) Share transfer can be restricted as per Articles of the company

e) Cannot accept deposits from the public and it can take loans only from

shareholders, directors and relatives of directors

f) Cannot issue shares to the public

g) Less compliance with respect to company laws

h) Name of the company should end with the words 'Private Limited'

There are two classes of Private Limited Companies, ie., Small Company and Regular

Private Limited Company.

2 Categories of Private Limited Companies

As per the Companies Act 2013, Private Limited Companies are classified as Small

Company and Regular Private Limited Companies according to paid up Capital and

Turnover.

2.1 Private Limited Companies - Small Company

A Private Limited Company that fulfils both the following conditions shall be treated as

‘Small Company’:

Criteria Monetary Limit (Both Conditions to be fulfilled)

Paid-up share capital Rs.50 Lakhs or less

Turnover Does not exceed Rs.2 Crores

Small Companies are exempted from certain compliance requirements under

Companies Act. The Registration Fee payable to the Registrar of Companies is less

compared to a regular Private Limited Company.

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2.2 Regular Private Limited Companies

A Private Limited Company which is not a Small Company is referred as Regular

Private Limited Companies.

Criteria Monetary Limit ( Any Conditions to be fulfilled)

Paid-up share capital Rs.50 Lakhs or More

Turnover More than Rs.2 Crores

Exemptions that are exclusively available to Small Companies won’t be available to

Regular Private Limited Company. The Registration Fee payable to the Registrar of

Companies is higher compared to a Small Company.

3 Advantages of Private Limited Company

A Private Limited Company Limited, being an incorporated form of business, has the

following advantages over unincorporated business such as Proprietorship and

Partnership

3.1 Limited Liability

The liability of company owners (shareholders) is limited to the shares taken in

the company. They are not responsible for the company debts.

3.2 Perpetual existence

A company is a separate entity different from its owners. A change in ownership

will not affect the existence of the company.

3.3 Contracting Capacity

A company can sign contracts or conduct business in its name. Like any person, a

company can sue and be sued in a court of law.

3.4 Professional Management

Since company is an entity, it is managed by a board of directors elected by

shareholders. This enables a company to bring a professional team for the

management of the company.

3.5 Protection of Personal Asset

Assets of a company belong to the company itself. Hence, in case of a business

loss, an outsider can claim only the assets of the company and not that of the

Guide for Private Limited Company Registration © www.companiesinn.com 5

individual shareholders. So a business loss of the company will not affect

shareholders’ assets.

3.6 Credibility

A Private Limited Company is one of the most credible business structures in

India. It enjoys the highest rating among all types of business organizations.

4 Requirements for Company Registration

4.1 Members, Directors, Capital and Turnover

The following are the basic requirements / restrictions of Private Limited Company

Criteria Small Company

Regular Private Limited

Company

Minimum Maximum Minimum Maximum

No of

Shareholders 2 200 2 200

No of Directors 1 15 1 15

Share Capital (Authorised /

Paid-up Capital)

No

Requirements INR 50 Lakhs

No

Requirements No Limit

Turnover NA INR 2 Crores NA NA

The Directors need not be shareholder and vice versa.

Authorised Capital or Registered Capital of a company is the upper limit of capital that a company

can issue shares and collect money from shareholders. Company registration fee is payable to ROC

and will be calculated on the basis of Authorised Capital. The Authorised Capital can be enhanced

at any time by passing a resolution at a meeting of shareholders

4.2 Digital Signature Certificate (DSC)

Digital Signature Certificate (DSC) is a legally recognized method of signing documents

electronically. A digital signature is a type of asymmetric cryptography used to

simulate the security properties of a handwritten signature on paper. Digital signature

schemes normally give two algorithms, one for signing that involves the user's secret or

private key, and one for verifying signatures that involves the user's public key. The

output of the signature process is called digital signature.

Documents are submitted to ROC online through www.mca.gov.in. These forms need

to be authenticated by signing with a Digital Signature Certificate issued by the

Certifying Authority in India.

Guide for Private Limited Company Registration © www.companiesinn.com 6

Every Directors of the Company must have a Digital Signature Certificate for making

application to obtaining the Director Identification Number (DIN) allotted by the

Ministry of Corporate Affairs (MCA).

4.3 Director Identification Number (DIN)

Directors Identification Number (DIN) is an identification number issued by the

Ministry of Corporate Affairs, Government of India, to Directors of a Company or

Designated Partners of an LLP.

Every Director of the proposed Company should have a Director Identification Number

(DIN) allotted by the Ministry of Corporate Affairs (MCA).

4.4 Company Name

'Company Name' is the name by which a registered Company is being identified.

Generally, name of the Company depicts its Trade Name or Brand Name along with its

main activities. In the case of a private limited company, the name shall end with words

"Private Limited" Company Name has three parts. 'The Name', 'Activity' and words

'Private Limited' or 'Limited' as the case may be.

For Example 'CompaniesInn Solutions Private Limited'. Here, 'CompaniesInn' stands

as unique name, Solutions refers to activities and 'Private Limited' refers to the

mandatory requirement of last words for a Private Limited Company.

Company Name approval and allotment process in India is administered by the

Ministry of Corporate Affairs (MCA) as per the Company Name Availability Guidelines

issued under Companies Act 2013.

The Company Name

SHOULD

Be unique

Contain a noun and an activity word that reflects its objectives

Be in line with Company Name Guidelines issued by Ministry

of Corporate Affairs.

The Company Name

SHOULD NOT

Be same, similar, identical or resembling to the name of an

existing Company or LLP registered. Phonetically similar

names also to be avoided.

Be similar of a registered trade mark or a trade mark for

which an application has already been filed

Be Offensive

Guide for Private Limited Company Registration © www.companiesinn.com 7

4.5 Company Objects

Company Objects refers to the proposed business activities of the Company.

Company can have any legal business activities that are legal. It is advisable to identify

the main objects of the company in a particular line of business. The name of the

company must be in line with the main objects of the company. If the name of the

company is not describing a particular object, then the company can have multifaceted

objects. The objects are described under a Clause in Memorandum of Association of the

Company.

4.6 Registered Office

The Company should have Registered Office as official correspondence address for all

official communications of the company. This need not necessarily be a commercial

space.

At the Time of Incorporation, a temporary address can be provided as Company’s

Registered Office Address. It could be any address including address of any of the

Directors.

Within 15 days of Incorporation, a Company should have an office as its Registered

Office for receiving and acknowledging all communications and notices addressed to it.

Within 30 days of Incorporation, Company has to furnish the Permanent Registered

Office Address to the Registrar duly verified with proof of address along with No-

Objection Letter from owner of the premises.

5 Documents Required for Registration

The Promoter Directors / Shareholders have to produce the following documents duly

attested / certified as Identity / Address Proof in relation to obtaining Digital Signature,

Director Identification and for filing the Incorporation Documents.

5.1 Proposed Directors

The Members and proposed Directors have to produce the following documents as

Identity / Address Proof in relation to obtaining Digital Signature, Director

Identification and for filing the Incorporation Documents.

Category Document Required Identity Proof

Permanent Account Number (PAN) Card (Mandatory for Indian Nationals)

Additional Identity Proof (Any one of the Document)

a) Passport

Guide for Private Limited Company Registration © www.companiesinn.com 8

b) Driving License

c) Aadhaar Card

d) Voter Identity Card

Address Proof (Any one of the Document / Not older

than 2 months)

a) Telephone Bill

b) Electricity Bill

c) Bank Statement

d) Mobile Bill

Important Notes - Document Requirements a. All the Copies of documents must be Self Attested by the applicant

b. Telephone Bill / Mobile Bill/Electricity Bill / Bank Account Statement must be in the name of

applicant and should not be older than 2 months.

c. In case of documents that are in languages other than English, it should be translated to English

with the help of a professional translator, carrying his details (name, signature, address, and seal)

d. If the proposed director has a valid Director Identification Number (DIN) and if he or she is a

proposed shareholder, the address in MCA records and should match with present address proof.

5.2 Registered Office Address

5.2.1 At the Time of Incorporation

At the Time of Incorporation, a temporary address can be provided as Company’s

Registered Office Address. It could be any address including address of any of the

Directors.

The address furnished at the time of Incorporation shall be captured on the

Certificate of Incorporation.

5.2.2 After Incorporation

Within 15 days of Incorporation, a Company should have an office as its

Registered Office for receiving and acknowledging all communications and

notices addressed to it. Within 30 days of Incorporation, Company has to furnish

the Permanent Registered Office Address to the Registrar duly verified with proof

of address along with No-Objection Letter from owner of the premises.

The following documents are required to file return of verification of registered

office with Registrar of Companies within 30 days of Incorporation.

Ownership of Registered

Office

Documents Required

If the Registered Office is

taken on rent by the

Company

a) Notarized copy of Rent Agreement

b) Copy of Rent paid receipt

c) Copy of Electricity Bill or Tax Paid Receipt

If the Registered office is a) No-Objection letter from the owner

Guide for Private Limited Company Registration © www.companiesinn.com 9

owned by any other

person

b) Copy of Electricity Bill or Tax Paid Receipt

NOTE: In case the address on the Electricity Bill or Tax Paid Receipt is incomplete, an additional address proof

with complete address in the name of the owner of the premises shall also be furnished.

6 Company Incorporation & Post Incorporation Process

6.1 Company Incorporation Process

6.1.1 Digital Signature Certificate (DSC)

Every proposed Director has to obtain a Digital Signature Certificate (DSC) issued by

Certifying Authorities appointed under Information Technology Act 2000. An

application in the prescribed format along with Identity and address documents is

required to be submitted to the office of Certifying Authority for issue of DSC.

6.1.2 Director Identification Number (DIN)

DIN can be obtained by filing an online application with a copy of identity and address

proof using the Digital Signature Certificate (DSC) of applicant and certified by a

Company Secretary / Chartered Accountant / Cost Accountant in Practice.

6.1.3 Company Name Application

Availability of a Company Name for registration can be verified at www.mca.gov.in.

The search results may not guarantee that the searched name will be available for

registration as the company name has to be approved by office of ROC.

The application for Company Name has to be filed for getting the company name

approval from the ROC. It is preferable to submit the application with multiple names

in the order of preference.

Multiple names can be submitted for approval in one application in the order of

preference. If the first applied name is not available, ROC will approve the next name.

If you are very particular about a name, it is preferable to apply with that name only

and in case that name is not available apply the next preferable name.

If there is no Company or LLP registered already with the same or similar names, the

proposed shall be approved by the ROC subject to Company Name Availability

Guidelines issued under Companies Act 2013.

Once approved by the office of ROC, Company Name shall be available for 60 days

from the date of application. Company registration documents have to be executed and

filed within this time line.

Guide for Private Limited Company Registration © www.companiesinn.com 10

6.1.4 Execution of Company Incorporation Documents

Once the company name is approved, the company incorporation documents such as

Memorandum of Association (MOA) and Articles of Association (AOA) and related

documents have to be executed by the promoters in the prescribed format.

MOA and AOA have to be executed by the subscribers by writing their details such as

Name, Father's Name, Residential Address, Occupation and the Number of Shares they

agree to subscribe in their own handwriting and have to sign the same. The signatures

of the subscribers have to be witnessed by a person with his/her Name, Father's Name,

Residential Address and Occupation.

6.1.5 Submission of Incorporation Documents to ROC

Duly executed MOA and AOA has to be submitted to the office of ROC in the

respective state for company registration through online along with Company

Registration Fee. Along with MOA and AOA, details of directors are also required to be

filed with the ROC.

As the documents are filed through online application, originally executed MOA and

AOA are not required to be filed with the ROC. The same have to be preserved by the

promoters as permanent records.

6.1.6 Certificate of Incorporation from ROC

After due verification of MOA, AOA and other details, the ROC will register the

company and will issue the Certificate of Incorporation (COI). ROC will also allocate a

Corporate Identification Number (CIN) to the company so registered.

The Certificate of Incorporation is issued by the ROC in Electronic Format signed with

the digital signature certificate. No physical certificate will be issued by the office of

ROC.

6.2 Post Incorporation Process

6.2.1 Verification of Registered Office Address

From the 15th day of registration, company should have a permanent address as

registered office receiving and acknowledging all communications and notices. Within

30 days of registration, the company has to file a return of verification of registered

office with proof of registered office address with Registrar of Companies.

The verification of registered office has to be filed with the Registrar of Companies

along with:

Guide for Private Limited Company Registration © www.companiesinn.com 11

1. Notarized copy of Rent / Lease Agreement in the name of company and Rent

paid receipt not older than one month;

AND

2. NOC from owner along with proof of ownership like Tax Paid Receipt /

Electricity Bill / Sale Deed;

AND

3. Copy of utility bill not older than two months like telephone, gas, electricity, etc.

in name of the Owner with complete address of the premises.

6.3 Timeline for Company Incorporation Process

Approximate Timeline for Company Incorporation Process are as follows:

*Notes:

a) ‘Timeline’ referred above is only indicative.

b) ‘Order Date’ refers to the date when we receive ALL THE REQUIRED DOCUMENTS at CompaniesInn

office in Bangalore.

c) ‘Day’ refers to a Working Day.

d) The attainment of timeline depends on the speed by which each ROC office processes the applications.

Generally any document filed with Registrar for Company Name and Company Registration takes 3-10

Working days for processing after filing. There are cases; the process will be completed well ahead of time

also. In certain states, it takes more time due to pendency of work at ROC office. In case of any technical or

system issues, the days lost due to the contingencies also need be considered.

7 Company Registration FAQ

To Read Company Registration FAQ visit www.CompaniesInn.com

Process Time Line*

Digital Signature Certificate (DSC) Order Date* + 3 Days*

Director Identification Number (DIN) Order Date + 4 Days

Company Name Application Order Date + 5 Days

Company Name Approval Order Date + 15 Days

Execution of Company Incorporation Documents Order Date + 16 Days

Submission of Incorporation Documents to ROC Order Date + 17 Days

Certificate of Incorporation from ROC Order Date + 25 Days

Verification of Registered Office Incorporation + 15 Days