Private Limited Company
A private limited company is a company established by a few individuals privately. The shareholders of a private limited company cannot trade their shares publicly. A private limited company cannot issue a prospectus inviting the public to subscribe to its shares. It is the most recommended type of business entity for many small and medium businesses that are managed by a few individuals or are family-owned.
Definition of a Private Limited Company
Section 2(68) of the Companies Act, 2013 (‘Act’) defines a private company as a company having a minimum paid-up capital as prescribed and whose articles of association :-
- Restricts the right to transfer shares
- Excluding One Person Company (OPC) limits the number of its members to 200
- Restricts any invitation to the public to subscribe to any company securities
However, when two or more members of a private limited company hold one or more shares jointly, they are considered a single member. Further, the following will not be considered as company members:
- Persons who are employees of the company
- Persons who were former employees of the company and also members while in employment and continued to be members after cessation of their employment
Step 1 : Obtain Digital Signature Certificate(DSC)
All the directors must obtain a DSC as it is required to file forms on the MCA portal and sign digital documents like the e-MOA and e-AOA. Even the subscribers and witnesses of the Memorandum of Association (MOA) and Articles of Association (AOA) must obtain DSC since they need to attach their DSC on the e-MOA and e-AOA that must be filed with the registration form.
Step 2: Obtain Director Identification Number (DIN)
The DIN is the unique identification number of a director. It is mandatory for a person proposing to be a director in a company to obtain a DIN. One DIN is sufficient to act as a director in any number of companies.
Step 3: Name Availability
The SPICe+ form (company registration form) allows for ‘name reservation’ in Part-A. A company can enter two proposed names in the SPICe+ form. In case of rejection of the name, the company has to file another SPICe+ form with the prescribed fee.
However, when the ROC approves the name, it will be reserved for 20 days, within which the company must fill and submit Part-B of the SPICe+ form. A company can also apply for the proposed name and application for incorporation together, i.e. Part-A and Part-B of the SPICe+ form can be submitted together.
Step 4 : Form SPICe+ INC-32
The company must complete and submit Part-B of the new SPICe+ form on the MCA portal. Many services are consolidated in the SPICe+ form. It provides the following services and benefits in a single application:
- Reservation of company name
- Application for allotment of DIN (Director Identification Number)
- Application for PAN and TAN
- Application for EPFO registration
- Application for ESIC registration
- Application for opening a company bank account
The DSC of a professional is required to complete the SPICe+ form. The professional should certify that the information provided in the form is correct.
Step 5: e-MOA and e-AOA
e-MOA means electronic Memorandum of Association, and e-AOA is electronic Articles of Association. E-MOA and e-AOA are filed online on the MCA portal as a linked form with the SPICe+ form. Both these forms should contain the DSC of the subscribers to the MOA and AOA.
Step 6 : PAN and TAN Application
A company can apply for PAN and TAN through the SPICe+ form. After submitting the SPICe+ form, the system will auto-generate the company PAN and TAN. The Certificate of Incorporation is issued with the PAN allotted by the Income Tax Department.
When all the details in the SPICe+ form are correct, and the company submits the required documents, the ROC will approve the registration and a CIN (Corporate Identity Number) to the company. It will also send the Certificate of Incorporation to the company at its registered office address.
Documents Required to Register a Private Limited Company
- An affidavit on a stamp paper given by the subscribers stating their willingness to become the company shareholders
- Proof of office address (Rental agreement or sale deed or ownership deed of the office premises)
- NOC from the property owner when the registered office is situated on a rented/leased property
- Copies of utility bills such as water, electricity or gas bill, not older than two months
- Identity and address proof of all the directors