Private Limited Company

Private limited company

By virtue of section 2(68) of the Companies Act, 2013, a private company means a registered company, which by its articles:

  • Restricts the right to transfer shares
  • Limits the numbers of its members to 200
  • Prohibits any invitation to the public to subscribe for any shares in, are debentures of the company(No Public Trading of Shares)
  • Prohibits any invitation or acceptance of deposits from persons other than its member
  • The word ‘Private Limited’ must be added at the end of its name

Benefits of Private Limited Company

Private Limited Company Benefits

  • It is flexible and has limited liability
  • Greater capital contribution and greater stability
  • Possibility to grow big and expand

Advantages of Private Limited Company

There are multiple reasons to choose private limited company :

  • Preferred by banks, VCs & investors.
  • Easy to allocate and redistribute shares to investors or other directors.
  • Separate legal entity which limits your liability.
  • Offers the flexibility of a partnership firm and the advantages of a Public Ltd Company.
  • Easy to register, manage & run.
  • Easy to dissolve or wind-up.

How can a Private Limited Company be incorporated?

Steps to incorporate Private Limited Company:

1. Application of DSC & DPIN :
First of all, the partners have to apply for Digital signature and DPIN. Digital signature is an online signature used for filing and DPIN refer to Directors PIN number issued by MCA. If the directors already have DSC and DPIN, then this step can be skipped.

2. Name approval :
You need to provide 3 different options for your company name to MCA of which one will be selected. Names provided should ideally be unique and suggestive of company business.

3. MOA & AOA submission :
Once name is approved, one needs to draft Memorandum of association and Articles of Associate. Both MOA and AOA are filed with the MCA with the subscription statement and

4. Get incorporation certificate :
It typically takes 15- 25 days to form a Private limited company and get the incorporation certificate. Incorporation certification is a proof that company has been created. It also includes your CIN number.

5. Apply for PAN, TAN and Bank account :
Then you need to apply for PAN and TAN. PAN and TAN are received in 7 working days. Post this, you can submit the Incorporation certificate, MOA, AOA and PAN with a bank to open your bank account.

Minimum requirement for incorporation of Private Limited Company

Minimum Requirements For Company Registration

  • Minimum 2 Shareholders
  • Minimum 2 Directors are required
  • DIN for all the Directors
  • Atleast one designated partner should be an Indian Resident

Is it necessary to have 2 directors for Private Limited Company incorporation?

Yes, you need a minimum of two directors for a private limited company. The maximum members can be 200. If you are the sole owner, you can register as a One Person Company.

Who can be a member in Private Limited Company?

Any individual/organization can become the member of the private limited company including foreigners/NRI. However, the individual must 18+ above in terms of age and should have a valid PAN card.

Can NRIs/ Foreign Nationals become a director in Private Limited company?

Yes, an NRI or Foreign National can become a Director in a Private Limited Company. They can get a DPIN from Indian ROC. Also, they can be a majority shareholder in the company. But, at least one Director on the Board of Directors must be an Indian Resident.

Why a Private Limited Company is called a separate Legal Entity?

A company is a legal entity and a different person established under the Act. A company is treated as a different person which can own property and have creditors or debts. The members (Shareholders/Directors) of a company will have no liability to creditors of a company in case the company is unable to pay the debts.

Can a Salaried working person also become a director of a Private Limited Company?

Yes, you as a salaried person can become the director in private limited, LLP or OPC private limited company. You need to check your employment agreement if that allows for such provisions. In most, cases employers are comfortable with the fact that their employee is a director in another company.

Are there any other payments to be made for incorporation certificate in addition to fee paid at the time of registration?

There is absolutely no other payment. Our charges are inclusive of everything. We will send you an invoice with no hidden charges. Our team provides you support till you get your bank account.