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Step By Step To Register A Private Limited Company In India

A Private Limited Company is the most popular type of corporate entity in India. It is registered as per the compliance and regulatory guidelines of the Ministry of Corporate Affairs. In this article, we will be going over the entire process of registering a Pvt. Ltd. Company in India, step-by-step and explaining the compliance measures one at a time.

How to register a Private Limited company

1: Obtain a unique Digital Signature Certificate:

The first step in company registration is obtaining a unique DSC for yourself. The Board of Directors or Managing Director of the Private Company needs to have its own DSC, as it is needed while filing e-forms and submitting tax returns. The DSC acts as a sort of verification or identification mark, allowing such personnel to authenticate documents being sent to the Government.

The digital signature certificate is usually issued by a Certifying Authority, and is generally valid for either one or two years, following which the applicant must get the DSC renewed. All Subscribers (people who promote the company and serve as shareholders), and Directors (administrative heads of the company) of the Private Limited Company must obtain DSCs. The shareholders will routinely have to e-file their MoAs and AoAs, and these require authentication via DSC, whereas the Directors need the DSC to procure DINs for themselves.

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Documents Needed to Obtain a Digital Signature Certificate:

Applicant’s passport size photo
Self-attested copies of the applicant’s Address proof
Applicant’s self-attested PAN card

2: Procure the Director Identification Number:

The Director Identification Number, popularly known as DIN, is a unique identification number assigned to Directors of companies by the Ministry of Corporate Affairs. The number is valid for a lifetime unless withdrawn, surrendered or removed by the MCA. All the Directors of the company need to procure for themselves unique DINs to register their company. Therefore, it is safe to say that to be a Director of a legally registered company, a DIN is mandatory. Furthermore, it also comes to use when a director is appointed to another company or takes charge as the Designated Partner of an LLP.

Documents required for DIN:

Applicant’s passport size photo
Self-attested copies of the applicant’s Address proof
Applicant’s self-attested PAN card

3: Reserve a Name for the Company:

Before a company can file for incorporation, it needs to have a unique name for itself. To do so, the Directors must submit an application asking to reserve a particular name for the Private Limited Company via e-Form INC – 1. The Directors must ensure that the appropriate form is filled and that the required processing fees have been paid. One single application can contain a maximum of 6 different names, ranked in order of their preference along with why the name is a good fit for the company. Government officials will then check the availability of each name and then approve or reject the application accordingly. Furthermore, most Directors hire professionals to check the availability beforehand, to avoid any confusion later on. It is up to the Registrar of Companies to decide whether to approve or reject the application.

General Guidelines for Choosing a Name for the Private Limited Company:

The name must be easy to remember, as well as spell
It should provide the company with a unique identity
The name must be short, simple, and creative
Name must not contain within it any words which are derogatory or deemed unparliamentary
It must not contain words which are offensive and prohibited
It must not infringe any legal Trademarks registered earlier
The name cannot be similar or identical to any other company’s names

If approved, the RoC reserves the name for 60 days, within which the company must apply for incorporation. If the company fails to do so, the name shall lapse and the entire process will have to be repeated, for the company to file its incorporation.

Obtain the Certificate of Incorporation:

Once an appropriate name is reserved, the Company must apply for incorporation. Furthermore, it must also file an online application for registration of a private limited company.

Via the SPICe forms (Simplified Proforma for Incorporating Companies Electronically). Also, the officials must draft a Memorandum of Association and Articles of Association for the Private Limited Company. The MoA describes the company’s scope of operations, lists out its objectives, and also names its activities. On the other hand, the AoA describes the nature of operations of the company and explains how its administration will carry out its responsibilities. Both of these documents must be listed in the SPICe forms after being authenticated via affixing DSCs. If the RoC is satisfied with the application, he or she will approve the application and the company will receive a Certificate of Incorporation, which contains the PAN of the newly formed company.

Supporting Documents to Register a Private Limited Company

NOC from the owner of the office premises if it is rented or leased
Utility bill from the office space
Copy of the lease agreement/rental agreement/property certificate
Form DIR-2 showing Director’s consent
Affidavit of first shareholders and directors via INC-9
Self-attested proof of identity of the first directors and subscribers

Once a company receives the Certificate of Incorporation, it becomes a legal entity and can start functioning as a Private Limited Company within India. Therefore, from then on, the directors, administrators, and promoters can commence their operations. Furthermore, the company must deposit the share capital as listed in the company’s account as soon as possible. The CoI and other details about the company’s creation will be listed on the MCA website.

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Frequently Asked Questions

1: Do I need to be physically present during the process?

No, new company registration is a fully online process. As all documents are filed electronically, you would not need to be physically present at all. You would need to send us scanned copies of all the required documents & forms.

2: How much time is needed for setting up a private limited company in India?

If you have all the documents in order, it will take no longer than 15 days. However, this is dependent on the workload of the registrar.

3: What are the rules for picking a name for a private limited company?

The Registrar of Companies (RoC) across India expect applicant to follow a few naming guidelines. Some of them are subjective, which means that approval can depend on the opinion of the officer handling your application. However, the more closely you follow the rules listed below, the better your chances of approval. First, however, do ensure that your name is available.

4: What documents are required to complete the process?

All directors must provide identity and address proof, as well as a copy of the PAN Card (for Indian Nationals) and Passport (for foreign nationals). No-objection Certificate must be submitted by the owner of the registered office premises.

5: What is a DSC?

The DSC is an instrument issued by certifying authorities (TCS and n-Code are two of them) by which you can sign electronic documents. As all documents needed are electronic, partners need a DSC.

6: Does a Private Limited Company have a continuous existence?

Yes, so long as the annual compliances are met, the private limited company will continue to exist. If you do not comply with the requirements, it will go dormant, until it is struck off the register altogether.

7: How much does it cost to run a private limited company?

The can be divided into four categories: cost of setting a private limited company, cost of accounting and auditing, cost of compliance and miscellaneous expenses. At the very minimum, you can expect to spend Rs. 40,000 on all of these.

8: Is it necessary to have a company’s books audited?

Yes, a private limited company must hire an auditor, no matter what its revenues. In fact, an auditor must be appointed within 30 days of incorporation. Compliance is important with a private limited company, given that penalties for non-compliance can run into lakhs of rupees and even lead to the blacklisting of directors.

9: What are Articles of Association and Memorandum of Association?

These documents contain the rules, vision and mission of your organisation, and define, among other things, the exact business and the roles and responsibilities of shareholders and directors.

10: Are two directors necessary for a Private Limited Company Registration?

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

11: Who can be there is a Private Limited Company?

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

12: Can a director of a private limited company also be a salaried person?

Yes, a salaried person can become the director in private limited, LLP or OPC private limited company. One needs to check the employment agreement if that allows for such provisions. In a lot of cases, the employers are quite comfortable with the fact that their employee is a director in another company.

13: Can NRIs/Foreign Nationals become Director in a Private Limited Company

Yes, an NRIs and Foreign National can become Directors in a Private Limited Company. They need to get a DIN from the Indian ROC. They can also be a majority shareholder in the company. Provided at least one Director on the Board of Directors should be an Indian Resident.

14: What are the 10 common mistakes to avoid during Company Registration in India?

Don’t wait further to know the 10 common mistakes to avoid during company registration. Click here now.