The Private Limited Company registration stands out as a favoured choice among startups and businesses in India that have big growth dreams. Under the Companies Act of 2013, and overseen by India’s Ministry of Corporate Affairs, this type of company is established. It serves as a legally registered entity that sets the business apart from its owners, providing it with its own legal identity.
For private limited company incorporation, you need at least two directors and subscribers or shareholders. Interestingly, an individual can wear both hats as a director and shareholder in this company. Furthermore, the liability of these shareholders or members in a Private Limited Company is restricted to the extent of their unpaid shares.
Advantages of Private Limited Company Incorporation
In India, private limited company incorporation offers several advantages for entrepreneurs and business owners. These advantages contribute to the popularity of this business structure and provide various benefits, including:
1. Limited Risk to Personal Assets:
Shareholders in a private limited company enjoy limited liability. Shareholders are liable to pay for the company’s obligations only up to the extent of their contributions to the company’s share capital. Personal assets are not at risk to cover the company’s liabilities.
2. Legal Entity:
A private limited company is a distinct legal entity separate from its shareholders. This separation of legal identities means that the company itself is responsible for managing its assets, liabilities, debts, and creditors. Shareholders are not personally held accountable for the company’s losses or debts. Creditors cannot pursue shareholders’ personal assets to recover money owed by the company.
3. Raising Capital:
Despite the compliance requirements associated with private limited companies, entrepreneurs prefer this business structure because it facilitates raising capital through equity investments.
Private limited companies can issue shares to investors, allowing them to raise funds for expansion and operational needs.
Opting for private limited company incorporation in India provides entrepreneurs and business owners with a robust and flexible legal structure that combines limited liability protection, fundraising opportunities, trustworthiness, and the assurance of continued existence. These advantages make it a popular choice for those looking to establish and grow their businesses in the Indian market.
Documents Required for Filing SPICe+ (INC-32) for Private Limited Company Incorporation
To successfully file SPICe+ (INC-32) for the private limited company incorporation in India, you will need to provide a specific set of documents. The required documents for private limited company incorporation are:
A. Where Director and Subscriber are Indian Nationals:
1. Affidavit on Stamp Paper:
All subscribers of the company must provide an affidavit on a stamp paper stating their willingness to become shareholders of the company.
2. Proof of Office Address:
Rental Agreement or Ownership Deed: Provide a copy of the rental agreement or ownership deed for the registered office of the company.
3. Utility Bills:
Copies of utility bills (e.g., electricity bill, water bill, gas bill) not older than two months for the registered office address.
4. Name Approval Documents:
Copy of approval if the proposed name of the company contains any word or expression that requires approval from the central government.
5. Trademark Documents (if applicable):
If the proposed name is based on a registered trademark or is the subject matter of an application pending for registration under the Trade Marks Act, attach the trademark registration certificate or trademark application copy.
6. NOC for Rented/Leased Property:
NOC (No Objection Certificate) from the owner of the property if the registered office is located on a rented or leased property.
7. Proof of Identity and Address (if no DIN):
In case any of the subscribers or directors do not have a Director Identification Number (DIN), attach proof of their identity and address.
B. Where Director/Subscriber is a Foreign National:
1. Passport:
A copy of the passport of the foreign national director or subscriber.
2. Address Proof:
Address proof for the foreign national director or subscriber, which can be one of the following:
- Driving licence
- Residence card
- Bank statement
- Id proof with address that is govt issued
Additionally, the specific details and formats of these documents may change over time, so it’s advisable to consult with legal professionals or experts familiar with the current regulations and processes for private limited company incorporation in India.
Guide to Private Limited Company Incorporation in India
The process of private limited company incorporation in India is as follows :
Step 1: Obtain Digital Signature Certificate
- Digital signatures are mandatory for filing the necessary forms for company formation.
- Obtain a Digital Signature Certificate from government-recognised certifying authorities. It is recommended to obtain a Class 3 category DSC.
- The cost of obtaining a DSC may vary depending on the certifying authority.
Step 2: Apply for Director Identification Number
- Directors of the company must obtain a Director Identification Number from the Ministry of Corporate Affairs.
- There are three options to obtain DIN:
- Option 1: File Form DIR-3 for individuals who want to become directors in an existing company. This form requires basic details of the proposed director, identity proof (e.g., PAN, Aadhaar Card), and address proof.
- Option 2: If incorporating a company with more than three directors, you can apply for DINs within the SPICe+ form (INC 32).
- Option 3: A StartupFino expert can procure DIN for you when registering a Private Limited Company through StartupFino.
Step 3: Name Approval
- Choose a unique company name and check its availability. This can be done through Part-A of the SPICe+ Form on the MCA portal.
- Once the name is approved, it will be reserved for 20 days. During this time, proceed with incorporation by filing Part-B of the SPICe+ Form.
Step 4: Form SPICe+ (INC-32)
- Form SPICe+ is used for the registration of new companies as introduced by the MCA.
- After name approval, you can click on the link of the approved name on your dashboard and continue with the incorporation process.
- Part-B of SPICe+ enables web-based incorporation and serves various purposes, including DIN allotment, name reservation, incorporation of the company, PAN and TAN application, EPFO and ESIC registration, professional tax registration (for Maharashtra), and opening a bank account for the company.
- The details filled in Part-A and Part-B of SPICe+ will automatically populate linked forms, such as AGILE-PRO, eAoA, eMoA, URC1, and INC-9.
- Step 5: e-MoA (INC-33) and e-AoA (INC-34)
- e-MoA (electronic Memorandum of Association) and e-AoA (electronic Articles of Association) simplify the registration process.
- These forms represent the charter and internal rules and regulations of the company, respectively.
- Both forms must be digitally signed by the subscribers to the Memorandum and Articles of Association.
- Step 6: PAN and TAN Application
- You can apply for the company’s Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) through SPICe+.
- The system will auto-generate PAN and TAN application forms after submitting SPICe+.
- The Certificate of Incorporation, along with PAN and TAN details, will be sent by the MCA via email. The Income Tax Department will issue the PAN card.
Please note that the private limited company incorporation can be time-sensitive, and compliance with all legal requirements is essential. Consulting with legal professionals or experts at StartupFino in company registration can help ensure a smooth and successful registration process for your private limited company.
Time Required for Private Limited Company Incorporation in India
The time required for private limited company incorporation in India has significantly improved with the introduction of simplified procedures and digitalisation. Mentioned below is a general timeframe for the registration process:
1. Approval of DIN (Director Identification Number): Obtaining a DIN typically takes a few days, as the process involves verification of identity and address. In some cases, DINs can be obtained within 1-2 days.
2. Name Approval: The name approval process can vary depending on the availability of unique names and compliance with naming guidelines. This step may take around 2-3 working days. However, if the proposed name requires resubmission due to similarity with existing names or trademark issues, it can extend the timeline.
3. Incorporation: After the name is approved, you can proceed with the incorporation of the company. Filing Form SPICe+ (INC-32) and associated documents generally takes around 1-2 working days.
4. Additional Approvals: If your company requires additional approvals, such as GSTN (Goods and Service Tax registration number) or other specific licences, the time for obtaining these approvals may vary.
5. Overall Time Frame: In summary, the entire process, including the approval of DIN, name, and incorporation, can be completed within approximately 10 working days. However, it’s important to note that the actual timeline may vary based on many factors.
Final Thoughts
Registering a private limited company in India typically takes around 10 working days, due to the streamlined e-governance processes. This business structure offers advantages such as limited liability, fundraising opportunities, and credibility, making it a preferred choice for entrepreneurs. Ensuring proper documentation and compliance is essential throughout the registration process.
While it may require some effort, the benefits of a private limited company incorporation in India, including separate legal entity status and perpetual existence, outweigh the time invested. Prospective business owners should carefully consider these advantages and limitations before proceeding with this legal structure.
