Company Registration in India

What is a Private Limited Company?

 A private limited company is a company whose shares are not listed on a stock exchange, have limited liability, and have a separate legal identity from the owners. Because they are not listed on a stock exchange, their shares are not traded to the general public.

A private limited company is common for a new company. They range from small to large-scale companies. Their initial capital may come from the owner’s money, the family, or from private equity.

When companies need additional capital to finance expansion, they can sell their shares to the public through the stock exchange. When done, the company turns into a public limited company. In addition, they can also raise funds by issuing debt securities such as bonds and medium-term notes.

Minimum Requirements for Company Registration Process

Before we get into the company registration process, here are the 4 basic requirements for registering a private limited company in India.

1. Minimum 2 directors

As per the Companies Act, 2013, one director must be an Indian resident who has continuously stayed in India at least for 12 months (as recently amended). Another one can be a foreign or Indian resident.

2. Minimum 2 shareholders

Shareholders can be a person or corporate entity. In the case of a corporate entity, a person is authorized to represent the company as a shareholder.

3. Registered office address in India

The Registered Office (RO) of the company must be in India. And, the company can choose a commercial or residential property as their RO Address.

4. Unique business name

Entrepreneurs are very particular about the name of their company. However, they need to make sure that it is unique enough

Documents Required for Company Registration

Private limited companies require the following documents to set up:

• Memorandum of association: It talks about the purpose of setting up a business, the nature of business, the objective of a company and the capital clause. It is a corporate document, which is also called a charter of the company and defines a company’s relationships with shareholders and specifies the company’s goals.

• Article of association: This document talks about the internal operating system of the company. It explains the managing process, duties and responsibilities of each member, dividend policy, shareholder meetings and appointment of directors.

• Certificate of incorporation: It is the certificate or license that the directors receive after submitting all required documents for registration. It is the primary document of authentication of the company and the Registrar of Companies(ROC) issues this document in India.

• Other documents: Other documents include ID proof (PAN card, Aadhaar card), address proof (ration card, voter id), rental agreement, NOC from the property owner and a copy of the sale deed for the owned property for all directors and shareholders of the company.

• Minimum Capital Requirement:

  Authorised capital of a Private Limited Company:

  Authorised capital marks the maximum share capital out of which shares can be issued in a private limited company. This authorised capital is usually cited in the Memorandum of Association of the company and is mostly fixed as ₹100,000. However, it can be increased with the consent of the shareholders and by paying the required fee to the Registrar of Companies (RoC). The authorised capital denotes the net worth of a company.

  Paid-up capital of a Private Limited Company:

  Paid-up capital, on the other hand, is the actual amount of money that is acquired by the company by means of issuing shares to the shareholders. The paid-up capital is always lesser than the authorised capital of the company, as the company cannot issue shares over and beyond the authorised capital. The paid-up capital thus received is often utilised for managing the expenses of the company.

• Steps to register as a Private Limited Company

  A private limited company registration process entails a few simple steps for which applicant need only the most basic documents. Below are five easy steps towards setting up private limited company:

  Step 1: DSN and DPIN Application: Applicant needs to apply for a Digital Signature Certificate (DSC) and Director’s Pin (DPIN), where the DSC is essentially an online signature that can be used for form filling. DPIN is issued by the Ministry of Corporate Affairs (MCA).

  Step 2: Approval of Name: To set up a private limited, applicant will need to provide at least 3 optional names that are clearly descriptive about the company’s business.

  Step 3: MOA and AOA: One of the important steps towards creating one’s company is the drafting of a Memorandum of Association (MOA) and Articles of Associate (AOA).

  Step 4: Incorporation Certificate: Private limited company is officially set up for business in a span of about a month where the incorporation certificate confirms it and also includes the crucial Corporate Identity Number (CIN) number.

  Step 5: Applying for the PAN and bank account: After receiving the incorporation certificate, applicant will get his/her PAN and TAN card within a week, after which he/she can submit PAN, AOA and MOA to the bank to open bank account.

• Mandatory Compliances for a Private Limited Company in India

Auditor appointment: An auditor will be appointed and a form ADT-1 will be filed for a 5-year appointment. Within a month after the company’s establishment, the first auditor will be chosen.

Statutory Audit of Accounts: Every Company shall prepare its Accounts and get the same audited by a Chartered Accountant at the end of the Financial Year compulsorily. The Auditor shall provide an Audit Report and the Audited Financial Statements for the purpose of filing it with the Registrar.

Filing of Annual Return (Form MGT-7): Every Private Limited Company is required to file its Annual Return within 60 days of holding of Annual General Meeting. Annual Return will be for the period 1st April to 31st March.

Filing of Financial Statements (Form AOC-4): Every Private Limited Company is required to file its Balance Sheet along with statement of Profit and Loss Account and Director Report in this form within 30 days of holding of Annual General Meeting.

Holding Annual General Meeting: It is mandatory for every Private Limited Company Company to hold an AGM in every Calendar Year. Companies are required to hold their AGM within a period of six months, from the date of closing of the Financial Year.
Preparation of Directors’ Report: Directors’ Report will be prepared with a mention of all the information required under Section 134.
Statutory Audit Compliances.