A private limited company is a company privately held for small businesses. This type of business entity limits owner liability to their shareholdings, the number of shareholders to 200, and restricts shareholders from publicly trading shares.
1. Limited risk to personal assets The shareholders of a private limited company have limited liability. This means that as a shareholder you will be liable to pay for company’s liability only to the extent of the contribution made by you.
2. Legal Entity A PLC has a separate legal entity different from you. This means that the Company is responsible for the management of its assets and liabilities, debtors and creditors. And you are not responsible for it. So, the creditors cannot proceed against you to recover the money.
3. Raising Capital Even though registering a PLC comes with compliance requirements, it is preferred by entrepreneurs as it helps them raise funds through equity, expand and at the same time limits the liability.
4. Trustworthiness Companies in India are registered with the Registrar of companies(ROC) under Companies Act 2013. Anyone can check the details of the company through Ministry of Corporate Affairs (MCA). Also, details of all the directors are provided while the formation of the company. Hence a PLC form of business structure is trusted more.
5. Continue Existence A company has ‘perpetual succession’, that is continue or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or cessation of any member but continues to be in existence irrespective of the changes in membership.
To register a private limited company, a minimum of two persons to act as Directors and shareholders are required. The shareholders of a private limited company can be a corporate entity or a natural person. Director can only be a living person with one Director being a resident and Indian Citizen. A person is designated as a resident if he/she spends over 186 days in India.
There are no restrictions on foreign companies or foreign nationals being Directors or shareholders of a private limited company. As, foreign nationals, foreign corporate entities or NRIs are allowed to be Directors and Shareholders of a Company with Foreign Direct Investment, incorporating a company is the preferred choice of entry to India for foreign promoters.
The documents required for company registration can be grouped under three heads:
Documents for Directors: Two identity proof documents like Aadhaar, PAN, Passport, Drivers License or any other Government-issued identity document would be required. Indian nationals are mandatorily required to provide PAN. Foreign nationals are mandatorily required to submit attested or apostille passport copy.
In addition to the identity proof, the Directors must submit residence proof that is less than three months old. Proof of residence documents includes bank statements, electricity bill, water bill, gas bill and telephone bill.
Documents for Registered Office: Companies registered in India must mandatorily maintain a registered office within India. In the case of leased property, the copy of lease deed for the registered office premises along with a NOC from Landlord and EB bill/property tax receipt/water bill copy of the registered office property. In case of own property, copy of sale deed along with the EB bill/property tax receipt/water bill copy of the registered office property.
Documents for Corporate Entities: In case one of the shareholder or subscriber to the MOA and AOA is a Corporate Entity (Company, LLP, etc.,) then Certificate of Incorporation of the Body Corporate must be attached along with the resolution passed by the Body Corporate to subscribe to the shares of the company under incorporation.
Step 1: Obtain Digital Signature Certificate (DSC)*
Step 2: Obtain DIN*
Step 3: Name Availability
Step 4: Form SPICE INC-32
Step 5: MOA and AOA
Step 6: PAN and TAN Application
Heramb India Associates has exclusive relationships with top Banks in India wherein we can help you open a zero-balance Current Account digitally through our platform. Based on your choice of Bank, we can forward the request digitally to the Bank for opening the company’s current account from the comfort of your home in any city or town in India. Note: Bank account opening would be subject to the bank's process and products offered by the Bank from time to time.
All companies registered in India are required to maintain compliance under various regulations. Failure to maintain compliance can lead to penalty or disqualification of Directors. Heramb India Associates can help you with accounting and maintaining of statutory compliances for the company at a very affordable price point.
Some of the important compliances for companies registered in India include, but not limited to:
Appointment of Statutory Auditor: The Board of Directors must appoint a practising Chartered Accountant within 30 days of incorporation.
Commencement of Business: Within 180 days of incorporation, the capital mentioned in the MOA [Memorandum of Association] must be deposited in a bank and commencement certificate must be obtained from MCA.
Income Tax Filing: Companies registered in India must file income tax return each year in Form ITR-6.
Annual Return: Companies registered in India must file MCA annual return each year in Form AOC-4 and MGT-7.
DIN KYC: DIN KYC procedure must be completed each year for the Directors of the company.