PRIVATE LIMITED COMPANY

A private limited company, is a type of privately held small business entity. This type of business entity limits owner liability to their shares, limits the number of shareholders to 200, and restricts shareholders from publicly trading shares. Any natural person or entity having separate legal identity can become member in the private limited company, but there shall be atleast 2 members to form a private limited company.



Inclusion

2 DSC of Directors

2 DIN of Directors

Incorporation with Registrar of Companies

Customized Memorandum of Association and Article of association.

VAT/SERVICE TAX/EXCISE/IEC or any other registration applicable and selected by the user.

Courier charges of sending the original certificate and 1 original MOA & AOA at your address.

Any Government Fee or charges payable.

Application of PAN and or TAN

EXCLUSIONS

Inspection fee payable at the time of visit to the officer if any.

Fresh application fee if registration applicable is rejected due any discrepancies in documents of the applicant.

Post Incorporation filings of documents

Any registration with government department not selected by the user.

REQUIRED DOCUMENTS

Identity and Address Proof of the Applicant directors and subscribers

Copy of PAN card of subscribers (for DIN and registration with govt. department)

Passport size Photographs of subscirbers, if applicable

Address Proof and NOC for proposed address of Company.

Consent letter for admission as directors

Any other documents according to selected registration.

TIMELINE

2 days process for gathering the necessary details and documents

2 days process of DSC application of directors

1 day process for application of DIN

2 days process for preparing documents, MOA & AOA for submission of forms (if customized time depends upon time take by client)

7-9 days process for approval from the date of submission and providing certificate of incorporation.

7 days process of PAN application

1 day process for getting documents ready for submission to govt. after receipt of PAN

2 day process for submitting application to government after signing and verification of all documents

1 day process for providing certificate after approval from relevant department and updating its status.




FREQUENTY ASKED QUESTIONS


1. What is Private Limited company?

A private limited company is form of organization in which more than one person whether natural or artificial come together to earn profits, this type of business limits owners (shareholders) liability to the extent of their shareholding in the company. The number of shareholders are limited to 200 and restrict the right to transfer the shares publicly.

2. Who can become member in private limited company?

Any natural person or entity having separate legal identity can become member in the private limited company, but there shall be atleast 2 members to form a private limited company.

3. What are the minimum and maximum number of directors in a private limited company?

A private limited company should have atleast 2 directors and maximum 15 directors.

4. Whether registration of private limited company is mandatory?

Yes for formation of private limited company registration with registrar to companies is mandatory. To know the process click here

5. What are the agreement or deed governing the bye laws of the company?

In case of companies the area of operation i.e. business activities, its relation with outsiders, restriction on transfer of shares, directorship and internal mode of operation of company are governed and is written in documents which is called Memorandum of association and Article of association. The Memorandum and Article of association are the basic documents of the company which are mandatory and just like constitution of the company. To know more about Memorandum and association and article of association click here.

6. What is minimum amount of paid up capital required to start private limited company?

There is no upper limit, however minimum paid up capital of Rs100000/- (One Lac rupees) is required to be introduced in order to incorporation/form private limited company. In the private limited company paid capital of the company is restricted to the extent of authorized capital of the company and in order to enhance the paid up capital, one has to increase the authorized capital of the company.

7. How can i invest money/paid up capital in private limited company?

In private limited company whether it is subscribers initial capital or further issue of shares (except right issue or sweat equity shares) investment is required to be made through proper banking channel separate bank account of the company. Refer section 42 of the companies act, 2013.

8. Can i open a bank account of Private Limited company?

Yes, with the certificate of incorporation and Memorandum of association bank account after complying with other RBI Norms can be opened, there is no need to apply any other registration with government department like VAT or Service Tax etc.. To know more about how to open bank account click here.

9. Whether registration with government departments are mandatory ?

No, only applicable government registrations are mandatory like if sales exceed specified limit of turnover then registration with Value Added Tax (VAT), Service Tax Registration, Excise or shop and establishment as applicable are mandatory. To know about registration with government departments click here.

10. What are the maximum number of shareholders in private limited company?

In private limited company maximum number of shareholders cannot exceed 200 (two hundred). Further there is restriction on right to transfer share of the company publicly.

11. What are the advantages of Start business as Private Limited Company?

Advantage
LIMITED LIABILITY

It means that if the company experience financial distress because of normal business activity, the personal assets of shareholders will not be at risk of being seized by creditors.

Advantage
CONTINUITY OF EXISTENCE:

Business is not affected by the status of the owner.

Advantage
MINIMUM NUMBER OF SHAREHOLDERS

MINIMUM NUMBER OF SHAREHOLDERS need to start the business are only 2.

Advantage
MORE CAPITAL

More capital can be raised as the maximum number of shareholders allowed is 200.

Advantage
Scope of Expansion

Scope of expansion is higher because easy to raise capital from financial institutions and the advantage of limited liability.

Advantage
Brand Value

Company’s brand value will get increased because people come to know about the company very well.

Advantage
Valuation

Since the share price reflects the company’s financial healthiness it would become easy to arrive at a price in case of mergers and acquisitions

Advantage
Equity funding or Bank Finance

A private limited company are favourites of angle investors or venture capitalists, they give preferences to this type of business structure and can invest money through equity investment. All banks and financial institutions give more preference to advance loans and funding to companies rather than proprietorship and partnership firms.

12. What are the disadvantages of Start business as Private Limited company?

Advantage
No liability in case of frauds by directors

The day to day operations and business decisions in the companies are taken by the board of directors, and if any fraud is made by them, then they will personally liable for the fraud and they will also be liable for prosecution. However there is no shareholders liability in case of fraud by the management of the company if shareholders are not involved.

Advantage
TRANSFER OF SHARES

The law restricts shareholders of a privately held company from transferring shares freely to non-shareholders without consent of other shareholders. This leads to inefficiencies since the investment decisions should be timely so that a shareholder can sell his shareholding in the company without informing the other shareholders.

Advantage
ISSUE OF SHARES

Privately held companies cannot issue shares to the public. This means that they are not able to raise large amounts of capital through issuing shares. This is because the law restricts these companies to a limited number of members. Therefore, they have a limit to the amount of capital they can raise from the issue of shares

Advantage
ACCESS TO CREDIT

The risk of loss is high for a financial institution funding a privately held company. This is because the existence of these companies is dependant on the life and wealth of its shareholders. The death or bankruptcy of a majority shareholder is a big blow to the existence of these companies. Therefore, financial institutions have restrictions when advancing loans to companies of this type, and the directors of these companies have to act as guarantors of these companies. This makes it hard for privately held companies to access loans to finance their operations and expansion as the amount that directors can guarantee is limited on their wealth. This also limits the value of assets they own

Advantage
RISK OF LOSS

Shareholders in a privately held company face a high risk of personal loss since they can easily lose all their investment. This is because it the individual shareholders mainly fund the assets of the company. This is because a privately held company comprises only a few members who contribute capital to the firm. Thus, the company’s value reflects the wealth of its shareholders. The death or bankruptcy of a major shareholder has a negative impact on the company’s performance and continuity since the company's value is dependent on the value of individual shareholders.

13. Can a private limited company invite investor’s money?

Yes, a private limited company are favourites of angle investors or venture capitalists, they give preferences to this type of business structure and can invest money through equity investment. All banks and financial institutions give more preference to advance loans and funding to companies rather than proprietorship and partnership firms.

14. Whether name of the company is protected against duplication? Or whether name of an existing company be used for form new company?

No unlike partnership firm, in case of limited liability partnership and companies name of an existing company cannot be taken by any other person. If anyone tries to take same name it will not be approved by the registrar of companies. So it provide protection of theft of name irrespective of whether trademark of name is taken or not. Further taking name of the company requires approval from the registrar of companies and should company with the guidelines issued from time to time. To know more about such guidelines click here.

15. Which forms are required to be filed with registrar of companies by private limited companies?

To know the forms which are required to filed with registrar of companies, click here.

16. What are the due dates of filing of forms of private limited company and penalties for late filing of forms of private limited company?

To know the due date of filing forms with registrar of companies, click here.

17. How can i compare private limited company with other form starting business?

Basis Sole Proprietorship Partnership Limited Liability Partnership Pvt. Ltd Co OPC Public Limited Company
Annual income tax return filing Filing of return is compulsory only if the Gross Total income exceeds the Exemption limit. Compulsory irrespective of profit or loss earned by entity during the year. Compulsory irrespective of profit or loss earned by entity during the year. Compulsory irrespective of profit or loss earned by entity during the year. Compulsory irrespective of profit or loss earned by entity during the year. Compulsory
Statutory Audit Not Applicable Not Applicable Not Applicable Compulsory Compulsory Compulsory
Liability Unlimited liability Unlimited liability As the name itself suggests, there is limited liability in case of limited liability partnership. Limited by Guarantee or Shares Limited by Guarantee or Shares Limited by shares
Ownership and Control One person has total control and ownership of the enterprise. Ownership and Control is through mutual agreement. Ownership and control is through mutual agreement. Ownership and control is amongst the shareholders of the co. Ownership and control is in the hands of only one member. Ownership is amongst the shareholders and control among the directors chosen by shareholders
  One Minimum 2 Minimum 2 Minimum 2 One Minimum 7
Complications Sole proprietorship is the least complicated form of business. Partnership is also less complicated as compared to company but more complicated as compared to sole proprietorship. Partnership is also less complicated as compared to company but more complicated as compared to sole proprietorship. Most complicated as compared to sole proprietorship and partnership firms. Most complicated as compared to sole proprietorship and partnership firms. Most complicated as compared to private limited company
Risk Risk is very high. Risk is high. Risk is low as liability is limited. Risk is low as shareholder’s liability is restricted to unpaid calls only or any specified amount of guarantee in case of co. limited by guarantee. Risk is low as liability is limited. Risk is low as liability is restricted to shareholding amount and unpaid calls only.
Transferability Cannot Transfer, only in case of death of proprietor New partners can be admitted and old partners can resign New partners can be admitted and old partners can resign Shares can be transferred with restrictions to public There is restriction of transfer of shares subject to change in nominee and directors Shares can be easily transferred without restriction.