What is Private Limited Company ?

A Private Limited Company (Pvt Ltd) in India is a type of business structure that is privately held and offers limited liability to its shareholders. It is governed by the Companies Act, 2013, and its establishment and functioning are regulated by the Ministry of Corporate Affairs (MCA).

Features of a Private Limited Company ?

Limited Liability

Shareholders liability is limited to their share capital.
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Separate Legal Entity

It has its own legal identity, separate from its owners.
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Perpetual Succession

The company continues to exist beyond the lives of its shareholders..

Minimum and Maximum Number of Members

A minimum of 2 and a maximum of 200 members (excluding current and former employees)

Restrictions on Share Transfer

Shares cannot be freely transferred and are typically restricted to maintain control within a small group of people.

No Minimum Paid-Up Capital Requirement

As per the Companies Amendment Act, 2015, there is no minimum capital requirement to form a Private Limited Company.

Incorporation Process

1. Digital Signature Certificate (DSC): Obtain DSC for all proposed directors.

2. Director Identification Number (DIN): Apply for DIN for all proposed directors through SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form.

3. Name Reservation: Reserve the company name through the RUN (Reserve Unique Name) web service or through the SPICe+ form.

4. Memorandum and Articles of Association (MoA and AoA): Draft and file MoA and AoA, which outline the company’s objectives and rules.

5. SPICe+ Form: Complete and submit the SPICe+ form, which integrates the application for company incorporation, DIN allotment, PAN, TAN, EPFO, ESIC, GSTIN, and bank account opening.

6. Incorporation Certificate: Upon approval, the RoC issues the Certificate of Incorporation along with a unique Corporate Identity Number (CIN).

Advantages of a Private Limited Company ?

Credibility and Trust

More credible than a sole proprietorship or partnership, which helps in attracting investors and customers.

Access to Funding

Easier to raise capital from investors, venture capitalists, and through bank loans.

Tax Benefits

Eligible for various tax exemptions and incentives under the Income Tax Act.

Separate Property

Can own property in its own name, which provides more stability.

Continuity of Business

Unaffected by changes in ownership or management.

Documnets Required

Digital Signature Certificate (DSC)

1. For all Directors and Subscribers:

Passport-sized photograph
Copy of PAN Card
Copy of Aadhaar Card

2. Address Proof (Any one of the following):

Passport
Driving License
Voter ID Card
Latest bank statement or utility bill (not older than two months)

Director Identification Number (DIN)

2. For all Directors:

2.1. Identity Proof (Any one of the following):

PAN Card
Passport (in case of foreign nationals)

2.2. Address Proof (Any one of the following):

Passport
Driving License
Voter ID Card
Latest bank statement or utility bill (not older than two months)

Company Incorporation Requirements

3. Name Reservation

3.1. For all Directors:

Proposed Company Names (at least two names in order of preference)
Objectives of the Company

4. SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) Form

4.1. For Company Incorporation:

Memorandum of Association (MoA)
Drafted as per the prescribed format and signed by subscribers.
Articles of Association (AoA)
Drafted as per the prescribed format and signed by subscribers.
Declaration by Directors and Subscribers in Form INC-9 (auto-generated in SPICe+)
Declaration by Professional (Chartered Accountant/Company Secretary/Cost Accountant) in Form INC-8
Address Proof of Registered Office (Any one of the following):
- Sale deed (if premises are owned)
- Rent agreement/Lease deed (if premises are rented)
- Utility bill (Electricity bill/Telephone bill/Gas bill) not older than two months
No Objection Certificate (NOC) from the owner (if the premises are rented)
Consent to Act as a Director in Form DIR-2
Directors’ Details:
- Identity Proof
- Address Proof
- PAN Card
- DIN (if already allotted)