A private limited company is one of the popular type of business constitution seen in India. In Kerala also the private limited company is common and many of the new start up’s constitute their business as Private Limited Company. To promote the start up business the central government simplified the process of registering a company in India. A Company is a separate legal entity with perpetual succession for lawful purpose. A private limited company is controlled and regulated by The Companies Act 2013 (previously The Companies Act 1956). As the name indicates this kind of company is incorporates with limited liability to its shareholders. Every shareholder liability towards the company limited with their interest or share holding proportion. A private company is formed with a Authorized Capital and this capital is divided into shares of a fixed face value. The minimum authorized capital to incorporate a private limited company in India is Rs. 1 Lakhs. The minimum share holders and directors require for a private limited company is Two. A private limited company is corporate legal entity having its own identity. The major legal documents of a Private company are :-
“In terms of the Companies Act, 2013 ‘company’ means a company incorporated under the Act, or under the previous company law” [Sec. 2(20)].
“A company may be an incorporated company or a Corporation, or an unincorporated company. An incorporated company is a single and legal (artificial) person distinct from the individuals constituting it, whereas an unincorporated company, such as a partnership, is a mere collection or aggregation of individuals. Therefore, unlike a partnership, a company is a corporate body and a legal person having status and personality distinct and separate from that of the members constituting it.”
PAN & Aadhaar Card of Directors (For Identity Proof of Directors)
Passport size photo of Directors
Identity Proof of Directors and Shareholders (Passport, Driving License and Election id)
Address proof of Directors and Shareholders – (Bank Statement, Passport, Driving License and Election id)
Proof of Registered office ( Latest Electricity Bill, Telephone Bill and Property Tax Receipt and NOC from Landlord)
Where directors / Shareholders is a Foreign National
Address and Identity proof as : – 1. ) Passport 2. ) Driving License, Residence Card, Bank Statement, Government issued form of identification containing an address.
Registrar of Companies (RoC) under Ministry of Corporate Affairs is the statutory body responsible for company incorporation’s in India. All the companies registered in India will come under Companies Act 2013. Now Central government simplifies the company incorporation procedure in India, as a part of promoting investments and develop the Indian Economy. Incorporating a company through Simplified Proforma for Incorporating Company electronically (SPICe -INC-32), with eMoA (INC-33), eAOA (INC-34), is the default option and most companies are required to be incorporated through SPICe only.
Private Company Name Reservation, MOA / AOA / PAN / TAN / Certificate of Incorporation, Authorized Capital upto 10 Lakhs, two DSC and DIN. Plan inclusive of all fees and taxes. Additional DSC charges and DIN charges Rs. 2,000/- each.
Private Company Name Reservation, MOA / AOA / PAN / TAN / Certificate of Incorporation, Authorized Capital upto 10 Lakhs, two DSC and DIN, One Trademark Registration and GST Registration. Plan inclusive of all fees and taxes. Additional DSC charges and DIN charges RS. 2,000/- each.
Private Company Name Reservation, MOA / AOA / PAN / TAN / Certificate of Incorporation, Authorized Capital upto 10 Lakhs, two DSC and DIN, One Trademark Registration, GST Registration, Import Export Code, Trade License and Shop and Establishment Registration. Plan inclusive of all fees and taxes of PLC Registration Only. Additional DSC charges and DIN charges RS. 2,000/- each.
Independent corporate existence : The outstanding feature of a private limited company is its independent corporate existence. It is a distinct legal person existing independent of its members. By incorporation under the Act, the company is vested with a corporate personality which is distinct from the members who compose it.
Limited Liability : The privilege of limiting liability for business debts is one of the principal advantages of doing business under the corporate form of organization. Where the subscribers exercise the choice of registering the company with limited liability, the members’ liability becomes limited or restricted to the nominal value of the shares taken by them or the amount guaranteed by them. No member is bound to contribute anything more than the nominal value of the shares held by him.
Perpetual succession : An incorporated company never dies. It is an entity with perpetual succession. Perpetual succession, means that the membership of a company may keep changing from time to time, but that does not affect the company’s continuity. The death or insolvency of individual members does not, in any way affect the corporate existence of the company.
Separate property : A company, being a legal person, is capable of owning, enjoying and disposing of property in its own name. The company becomes the owner of its capital and assets. The shareholders are not the several or joint owners of the company’s property. The company is the real person in which all its property is vested, and by which is controlled, managed and disposed.
Transferable Shares : When joint stock companies were established the great object was that their shares should be capable of being easily transferred. Accordingly, the Companies Act, 2013 in Section 44 declares: ‘The shares or debentures or other interest of any member in a company shall be movable property, transferable in the manner provided by the articles of the company’. Thus incorporation enables a member to sell his shares in the open market and to get back his investment without having to withdraw the money from the company. This provides liquidity to the investor and stability to the company.
Common seal : Since the company has no physical existence, it must act through its agents and all such contracts entered into by its agents must be under the seal of the company. The common seal acts as the official signature of the company.
According to Section 2 (68) of Companies Act, 2013 a ‘Private Limited Company’ means a company having a minimum paid-up share capital as may be prescribed, and which by its articles:
restricts the right to transfer its shares.
except in case of One Person Company, limits the number of its members to two hundred.
prohibits any invitation to the public to subscribe for any securities of the company.
According to Section 464 of the Companies Act, 2013, no association or partnership consisting of more than such number of persons (i.e., not exceeding 50 as per Rule 10 of Companies (Miscellaneous) Rules, 2014) shall be, formed for the purpose of carrying on any business that has for its object the acquisition of gain by the association or partnership or by the individual members thereof, unless it is registered as a company under this Act or is formed under any other law for the time being in force:
Above stated provision shall not apply to:
Hindu undivided family carrying on any business. Or
an association or partnership, if it is formed by professionals who are governed by special Acts.
Every member of an association or partnership carrying on business in contravention of above law, shall be punishable with fine which may extend to one lakh rupees and shall also be personally liable for all liabilities incurred in such business.
Section 7 of the Companies Act, 2013 provides for the procedure to be followed for incorporation of a company.
I ) Filing of the documents and information with the registrar : For the registration of the private limited company required the following documents and information to be filed with the registrar within whose jurisdiction the registered office of the company is proposed to be situated:
a) the memorandum and articles of the company duly signed by all the subscribers to the memorandum.
b) a declaration by person who is engaged in the formation of the company (an advocate, a chartered accountant, cost accountant or company secretary in practice), and by a person named in the articles (director, manager or secretary of the company), that all the requirements of this Act and the rules made there under in respect of registration and matters precedent or incidental thereto have been complied with.
c) a declaration from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles stating that:
he is not convicted of any offence in connection with the promotion, formation or management of any company, or
he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the last five years,
and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief
d) the address for correspondence till its registered office is established for which 30 days time is alloted after incorporation.
e) the particulars (names, including surnames or family names, residential address, nationality) of every subscriber to the memorandum along with proof of identity, and in the case of a subscriber being a body corporate, such particulars as may be prescribed.
f) the particulars (names, including surnames or family names, the Director Identification Number, residential address, nationality) of the persons mentioned in the articles as the first directors of the company and such other particulars including proof of identity as may be prescribed, and
g) the particulars of the interests of the persons mentioned in the articles as the first directors of the company in other firms or bodies corporate along with their consent to act as directors of the company in such form and manner as may be prescribed.
II) Issue of certificate of incorporation on registration: The Registrar on the basis of documents and information filed, shall register all the documents and information in the register and issue a certificate of incorporation in the prescribed form to the effect that the proposed company is incorporated under this Act.
III) Allotment of corporate identity number (CIN): On and from the date mentioned in the certificate of incorporation, the Registrar shall allot to the company a corporate identity number, which shall be a distinct identity for the company and which shall also be included in the certificate.