MEANING

Private Limited Company is the most favored form of business entity in India having perpetual succession with least of two directors & shareholders, the maximum being 15 and 50 respectively, is a must for company registration. There is no minimum paid up capital required to start the company, it is very convenient to organize and operate a private limited company as business can be commenced immediately. Also, it improves business credibility thus, enhancing the future growth of the company.

Many start-ups and companies consider this form of business entity as it permits capital funding to be raised easily; it also limits the liability protection to its shareholders and enables them to offer employee stock options to motivate their employees.  Availability through a bank loan, equity or debt funding makes private limited company, the most recommended legal structure of many small and medium sized business entities that are family owned or professionally run in India.

REASONS TO OPT FOR A PLC

LIMITED LIABILITY

In a Private Limited Company, if debts are not repaid then only the invested capital in commencing the business would be lost, the personal properties of the directors would be safe unlike in a Partnership firm, where partners are personally liable for all their debts and would also have to sell their personal assets. A private limited company has a separate legal identity with limited liability.

PERPETUAL SUCCESSION

A Private Limited Company is a business entity having perpetual succession that means continued existence until it is legally dissolved or wound up. Having a separate legal identity, it is unaffected by the death or removal of any Director. Thus, a Private Limited Company continues to exist irrespective of the changes made in ownership.

EASY TRANSFERABILITY

The ownership in a Private Limited Company can be easily transferred by shares to another person. The signing and filing of share transfer form and share certificates are sufficient to transfer ownership of the company. The consent of other shareholders is required to affect the share transfers in a private limited company.

BORROWING CAPACITY

Private Limited Companies can raise equity funds. It can also issue equity shares, preference shares, debentures and accept deposits with the permission of RBI. Banks and Financial Institutions prefer providing funding to a company than partnership firms or proprietary concerns.

A private limited partnership offers legal protection to its shareholders but restricts its ownership. It is relatively convenient to manage and run the company with a possibility of expansion for growing companies. Also, it is easy to dissolve and wind up the company.

DOCUMENTS REQUIRED

1. FOR DIRECTORS & SHAREHOLDERS

  • Copy Of PAN OR Passport (For NRI’S)
  • Copy Of Voter’s ID OR Passport OR Driver’s License
  • Copy Of Latest Bank Statement OR Electricity Bill OR Telephone Bill
  • Passport sized photographs
  • Specimen Signatures
2. FOR REGISTERED OFFICE

  • Copy Of Latest Bank Statement OR Electricity Bill OR Telephone Bill
  • Copy Of Notarized Agreement of the rent (English)
  • Copy Of Property owner’s NO-Objection certificate
  • In case of owned property, Sale deed (English)

REGISTRATION PROCEDURE

Recently, Ministry of Corporate Affairs (MCA) came with new rules for Incorporation of Company under Companies Act, 2013 by introducing e-form INC-32 under SPICE scheme in one single step.

*SPICE – Simplified Performa for Incorporating Company Electronically.

The SPICE form was introduced by MCA with a motive to prepare MOA & AOA electronically (E- MOA or E-AOA). Due to this amendment, the manual preparation of MOA & AOA & physical signature by the concerned persons will not be required.

This form can be used for the following:

  • Application of DIN (up to 3 Directors)
  • Application for the availability of Name (Only One)
  • No need to file a separate form for first Director (DIR-12), the address of registered office (INC-22), PAN  & TAN.

*E-MOA – Form INC-33

*E-AOA – Form INC-34

DSC of every subscriber is Mandatory. The subscribers & witnesses shall affix their digital signatures to the E-MOA and E-AOA.

The approval of DIN, Name, and Incorporation will usually take 1-2 days.

INC-32 will require Professional Certification.

Also, it is mandatory to file & upload PAN & TAN applications on the MCA website.

Note: Director has to give a declaration in the form that he has checked the name on MCA and Trade Mark Website.

 

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