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Private Limited Company

What is a Private Limited Company?

A Private Limited Company (Pvt Ltd) is a type of business entity in India that is privately owned by a small group of individuals. It is regulated by the Companies Act of 2013 and provides various advantages, including limited liability for its shareholders, recognition as a separate legal entity, and continuity of existence despite changes in ownership.

According to Section 2(68) of the Companies Act 2013, a private company is defined as follows:

A “private company” is a company that has a minimum paid-up share capital as prescribed and, by its articles:

restricts the right to transfer its shares.
limits the number of its members to a maximum of two hundred, except in the case of a one-person company. It is important to note that if two or more people hold one or more shares in the company jointly, they are considered a single member for this purpose.
prohibits any invitation to the public to subscribe to any company securities.

Features Of a Private Limited Company

Separate Legal Entity. A private limited company is a separate legal entity, distinct from its owners. This means that the company can own property, enter into contracts, and can sue or be sued in its own name.
Limited Liability: The liability of shareholders is limited to the amount they have not yet paid on their shares. Personal assets of shareholders are safeguarded in the event of company debts.
Ownership: The ownership is divided into privately held shares by individuals, typically founders, family members, or close associates. These shares cannot be publicly traded.
Number of Members: Minimum 2 members and a Maximum of 200 members (excluding employees who are shareholders).
Number of Directors: A minimum of 2 directors and one of those should have residency in India.
Name: The name of the Private Company should end with Private Limited.
Compliance: Private limited companies are required to comply with statutory obligations, including filing annual returns, maintaining accurate books of accounts, and conducting audits.
Restrictions on Share Transfer: Shares cannot be easily transferred to the public, ensuring better control within a select group.
Perpetual Succession: The company remains in operation even if its shareholders or directors change or pass away.

Document Required for Private Limited Company

Members of Director

Each director must have the DIN (Director Identification Number) which they can obtain from the Ministry of Corporate Affairs.
At least one director should have lived in India for 182 days recently and have Indian residency.

Name of Company

The main name should be unique
Middle should be there that define the nature or main activity
Private Limited will be added at the end of the name
The applicant should have 5-6 names for approval from the registrar of companies because the desired name may not be available at the time of name approval and the names should not be similar to an existing company name.

Address

The permanent address should be there while applying for the Private Limited Company.

Documents

Pan card and address proof of directors and shareholders.
Digital Signature Certificate (DSC) of Directors.
DIrectos Identification Number (DIN)
Certificate of Company incorporation.
Address proof of the registered office.
Good and Services Tax (GST) Certificate.

Procedure of Registering Private Limited Company

Apply For DSC: Apply for a Digital Signature Certificate (DSC) for directors.
Apply for DIN: After getting the DSC, the next step is to get Director Identification Number (DIN).
Name Reservation (SPICe+ Part A): Must be unique and not similar to an existing company Should not violate trademark laws.
File Incorporation Form (SPICe+ Part B): Once the name is approved, proceed with incorporation using the SPICe+ Part B form, which includes.
MOA (Memorandum of Association): Defines the company’s objectives.
AOA (Articles of Association): Defines rules and regulations for the company’s operations

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