Private Ltd Company

Private Ltd Company

Among the different business entities available, Private Limited Company Registration is the most preferred choice for entrepreneurs. A Pvt Ltd Company offers several advantages, including limited liability, credibility, and ease of fundraising.

Setting up your business as a Private Limited Company is the most recommended and globally acceptable business structure. It has become the most preferable choice of business registration in the Indian Start-up Ecosystem. The registration of your business as a Private Limited Company gives your business an identification, legal protection, and opens up many other fund-raising opportunities from Angel Investors, Venture Capitalists, Private Equity Investors, Incubation Funds, and various other banking schemes in India.

Private Limited Company is considered the most suitable and desirable form of starting any business. You may have the business of Industrial Manufacturing, Trading, Marketing, Consultancy, E-Commerce, Service Sector, Technology-driven start-ups, registering a Private Limited Company is the universally accepted business structure and as such is relied across borders by MNCs when need arises to collaborate.

What is a Private Limited Company? A Private Limited Company (Pvt Ltd Company) is a privately held business entity that provides its owners with limited liability and a separate legal identity from its shareholders. The Companies Act, 2013 governs Pvt Ltd Companies in India, and they must be registered with the Ministry of Corporate Affairs (MCA).


What are the characteristics of a Private Limited Company?

Key Characteristics of a Private Limited Company:

  1. Limited Liability Protection - Shareholders' liability is limited to the number of shares they hold.
  2. Separate Legal Entity - A company has its own identity, distinct from its owners.
  3. Minimum 2 Shareholders & Directors - At least two individuals must act as shareholders and directors. (A director and shareholder can be the same person.)
  4. Maximum 200 Shareholders - A Pvt Ltd Company cannot have more than 200 shareholders.
  5. No Public Share Offering - The company cannot raise funds by issuing shares to the public.
  6. Mandatory Compliance - Annual filings, audits, and regulatory adherence are required.


Benefits of Pvt Ltd Company Registration

Many entrepreneurs prefer Private Limited Company Registration over other business structures because of the following benefits:

  1. Limited Liability Protection: Shareholders are only liable for the amount they have invested.
  2. Separate Legal Entity: The company is distinct from its owners and can enter contracts, own property, and sue or be sued in its own name.
  3. Ease of Raising Funds: Investors prefer investing in Pvt Ltd Companies as they offer more credibility and structured governance.
  4. Perpetual Succession: The company continues to exist even if a shareholder or director exits.
  5. Better Credibility: Pvt Ltd Companies gain trust among customers, suppliers, and financial institutions.


    Documents Required for Pvt Ltd Company Registration

    The following are the documents required for Pvt Ltd Company Registration:

    1. For Directors and Shareholders: PAN Card, Aadhaar Card, Passport-size photograph, Address Proof (Bank Statement/Utility Bill)
    2. For Registered Office: Rental Agreement or Sale Deed NOC from the property owner, Utility Bill (Electricity/Water/Gas)


    Process for Private Limited Company Registration

    Registering a Pvt Ltd Company involves five key steps:

    1. Step 1: Obtain a Digital Signature Certificate (DSC)
    2. Step 2: Obtain a Director Identification Number (DIN)
    3. Step 3: Name Reservation (SPICe+ Part A)
    4. Step 4: File Incorporation Forms (SPICE+ Part B, MoA, AOA)
    5. Step 5: Certificate of Incorporation Issued by MCA


    Post-Registration Compliance for Pvt Ltd Companies

    Once a Pvt Ltd Company is registered, it must comply with various regulatory requirements:

    1. Appointment of Auditor - Within 30 days of incorporation.
    2. Income Tax Filings Annual ITR filings are mandatory.
    3. ROC Compliance Filing of MCA annual returns (AOC-4 and MGT-7).
    4. GST Registration If applicable, based on turnover.
    5. Board Meetings Conduct at least four board meetings per year.
    6. Accounting & Bookkeeping Maintain proper financial records.