A private limited company is a company privately held for small businesses. This type of business entity limits owner liability to their shareholdings, the number of shareholders to 200, and restricts shareholders from publicly trading shares. To register a private limited company a minimum of two shareholders along with two directors (they can be same person) are required.
Ministry of Corporate Affairs (MCA) has recently launched SPICE+ and AGILE-PRO (Incorporation Forms) to turn down the procedure, time and cost for new company incorporation through these integrated forms it becomes quite simple to incorporate a company.
Why you should incorporate company as a Private Limited Company ?
1. Limited risk to personal assets- The shareholders of a private limited company have limited liability. This means that as a shareholder you will be liable to pay for company’s liability only to the extent of the contribution made by you.
2. Legal Entity A PLC has a separate legal entity different from you. This means that the Company is responsible for the management of its assets and liabilities, debtors and creditors. And you are not responsible for it. So, the creditors cannot proceed against you to recover the money.
3. Raising Capital Even though registering a PLC comes with compliance requirements, it is preferred by entrepreneurs as it helps them raise funds through equity, expand and at the same time limits the liability.
4. Trustworthiness Companies in India are registered with the Registrar of companies (ROC) under Companies Act 2013. Anyone can check the details of the company through Ministry of Corporate Affairs (MCA). Also, details of all the directors are provided while the formation of the company. Hence a PLC form of business structure is trusted more.
5. Continue Existence A company has ‘perpetual succession’, that is continue or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or cessation of any member but continues to be in existence irrespective of the changes in membership.
Fasten your seat belt we are going to incorporate a company
Step 1: Obtain Digital Signature Certificate (DSC) –
As we are living in the 21st century and we are incorporating companies in INDIA where all the filing of the company is in electronic form hence, we have to sign the form in digital mode only, for signing the prescribed form we should have Class-2 or Class-3 digital signature. Under Class 2 category, the identity of a person is verified against a pre-verified database whereas, under class 3 category, the person needs to present himself before registering authority to prove their identity.
Step 2: Obtain DIN–
DIN allotment is carried out by the Ministry for the Individual for acting as Director in a company, DIN is a unique number like PAN Card for any person and which is applied and allotted once in the lifetime.”
In case a director do not have DIN at the time of incorporation then he can apply DIN as well at the time of filing of form SPICE+
Point to be noted: Only 3 Directors not having DIN can apply for DIN in SPICE+ Part B.
Step 3: Name Availability-
We should have a name in our mind which should not be similar with the name of any existing company registered with MCA or having a similar registered trademark.
we can apply two names simultaneously for a company through incorporation form i.e. SPICE+ (part A) and filing fee for the same is Rs. 1000.00 only in case our applied name is rejected then only one resubmission is allowed for the name approval with the same fee of Rs. 1000.00.
We can also apply the whole registration procedure in one go in SPICE+ (by clicking on the button proceed for incorporation) without prior reservation of name but in this case only one name is to be applied and before application it should be taken care of that this name is available because in case the name is not available then the form will be rejected.
Step 4: Form SPICe INC-32-
Ministry of Company Affairs has introduced Form SPICe (INC-32). It is a simplified proforma for incorporating a company electronically. It serves the following purposes with the benefit of a single application:
Application for allotment of DIN (Director Identification Number)
Reservation of company name
Incorporation of a new company
Application for PAN and TAN
The digital signature of a professional is required to file Form INC-32. The professional must certify that all the information given in the form is correct. The professional can be Chartered Accountant, Company Secretary, Cost Accountant or advocate. No ROC fees for Incorporation of Company up to 10 lack of authorized capital.
Step 5: MOA and AOA –
Filed online on MCA portal as a linked form with SPICe (INC-32) named e-MoA(INC-33) and e-AoA (INC-34). Both these forms must be digitally signed by subscribers to the Memorandum and Articles of Association.
Step 6: PAN and TAN Application – Through this single form SPICe, you can also apply for company’s PAN and TAN by using forms 49A for PAN and 49B for TAN. The system will auto-generate these forms after the submission of SPICe form.
Checklist of documents required for the company incorporation:
- An Affidavit on a Stamp Paper is to be given by all the subscribers of the Company to state their willingness to become the shareholders of the Company
- Proof of office address – Rental Agreement
- Copies of utility bills that are not older than two months
- Copy of approval in case the proposed name of the company contains any word(s) or expression(s) that require approval from central government
- If the proposed name is based on a registered trademark or is subject matter of an application pending for registration under the Trade Marks Act, then it is mandatory to attach the trademark registration certificate or trademark application copy
- NOC from the owner of the property
- In case of subscribers/ Director does not have a DIN, it is mandatory to attach, proof of identity and address proof of the subscribers
- Where director is foreign national: passport & Address proof: It can be driving license, residence card, bank statement, Government issued form of identification containing an address.