Private Limited Company
What is Private Limited Company?
Private Limited Company can be understood as closely held company. A private limited company is a popular way to start a business in India. A private limited can be set up with minimum two members and two directors. The requirement of minimum paid up share capital of Rs 1 Lac is omitted by Government for the purpose of ease of doing business. These companies should limit its members to maximum 200 and prohibits any invitation to the public to subscribe for any securities of the Company.
Members who want to keep their personal liability separate from that of company may set up a private limited company. This type of company is regulated by Companies Act, 2013 and are given some exemptions from the provisions of Companies Act by Central Government.
Types of Private Limited Company
1) Company Limited by Shares: -The liability of members is limited to the amount, if any, unpaid on shares respectively held by them.2) Company Limited by Guarantee: -The liability of members is limited to the amount as the members may respectively undertake to contribute to the assets of the company at the time of its being wound up.
3) Unlimited Company: -The liability of members is unlimited i.e., if the company is insolvent or goes into liquidation the shareholders are personally liable to repay creditors.
Advantages of Private Limited Company
• Limited Liability: -As the owners of the company are not legally obliged to pay debts beyond the amount of shares held by them or amount of guarantee taken by them. It protects their personal assets (except in case of unlimited company).• Separate Legal Entity: -A private limited company is a legal entity separate from that of its members and known as artificial person. Therefore, it can sue or be sued in its name.
• Perpetual Succession: -A company has a perpetual succession until it is legally dissolved. It is unaffected by the death of members or change in constitution.
• Less number of shareholders: -A private limited company can be started with just two shareholders.
• Tax Benefits: -Private Limited Company enjoys tax advantages as their corporate taxes may be lower than those paid by other type of businesses.
Procedure for the Incorporation of Private Limited Company
1) The first step is to obtain a Digital Signature Certificate (DSC) by all the Directors. Documents required to obtain DSC are:
- PAN Card of the Director
- Aadhar card of the Director
- Photo
- Email ID
- Contact Number
2) After obtaining DSC, the next step is to obtain the Director Identification Number (DIN) by filing form DIR-3 along with a self-attested identity proof, address proof and a photo. (If directors are more than three as DIN for up to three directors can be obtained through Spice+ Inc-32).
3) File form Spice+ Part Afor reservation of name. Two names can be proposed in application. CRC on being satisfied may reserve the name for a period of 20 days from the date of approval.
4) The next step is to file application for certificate of Incorporation through Spice+ Part B for incorporation of company along with e-MOA and e-AOA.
5) Spice+ also gives facility to obtain EPFO, ESI and GSTIN registration of the proposed company.
6) After satisfying with all the details provided in application for certificate for incorporation, registrar of companies shall issue Certificate of Incorporation (COI) of the company and allot CIN Number (Corporate Identity Number).
Documents required for Incorporation of Private Limited Company
1) Passport size photograph of all directors.
2) Self-attested copy of PAN of all directors.
3) Self-Attested Address proof of all directors (Any One of Voter ID, Passport, Driving License, Aadhar Card)
4) Proof of office address (Any One of Electricity Bill, Telephone Bill, Property, Gas Bill, Tax Bill).
5) If Rented Business (Rent Agreement Copy) or if own (sell deed)
6) Company Name (1 to 2 Names)
7) Company object or product Name