Private Limited Company Registration

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Overview
Characteristics
Benefits
Documents Required
Registration Process
Compliance
Why Choose Us

Overview of Private Limited Company Registration

What is a Private Limited Company Registration?

A private limited company registration is one of the most popular and trusted forms of business structure in India. It is ideal for startups, small businesses, and enterprises seeking limited liability and separate legal identities.

Incorporating as a private limited company offers a range of advantages, such as a clear separation between personal and business finances, enhanced credibility, and easier access to funding and investments.

This combination of legal protection, operational flexibility, and financial discipline makes the private limited company a preferred choice in India’s dynamic and competitive market. Combine that with RegisterKaros expert assistance and cost-friendly pricing, and you are set.

Types of Private Limited Companies in India : Which is Right For You?

Entrepreneurs or aspiring business owners planning to establish a private limited company in India should evaluate the following types of private limited company structures before proceeding with company incorporation:

Company Limited by Shares icon for private limited company registration

Company Limited by Shares

The liability of shareholders is restricted to the nominal value of shares specified in the company's Memorandum of Association.

Company Limited by Guarantee icon for private limited company registration

Company Limited by Guarantee

The liability of members is confined to the guaranteed amount mentioned in the Memorandum of Association, which is enforceable only in the event of the company's winding up.

Unlimited Companies icon for private limited company registration

Unlimited Companies

Members bear unlimited personal liability for the company's debts and obligations. However, the company retains its status as a separate legal entity, shielding individual members from direct lawsuits.

This overview highlights the key types of private limited companies and their features, catering to diverse business requirements and objectives. From companies limited by shares to unlimited companies, each category offers distinct benefits and protections. Choosing the right structure ensures that businesses align with their goals while managing liabilities and compliance effectively.

Private Limited Company Registration Process in India

Still confused? Get in touch with an expert Private Limited Company Registration Consultant and receive answers to all your queries instantly for free.

Key Features of Private Limited Company

Characteristics of a Private Limited Company in India

To understand whether registering your company as a private limited would be ideal or not, check out these characteristics:

Separate Legal Entity icon

Separate Legal Entity

A Private Limited Company has a distinct legal identity, separate from its owners and shareholders. This means:

  • The company can own property, incur debts, sue, or be sued in its name.
  • Shareholders and directors are not personally liable for the company's obligations.
Limited Liability icon

Limited Liability

The liability of shareholders is limited to the unpaid amount on their shares. Basically:

  • Personal assets of shareholders are safeguarded from business losses or debts.
  • In case of bankruptcy, shareholders only lose their invested capital.
Minimum and Maximum Members icon

Minimum and Maximum Members

A Private Limited Company must have a minimum of 2 and a maximum of 200 members (excluding employees and former employees holding shares).

  • This makes it suitable for closely held businesses or family-owned enterprises.
Share Capital icon

Share Capital

The company must have a minimum authorized share capital of INR 1,00,000 (this can be increased as required). As for paid-up capital, the Companies Act, 2013 no longer mandates a minimum paid-up capital for Private Limited Companies.

  • Shareholders contribute capital by purchasing shares, and their liability is capped to their investment amount.
Restriction on Share Transfer icon

Restriction on Share Transfer

Shares in a Private Limited Company are not transferable to prevent hostile takeovers. Shareholders need the approval of other members to transfer shares, ensuring control remains within a trusted group.

Prohibition on Public Offering icon

Prohibition on Public Offering

A Private Limited Company cannot invite the general public to subscribe to its shares, debentures, or deposits.

  • It cannot raise funds through Initial Public Offerings (IPO) or public bonds.
  • Funding is typically through private investments, loans, or internal accruals.
Minimum Number of Directors icon

Minimum Number of Directors

A Private Limited Company must have at least two directors (a maximum of 15 directors; this can be increased by passing a resolution).

  • This helps ensure effective governance and compliance with corporate laws.
Perpetual Succession icon

Perpetual Succession

The company's existence is not affected by changes in its ownership or management, such as death, insolvency, or resignation of shareholders/directors.

  • Provides stability and continuity.
  • Suitable for long-term projects and businesses.
Ownership and Management icon

Ownership and Management

The ownership of the company is divided among shareholders, while the management is typically handled by directors.

  • This separation of ownership and management allows professionals to run the company while shareholders enjoy limited liability.
Raising Capital icon

Raising Capital

A Private Limited Company can raise capital from private investors, venture capitalists, or angel investors.

  • The structured nature and credibility of a Private Limited Company make it an attractive option for investments.
  • Shareholders can issue equity or preference shares to raise funds.
Tax Benefits icon

Tax Benefits

Private Limited Companies enjoy specific tax benefits under Indian corporate tax laws, some of which are:

  • Eligible for deductions on business expenses.
  • Can avail of tax benefits under various government schemes.
Governed by the Companies Act icon

Governed by the Companies Act

A Private Limited Company operates under the provisions of the Companies Act, 2013.

  • Provides a robust legal framework ensuring accountability and systematic operation.
  • Non-compliance attracts penalties and legal action.
Credibility and Transparency icon

Credibility and Transparency

The company's details, including incorporation, directors, and financial records, are publicly available on the MCA website.

  • The easy access to data increases trust and credibility among clients, investors, and other stakeholders.
Flexibility in Operations icon

Flexibility in Operations

While maintaining corporate governance standards, Private Limited Companies enjoy operational flexibility compared to public companies.

  • Easier decision-making due to fewer regulatory restrictions.
  • Better suited for businesses aiming for controlled growth.

Here's everything you need to know about Private Limited Company registration and how to get started.

Benefits of Private Limited Company Registration

Difference Between Business Structures

What are the Advantages of a Private Limited Company Registration?

Registering as a Private Limited Company offers several key benefits that make it a popular choice for entrepreneurs and business owners in India.

Limited Liability

Protection of Personal Assets

A private limited company ensures that shareholders have limited liability. This means their personal assets are safeguarded against any debts or losses incurred by the business.

Investment Protection

Shareholders are only responsible for the company's liabilities up to the amount they have invested, providing a critical safety net for individuals.

Separate Legal Entity

Distinct from Owners

Once registered, a private limited company becomes a separate legal entity, independent of its directors and shareholders. This separation means that the company itself is responsible for managing its assets, liabilities, and obligations.

Business Operations

Shareholders and directors cannot be held personally accountable for the company's financial losses, ensuring a clear boundary between personal and business responsibilities.

Opportunities for Raising Capital

Funds and Investments

Private limited companies are an attractive option for raising funds. Their structured nature and credibility make it easier to attract equity investment from venture capitalists, angel investors, and other funding sources. This structure supports growth and expansion while keeping personal financial risk to a minimum.

Financial Growth

Appealing for raising funds due to their structured nature and credibility, attracting equity investment from venture capitalists and angel investors. This setup fosters growth while minimizing personal financial risk.

Credibility and Trustworthiness

Reliable Platform

Being registered under the Companies Act and governed by regulatory bodies adds credibility to a private limited company. Prospective clients, investors, and partners can verify its details through official government platforms, creating a sense of trust.

Business Reliability

It demonstrates a commitment to professional business practices and regulatory compliance, building trust with stakeholders.

Perpetual Succession

Uninterrupted Existence

Unlike sole proprietorships or partnerships, a private limited company enjoys perpetual succession. This means the company continues to exist regardless of changes in ownership, such as the death or resignation of directors or shareholders. The continuity ensures long-term stability and reliability.

Transferability of Shares

Private limited companies offer ease of ownership transfer through the sale or transfer of shares. It ensures that ownership can be passed on to others without disrupting the company's operations. This flexibility in ownership transfer is advantageous for business growth and succession planning.

Comparison Between Different Types of Company Registrations

Compare the different business structures to determine which is right for your needs

FeaturePrivate Limited CompanyLimited Liability Partnership (LLP)Sole ProprietorshipPartnershipOne Person Company (OPC)
Legal StatusSeparate Legal EntitySeparate Legal EntityNo Separate Legal EntityNo Separate Legal EntitySeparate Legal Entity
Liability ProtectionLimited to the extent of shares heldLimited to the extent of contributionUnlimited liabilityUnlimited liabilityLimited to the extent of shares held
Minimum Members2 Directors, 2 Shareholders2 Partners1 Proprietor2 Partners1 Director, 1 Shareholder
OwnersRestricted, subject to regulationsRestricted, subject to regulationsNot ApplicableNot RestrictedRestricted
Compliance Required DocumentsHigh (Annual filings with MCA, financial statements)Moderate (Annual filings with MCA)Low (Basic tax filings)Moderate (Partnership Act, Tax filings)High (Annual filings with MCA, financial statements)
Tax BenefitsEligible for various deductions and exemptionsTax benefits for business expensesLimited DeductionsTax Benefits for business expensesEligible for various deductions and exemptions
Investor FriendlyHighly suitable for investors and venture capitalLimited investor appealNot suitableNot suitableLimited investor appeal
Regulatory AuthorityMinistry of Corporate Affairs (MCA)Ministry of Corporate Affairs (MCA)No specific authorityRegistrar of Firms (RoF)Ministry of Corporate Affairs (MCA)
Ideal forStartups, SME's and companies with growth potentialProfessional firms and service providersSmall traders and local businessesSmall to medium-sized businesses with shared ownershipIndividual Entrepreneurs seeking to establish a separate legal identity

Documents Required for Private Limited Company Registration

Documents Required For Private Limited Company Registration

To register your Private Limited Company, you'll need to prepare and submit the following documents:

For Directors and Shareholders icon
For Directors and Shareholders

Identity and Address Proof:

  • PAN Card & Aadhaar Card (Mandatory for Indian Nationals)
  • Voter ID/Driving License/Passport (Mandatory for Foreign Nationals), Email Address & Contact Number
  • Recent utility bills (electricity, telephone, water, or gas) not older than 3 months
  • Passport-sized Photograph
For the Registered Office icon
For the Registered Office

Required Documents:

  • Utility bill (electricity, water, or gas) with the registered office address
  • Tax paid receipt/Electricity bill/ Gas bill along with a NOC (if owned property)
  • Latest electricity bill/ Gas Bill Copy with an NOC from property owner (if rented)
  • Note: Format for NOC would be provided by us

Steps for Private Limited Company Registration

How to Register a Private Limited Company in India- Step-by-Step Guide

Follow these essential steps to register your Private Limited Company in India:

1

Obtain DSC (Digital Signature Certificate)dropdown Icon

2

Apply for DIN (Director Identification Number)dropdown Icon

3

Name Approvaldropdown Icon

4

Form SPICe+ (INC-32)dropdown Icon

5

Draft MOA & AOA (e-MoA and e-AoA)dropdown Icon

6

File Incorporation Applicationdropdown Icon

MCA Compliance for Private Limited Companies

Compliance After Registration of Pvt. Ltd. Company

Maintaining compliance is crucial for Private Limited Companies to ensure legal adherence and avoid penalties. Here's a detailed breakdown of the key compliance tasks:

Annual Filings with the Ministry of Corporate Affairs (MCA) Icon

Annual Filings with the Ministry of Corporate Affairs (MCA)

Every Private Limited Company must file financial statements with the MCA to maintain accountability.

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Tax Filing Icon

Tax Filing

Filing Income Tax Returns is mandatory for all Private Limited Companies, regardless of profit or loss.

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GST Registration and Compliance Icon

GST Registration and Compliance

If registered under GST, companies must file periodic returns showing all sales and purchases.

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Board Meetings Icon

Board Meetings

Companies must conduct regular board meetings as per Companies Act, 2013.

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Why Choose RegisterKaro for Private Limited Company Registration

Why Choose RegisterKaro For Pvt. Ltd. Company Registration in India?

Why Choose RegisterKaro

With RegisterKaro, you can leave all the complexities to the professionals and focus on setting up your company. You will get:

  • Our professionals handle the entire process, ensuring accuracy and compliance.

  • No hidden charges; everything is upfront.

  • Get your Private Limited Company registered in 7-10 working days.

  • Inclusive ongoing assistance for compliance and filings.

  • Submit your Details to get an Instant All-inclusive Quote to your email and a FREE Expert consultation

Frequently Asked Questions

Get answers to the most common questions about Private Limited Company Registration in India

1.Who can register a Private Limited Company in India?
Any individual or entity can register a private limited company, provided they meet the eligibility criteria such as the minimum number of directors, shareholders, and registered office requirements.
2.How many directors are required to start a Private Limited Company?
3.What documents are needed for Private Limited Company registration?
4.How long does it take to register a Private Limited Company?
5.Can a Private Limited Company be converted to other business types?
6.What is the Cost of Private Limited Company Registration?
7.What are MoA & AoA?
8.What is the SPICe+ Form?
9.What are the restrictions on a Private Limited Company?
10.What is the penalty for non-compliance?
11.Can NRIs and foreign nationals register a Private Limited Company in India?
12.What is the minimum capital required to register a Private Limited Company?
13.What is the difference between a Private Limited Company and an LLP?
14.Is GST registration mandatory for a Private Limited Company?
15.What are the post-registration compliance requirements?
16.How is the name of a Private Limited Company decided?
17.What are the most famous and popular forms of business entities in India?
18.Can a salaried person become the Company's Director?

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Private Limited Company Registration in States/Cities

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