Registering a private limited company/ LLP is one of the most popular ways of starting a business in India. It has various tax and regulatory advantages.
There are only 3 simple steps:
- We will help you register your Directors with the MCA (Ministry of Corporate Affairs)
- We will help you pick the right company name
- We will draft your company’s constitution (MoA and AoA)
That’s it. Company incorporation is done. We will then help you get a company PAN and TAN.
What is Company Registration?
Private Limited Company, the most popular legal structure for businesses, should be chosen by anyone looking to build a
scalable business. Start-ups and growing businesses choose to register a company in India because it allows outside funding to be raised easily, limits the liabilities of its shareholders and enables them to offer employee stock options to attract top talent. As these entities must hold board meetings and file annual returns with the Ministry of Corporate Affairs (MCA), they tend also to be viewed with more credibility than a Limited Liability Partnership (LLP), One Person Company (OPC), or General Partnership. At PKC Advisors LLP, we are continuously available to help you understand how to register a private limited company. All such businesses must have at least two directors and shareholders on inception.
6 Essential Facts on Company Registration
What if I am a single founder?
A private limited company is an entity with two directors and two shareholders at the minimum. If you are a single shareholder, you can also bring in your mother, father or any other relative to be part of the limited company with just one single share.
Why do startups prefer private limited companies?
Simple. Startups set-up private limited companies so that they can raise venture capital funding and offer their best employees stock options. Without funding and stock options, it’s almost impossible to build and scale a large business. Banks and other lenders would also much rather lend to private limited companies, as compared to sole proprietors.
What is the procedure to register one?
Initially, we help you get a digital signature certificate (also known as DSC), which is nothing but an e-signature to help you complete the registration online. It usually takes two days to get the DSC from the time you submit the documents. Next, we apply for the Director Identification Number (also called a DIN). This typically takes one day. The third phase involves selection of a name for your company. Now, do remember that your company name need not be your brand name. For example, Naukri.com has been incorporated as InfoEdge Technologies. Once done, we will prepare the Memorandum and Articles of Association and apply for the Certificate of Incorporation.
How many shareholders can there be in a private limited company?
A private limited company must have at least two directors and shareholders, and can have a maximum of 15 directors and 50 shareholders.
How much do you need to invest?
Good news. You don’t need to invest any money upfront. Most entrepreneurs do bring computers and other necessities at the very beginning. These can be the assets of the company. Private limited companies in India do not need to have any paid-up capital (that is, they do not need to introduce any money into the company).
What regulatory requirements are placed on private limited company?
As private limited companies are not traded publicly, regulatory requirements placed on them are fewer than on public companies. For example, they need not disclose their books of accounts. Because of this advantage, they need only worry about the long term rather than face the music from their shareholders in case their results in a particular quarter are poor.
Documents Required for Company Registration
TO BE SUBMITTED BY DIRECTORS & SHAREHOLDERS
- Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
Scanned copy of Voter’s ID/Passport/Driver’s License
Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
Scanned passport-sized photograph
Specimen signature (blank document with signature [directors only])
Note: Any one of the directors must self-attest the first three documents. In case of foreign nationals and NRIs, all the documents must be notarised (if currently in India or a non-Commonwealth country) or apostilled (if in a Commonwealth country).
FOR THE REGISTERED OFFICE
- Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
Scanned copy of Notarised Rental Agreement in English
Scanned copy of No-objection Certificate from property owner
Scanned copy of Sale Deed/Property Deed in English (in case of owned property)
Note: Your registered office need not be a commercial space; it can be your residence, too.
Advantages of a Private Limited Company
Businesses often need to borrow money. In structures such as General Partnership, partners are personally liable for all the debt raised. So if it cannot be repaid by the business, the partners would have to sell their personal possessions to do so. In a private limited company, only the amount invested in starting the business would be lost; the directors’ personal property would be safe.
Private limited companies easily accommodate equity funding as there is a clear distinction between shareholders and directors as well as limited liability. In fact, venture capitalists and private equity funds are unlikely to invest in any other structure. This is because LLPs would require them to become partners in the business, while an OPC can have only one shareholder. This feature also gives you the ability to hire top talent you may not be able to afford by merely paying a salary.
Easy Debt Access
A private limited company has more options for taking on debt than LLPs. Not only are bank loans easy to obtain (relative to OPCs and LLPs), the option of issuing debentures and convertible debentures are always available to it.<br><br>