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Private Limited Company

What is a Private Limited Company?

Private Limited Company is a most famous choice to begin a business in India by new companies and organisations with higher development desires. Private Limited Company is joined under the Companies Act, 2013 and administered by the Ministry of Corporate Affairs in India. An enrolled corporate design gives business a different lawful character from its proprietors. It very well may be enrolled with least of two chiefs and endorsers/investors. An individual can be both a chief and financial backer in a Private Limited Company. A private restricted organisation is an organisation secretly held for independent ventures. The obligation of the investors/individuals from a Private Limited Company is restricted to the degree of neglected measures of offers held by them.

“Private Company” means a company which by its articles: Restricts the right to transfer its shares; Limits the number of its members to 200; Denies any solicitation to people in general to buy in for any protections of the organisation.

Privileges to Private Companies

1. Provisions regarding rotation of directors not apply on Private Companies;

2. Private Companies are not expected to frame Audit Committee, Remuneration and Nomination Committee;

3. Maximum Ceiling of administrative compensation don't have any significant bearing on privately owned businesses;

4. Private Companies are not required to appoint Secretarial Auditor;

5. Private Companies are not required to get their Shares/Securities dematerialized.

Limitations of Private Companies

1) Securities of Private Companies are not uninhibitedly adaptable;

2) Securities of a privately owned business are not recorded on stock trade; hence, an investor/security holder can't have the foggiest idea about the genuine worth of his interest in a privately owned business;

3) In a Private Limited Company, the quantity of investors regardless can't surpass 200;

4) Private Companies cannot issue prospectus to public.

Process for Incorporation of Private Limited Company

Step 1: Obtain DSC for Directors and Subscriber

Step 2: Obtain DIN for Directors

Step 3: Name approval Application

Step 4: Proceed for Company Incorporation within the allotted time period

Step 5: Filing of KYC, MOA, AOA, and other relevant documents with ROC

Step 6: Approval of the Compliances related to Incorporation by MCA Portal

Step 7: Submission of Application by payment of Stamp-Duty

Step 8: After Submission proceed with form filing of PAN and TAN Online for Company

Step 9: Generation of Incorporation Certificate by MCA

Documents Required For Indian Nationals

Following are the mandatory documents to be presented by the organization's Directors and shareholders (Indian nationals)

Scanned copies of:

1. PAN. 2. Govt ID verification - Voters’ ID or passport or driver’s permit. 3. Bank statement latest 6 months with Address. 4. Service charges either portable or gas or power. 5. Passport size photograph. 6. Specimen signature

Significant things to remember:

1. Name on the PAN 2. Rent Agreement (If Premises is on rent) 3. Latest utility bills 4. NoC by the Owner of Premises where Registered Office is Situated

Documents Required For NRI's

Following are the mandatory documents to be presented by the organization's Directors and shareholders (NRIs). Scanned copies of:

1. PAN 2. ID verification like Voter ID/passport or driver’s permit. 3. Most recent bank statement 4. Latest utility bills like telephone, mobile or electricity 5. Passport size photograph 6. Specimen signature (clear record with the mark [directors only])

Significant things to remember:

1. Name on the PAN 2. Rent Agreement (If Premises is on rent) 3. Latest utility bills 4. NoC by the Owner of Premises where Registered Office is situated

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What are MOA and AOA?

Memorandum of Association (MOA) is the basic Chartered document of the Company mandatorily to be framed at the time of Incorporation. It characterises the constitution, abilities and objects of the organisation.

The Articles of Association (AOA) is defining the rules and regulation to be followed by the Company, it has all the details relating to the Management and functions to be performed by the Company.

Is Company a legal entity?

According to the Company’s Act 2013, Once the Company gets incorporated it becomes a separate legal entity complete entirely different from its Directors and Members and gets the capacity to sue and to be sued in its own name.

Is Incorporation a Time-Consuming Process?

Basically, it takes up to 15-20 days for the Incorporation of the Company and it also depends upon the number of technical errors faced and the approached used for the procedure.

 Is it Compulsory to open Bank Account in the name of Company?

Yes, as the Capital amount is transferred in the name of Company by the shareholders, hence it becomes compulsory.

How much Capital is required for registering a Private Limited Company?

Minimum of Rs. 1 Lakh is required for running a Private Limited Company.

Can a sole proprietorship be converted into a private company?

Yes, it is possible to convert a sole proprietorship into a private company registration after following the procedure as specified in the Company’s Act 2013.

Can small business get registered as Private Limited Company?

Yes, it can easily get registered as a private limited company as it will give an edge/advantage to the small business for growth in different fields.