There are many options in the Indian market to set up a business entity as it can be formed in the various
forms such as sole proprietorship, partnership firm, LLP, Private company and public company, etc. If a business entity opts
to set up a business entity through Company Formation, then, he/she needs to understand “how to formulate and register a company and what the legal compliance is?”
What are the types of Company Formation in India?
A company is a legal entity having a perpetual existence independent of its promoters, and is a corporate body having a common seal, has right to hold/sell/buy the property in its own name. A company can be formed in the form of a Private Limited Company, Public Company (Listed or Unlisted), OPC (One Person Company).
This further means that the business setter needs to further decide the type of company one wishes to form. The compliance part in
the private limited company is less as compared to a public company, hence it is usually recommended to start with the private
limited company. It must have two people as the shareholder and director, who can be the same persons. However one of the directors
must be resident in India.
Why is it Important to select a right Type of Company Structure in India?
It is required to select a right type of company structure as there are different levels of compliances for every type of company structure.
What is Private Limited Company Registration?
Private Limited Company Has a minimum paid-up share capital of [omitted] or such higher capital as may be prescribed
1. Limits the number of its members to 200 which will not include:-
- Members who are employees of the company
- Members who are ex-employees of the company and were members while in such employment and who have continued to be members after ceasing to be employees
2. Prohibits any invitation to the public to subscribe for any shares or debentures of the company
3. Prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives.
There are two types of Private Limited Company-
A private limited company limited by shares- In this type of company the members liability is limited to the amount unpaid on shares held by them.
A private limited company by guarantee is the one where member’s liability is limited to the amount that they have agreed to undertake at the time of winding up.
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What will be we provide
- DSC and Director Identification Number (DIN)
- Company Name Reservation - RUN one Attempt
- Articles of Association (AOA) and Memorandum of Association (MOA)
- Corporate Identification Number (CIN)
- PAN & TAN
- Free Legal Support for Start-ups
Reasons to Register a Private Limited Company
1. Separate Legal Entity
Private Limited Company is a legal entity and a juristic person established under the Companies Act. Hence, a company has a range of legal capacities including opening of a bank account, hiring of employees, taking on equity or obtaining licenses and more as an independent corporate entity. The members (Shareholders/Directors) of a company have no personal liability to the creditors of a company for company's debts.
2. Limited risk
The shareholders of a PLC have limited liability meaning that as a shareholder you will be liable to pay for company’s liability only to the extent of the contribution that you have made.
3. Legal Entity
A PLC has a distinct legal entity from you meaning that the Company is responsible for the management of its assets and liabilities, creditors and debtors. However, you are not responsible for the same. Therefore, the creditors cannot proceed against you to recover money.
4 Uninterrupted Existence
Private Limited Company has 'perpetual succession', meaning uninterrupted existence until it is legally dissolved.PLCs enjoy permanent succession because the company is its own legal entity. Shareholders and employees act “as agents of the company”.
5. Raising Funds
Although registering of a PLC comes with multiple compliance requirements, it is desired by entrepreneurs as it helps raise capital through equity and at the same time restrict the liability.
Therefore, all put together, it takes around 15 to 20 working days.
Is a Private Limited Company Suitable for making FDI in India?
Yes, immensely suitable! The private limited companies have been a hugely popular form of business entity amid foreign investors for making
the direct foreign investment (subject to FDI Guidelines) in any country, by means of a wholly-owned subsidiary, a joint venture, etc.
Can a Foreign National/Company be a Director/Shareholder in any Private Limited Company in India?
Yes. Any foreign national or company, or an NRI (non-resident Indian) can become a director, or hold share of a private limited company in India. But, at least one director on the Board of Directors of a private limited company in India must be a Resident in India. However, holding shares of a private limited company in India by foreign nationals/companies will be subject to the contemporary FDI Guidelines of India.
What is the general Procedure for Incorporating a Private Limited Company in India?
After obtaining the DSCs and DINs, the next task is to ensure the availability of the proposed name of the private limited company through filing the Form INC-1. Then, drafting appropriate Memorandum of Association (MOA) and Articles of Association (AOA) of the company will be made. And, finally, Form INC-29 will be filed with the concerned ROC for incorporation of the proposed company, together will all required documents.
What is the Tentative Time-period Lapsed in the Incorporation of a Private Limited Company in India?
Based on the requirement of obtaining diverse requisite documents, authenticity of the documents submitted by the directors/shareholders, the speed of processing and filing forms & documents, and the briskness of the proceeding performed by the concerned government authorities, the approximate time taken by the entire procedure for incorporation may range from one to Two Weeks.
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