What is Private Limited Company?

Forming a private limited company is the recommended business structure in India. Private limited company structure provides benefit of limited liability to shareholders but at the same time places particular ownership constraints.The ability to distinguish clearly between a firm's directors and shareholders is made possible by registration as a private limited company.

We at Mfiling provide an affordable solution to help you register a Private Limited Company (PLC) in India quickly and easily. Mfiling takes care of all legal requirements, guaranteeing tight adherence to the guidelines set forth by the Ministry of Corporate Affairs (MCA).

A private limited company is a privately controlled entity with limited liability,The reasons for preferring private limited companies includes standing as a legal entity, ease of formation and management, and limited liability protection. A private limited company requires minimum two members and two directors to operate, and it enjoys legal separation from its owner.

Characteristics of a private limited company

• Limited Liability Protection: A private limited company shareholders are only accountable to the amount of their ownership. Even in the event that the business experiences financial difficulties, their assets are protected.

• Separate Legal Entity: A private limited company is an independent legal entity. It is able to enter into contracts, own property, and bring or defend legal action under its own name.

• Minimum Number of Directors: Two directors are required for a private company. At least one of these directors must be an Indian citizen.

• Minimum Number of Shareholders:Two shareholders are required for a private company but it should not exceed 200.

• Name of Firm: The private limited company's name must end with the words "Private limited".

• Restrictions on Share Transfer: Within a private limited company, there exist restrictions on the transfer of shares. Only the Board of Directors consent or the procedures outlined in the company's articles of association may be used to transfer shares.

• Compliance Requirements: Private limited company must adhere to legal and regulatory requirements, including keeping accurate financial records, holding annual general meetings, and submitting yearly returns to the ROC.

• Prohibition on Public Invitation: Private limited companies cannot invite public to subscribe to their shares or debentures.

Types of Private Limited Company

•  Company Limited by Shares: The maximum amount of liability for shareholders is the nominal share amount specified in the  Memorandum of Association.

• Company Limited by Guarantee: Members liability is limited to the amount of guarantee specified in the Memorandum of Association.

• Unlimited Companies: Members of unlimited companies have unlimited personal liability for the company's debts and liabilities but still they are regarded as a distinct legal entity and no member may be sued individually.

Advantages of a Private Limited Company

A Private Limited company is one of India's most  popular business structures. Mfiling outlines the following list of benefits of a private limited company :

• Limited Liability: Shareholders liability is limited to the extent of their capital contribution, safeguarding personal assets from financial obligations and liabilities of company.

• Separate Legal Identity: A Private Limited Company has a separate legal identity from its owners. It is able to enter into contracts, hold property, and bring or defend legal proceedings under its own name.

• Perpetual Succession:The business continues to operate even in the event that directors or shareholders change. Its continuous existence is not dependent on how long its partners live.

• Ease of Funding: It is simpler to raise money by issuing shares to angel investors, venture capitalists, or investors. This structure attracts external investment.

• Tax Benefits: Private Limited companies may qualify for various tax benefits  and exemptions , making them tax-efficient entities.

•  Credibility and Trust: Having "pvt ltd" in your company name often instills more confidence and trust in customers, suppliers, and partners. 

Disadvantages of a Private Limited Company

Mfiling outlines the following list of drawbacks of a private limited company :

• Compliance Burden: Face regulatory demands,including financial reporting, filing and audits.

• Complex Setup: Process and cost for managing are higher then more superficial structure.

• Share Limits: Restricted share transfers;max 200 shareholders in India.

• Public Disclosure: Financial info is publicly viewable, impacting privacy.

• Exit Complexity:Compared to other structures, selling or quitting is more difficult.

• Slower decisions: Decisions may be made more slowly when directors and shareholders are involved.

Registration of Private Limited Company with Mfiling

Requirements for Registering a Private Limited Company

1.Directors and Members:

• A private limited company must have 200 members and at least two directors in order to be registered in India.

• Directors must have a Director identification Number (DIN) issued by The Ministry of Corporation Affairs (MCA).

• A minimum of one director needs to be a resident of India, having spent 182 days in the previous calendar year.

 2. Company Name:

• The principal business activity should be reflected in the name.

3.Address of the registered company:

•  After the company registration process, the business needs to give the company registrar the permanent address of its registered office. This office is where business is conducted and where all pertinent corporate paperwork is kept up to date.

Private Limited Company Registration Process 

Registering a company in India involves a straightforward fore-step process:

Step1:  Acquire a Digital Signature Certification (DSC):

 Every director and shareholder must secure a Digital Signature Certificate (DSC) issued by the Controller of Certification agencies (CCA).

Step2: Director Identification Number (DIN):

Obtain a Director Identification Number (DIN) if you intend to be a director in the company. DIN is essential for directors and needs to be provided in the registration form.

Step3: Name Reservation for the Company (SPICe+ Part A):

Begin by completing the SPICe+ Part A form to secure a unique company name. This entails selecting the company type, class, category, and sub-category specifying

the primary division of industrial activity and offering a comprehensive business description. You'll need to propose two names for approval.  

Step4: Submission of Company Details (SPICe+ Part B):

Provide comprehensive information concerning capital, registered office address, subscriber and directors' details, stamp duty, PAN and TAN application, and necessary attachments. Ensure compliance with the Companies Act 2013 and obtain digital signatures from assisting professionals.

Step5: Preparation and Submission of Incorporation Forms(SPICe+ MOA and AOA):

Draft the Memorandum of Association (MOA) and Articles of Association (AOA) containing crucial company details. Obtain digital signatures from subscribers and professionals before submitting these documents to the MCA for approval.Additionally, file the AGILE-PRO-S form to register For GST, EPFO, ESIC, a bank account, and a shop and establishment licence (which may be state-dependent).

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Certificate of Incorporation: Upon successful document verification, the MCA will issue the Certificate of Incorporation (COI) with the Company Identification Number (CIN), PAN and TAN.

Document Checklist

• For Indian Nationals: Self-attested PAN card copy, Passport-sized photo, Aadhar Card, Proof of Identity, and Address Proof.

• For Foreign Nationals: Notarized documents, Passport-sized photo, Passport, and Address proof.

Registered Office Documents

Proof of business address, copy of the rent agreement (if applicable), and owner's no objection certificate.

Register Your Company with Mfiling

Mfiling is an expert in company registration services in India, offering thorough direction and assistance all the way through the registration procedure. Our professional staff provides knowledgeable advice based on your unique needs and company objectives.

Choosing the right name for your business is essential, and Mfiling professionals can help you come up with a distinctive and appropriate name that complies with ROC regulations. We'll look up name availability and help you reserve the name that best suits your company's identity.

It can be difficult to gather the paperwork needed for a company registration, but Mfiling's expert will do this task quickly. We will assist you in compiling all necessary paperwork, making sure it is accurate and compliant.

Directors need to have a Director Identification Number (DIN) and Digital Signature Certificate in order to form a private limited business.