Private Limited Company Registration in India

Private Limited Company Registration in India

What is Company Registration? 

Private Limited Company would be the most preferred form of entity for anyone looking to build a scalable business. Start-ups and growing business choose to register their company in India because it allows them to raise external funds easily, limits the liabilities of shareholders, and enables them to offer employee stock options to attract top talents. As these entities must hold board meetings and file annual returns with the Ministry of Corporate Affairs (MCA), they tend to be more credible than a Limited Liability Partnership (LLP), One Person Company (OPC), or a general Partnership Firm. 

For GST-Registration-India, we are constantly helping naïve entrepreneurs understand how to register a private limited company. All such businesses must have at least two directors and two shareholders since inception.

6 Essential Facts on Company Registration: 

What if I am a single founder?

A private limited company is required to have atleast two directors and two shareholders since inception. If you are a single shareholder, you can also bring in 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?

It’s pretty simple. Startups choose private limited companies so that they can raise venture capital funds and offer best employees stock options. Without the right funding and stock options, it’s almost impossible to build a scalable 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 process 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 as DIN) which typically takes a day. The third phase will involve selecting a name for the company. Now, do remember that a company name need not be your brand name.  For example, Naukri.com has been incorporated as InfoEdge Technologies. Once all this is 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 two shareholders, and can have a maximum of 15 directors and 50 shareholders.

How much do you need to invest?

The great news is that you do not have to invest any money upfront. Most entrepreneurs do bring in 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 (as in, they do not need to introduce any money into the company).

What regulatory requirements are placed on private limited company?

As private limited companies cannot offer shares to the public, the regulatory requirements placed on them are fewer than on public companies. For example, they need not disclose their books of accounts and because of this advantage, they do not have to worry about the long term and rather face the music from their shareholders in case their results in a particular quarter are poor.