Private Limited Company Registration, Documents, Fees & Process

In India, a Private Limited Company is one of the most preferred business structures, governed by the Companies Act, 2013. Entrepreneurs looking to establish a company in India find Private Limited Company Registration essential, as it creates a solid business foundation and offers limited liability protection to its directors.

Registering a company under the Companies Act, 2013 must be done through the Registrar of Companies (ROC) by the guidelines set by the Ministry of Corporate Affairs (MCA). This legal registration is a vital step toward formalizing your business structure.

MSME Story provides an affordable and streamlined service to help with the Private Limited Company Registration. From handling all the necessary legal formalities to ensuring compliance with MCA regulations, MSME Story takes care of everything. Upon successful registration, you’ll receive a Certificate of Incorporation, along with PAN and TAN documents, allowing you to start business operations smoothly after opening a current bank account.

Company Limited by Shares: This is the most common type of private limited company, in which shareholders’ liability is limited to the amount unpaid on their shares. If the company faces financial losses, shareholders are only responsible for the unpaid portion of their shares.

Company Limited by Guarantee: In this type, members’ liability is limited to the amount they agree to contribute to the company’s assets in the event of its liquidation. It’s commonly used for non-profit organizations or charitable institutions.

Unlimited Company: Unlike other types, the members of an unlimited company have no limit on their liability. If the company incurs debts or losses, shareholders may be liable for the company’s obligations, extending beyond their shareholdings.

A Private Limited Company Incorporation is one of the most favoured business structures in India, offering numerous advantages that make it appealing to entrepreneurs. However, it also comes with some limitations.

• Limited Liability: One of the key benefits is limited liability. Shareholders’ responsibility is confined to the amount they’ve invested in the company, ensuring their assets remain protected from the company’s debts and liabilities.
• Distinct Legal Identity: A Private Limited Company enjoys a separate legal identity from its owners. This enables the company to own assets, enter into contracts, and take legal action in its name, providing greater operational flexibility.
• Continuous Existence: Another major advantage is its continuous existence. The company remains unaffected by changes in shareholders or directors, ensuring business continuity even in the event of unforeseen circumstances.
• Ease of Funding: Raising capital is simplified with this structure. A Private Limited Company can issue shares to investors, venture capitalists, or angel investors, making it easier to attract external funding and scale the business.
• Tax Benefits: Private Limited Companies are often eligible for various tax benefits and exemptions, making them a more tax-efficient entity compared to other business structures.
• Credibility and Trust: The “Pvt. Ltd.” suffix in the company name enhances credibility and trust among customers, suppliers, and potential business partners, adding to the company’s reputation in the market.

While a Private Limited Company offers many advantages, it also comes with certain challenges that entrepreneurs should consider.

• Compliance Burden: A Private Limited Company faces a high compliance burden. Regular financial reporting, filings, and audits are mandatory, adding to the regulatory demands.
• Complex Setup: The setup process for a Private Limited Company is more complex and costly compared to simpler structures like sole proprietorships. Managing the legal and administrative aspects requires more effort and resources.
• Share Limits: Share transfers are restricted, and the company can have a maximum of 200 shareholders in India, limiting the potential for expanding ownership.
• Public Disclosure: A Private Limited Company’s financial information is publicly accessible, which may affect privacy. This transparency can be a concern for businesses that prefer confidentiality.
• Exit Complexity: The process of exiting or selling the company is more complicated than in other structures, making it less flexible for entrepreneurs looking to transition out of the business.
• Slower Decision-Making: Since decisions often require the involvement of both shareholders and directors, it may result in slower decision-making, especially in urgent matters.

Following is the important checklist to register Private Limited Company  in India:

• A minimum of 2 Directors are required.
• A minimum of 2 Shareholders and a maximum of 200 Shareholders are required.
• DSC or Digital Signature Certificate for all the designated Directors.
• DIN or Director Identification Number of all the Directors of the Company.
• At least 1 Director must be an Indian Resident.
• Company’s Name which is not similar to any other existing Company name.
• Authorized Capital of a Private Limited Company.
• MoA (Memorandum of Association) & AOA (Articles of Association).
• Proof of registered office.

• Aadhar and PAN Card of the Directors.
• Latest passport-sized photos of all the proposed Directors.
• Identity proof of the Directors.
• Address proof of the Directors.
• Passport(Only if the Director is a Foreign National)
• Proof of office address – Rental Agreement or Ownership Deed such as Sale Deed
• Copies of utility bills such as electricity bill, water bill or gas bill not older than two months
• Copies of utility bills that are not older than two months
• Copy of approval in case the proposed name of the company contains any word(s) or expression(s) that require approval from the central government
• If the proposed name is based on a registered trademark or is the subject matter of an application pending for registration under the Trade Marks Act, then it is mandatory to attach the trademark registration certificate or trademark application copy
• NOC from the owner of the property, if the registered office is on a rented/leased property.

Board Meetings: The company must hold its First Board Meeting within 30 days of incorporation. It is mandatory to hold four board meetings each year, with no more than 120 days between them.

Annual General Meeting (AGM): An Annual General Meeting (AGM) must be held every year by September 30th at the company’s registered office during business hours.

Auditor Appointment: The first auditor must be appointed within 30 days of incorporation and will serve until the end of the first AGM. The ADT-1 Form must be filed within 15 days after appointing the subsequent auditor.

Filing Requirements

• Annual Return: File AOC-4 and MGT-7 within 30 and 60 days of holding the AGM, respectively.
• Income Tax Return: File Form ITR-6 annually for income tax purposes.
• DIR-3 KYC: Submit the DIR-3 KYC form to disclose director details annually.

Minimum Capital Requirement: There is no longer a minimum capital requirement to register a Private Limited Company. However, the minimum authorized and paid-up capital is usually set at ₹1,00,000 to accommodate initial investment potential. Previously, a minimum capital of ₹1,00,000 was mandated, but this was repealed in 2015.

Tax Rates for Private Limited Companies

• The basic tax rate for domestic companies (excluding surcharge and cess) is 25%.
• The surcharge is applicable based on the taxable income:
  • Income above ₹1 Crore and up to ₹10 Crore: 7% surcharge.
  • Income above ₹10 Crore: 12% surcharge.
• A Health and Education cess of 4% is levied on the total income tax and surcharge (if any).

Note: These tax rates are for FY 23-24 and may vary based on special provisions under sections 115BAA, 115BAB, or other deductions.

Typically, it takes around 7 to 10 days from submitting the SPICe+ form to receiving the Certificate of Incorporation, pending approval by the Ministry of Corporate Affairs (MCA). However, various factors can cause delays in the registration process.

Common Causes of Registration Delays

1. Incomplete or Incorrect Documentation

Providing inaccurate or incomplete documents is one of the most common reasons for delays. Ensure that all required documents are correctly filled out, signed, and attached as per regulatory guidelines to avoid setbacks.

2. Company Name Approval Issues

If your chosen company name doesn’t comply with naming guidelines or is already registered, the process may be delayed. To prevent this, conduct a Company Name Search beforehand to ensure the name is unique and acceptable.

3. MCA Server Glitches

The MCA portal can occasionally experience technical issues such as slow processing times or glitches, which may affect submission or cause data loss, delaying the process further.

4. Response Time Delays

Once your company name is approved, there’s a limited timeframe to complete the registration. If you don’t submit your application within this period, you may have to reapply for name approval, causing unnecessary delays.

5. Payment Processing Issues

Delays in payment processing can hold up the registration process. Make sure payments are processed promptly to keep your registration on track.

6. Jurisdictional Differences

Different jurisdictions may have varying processing times and specific requirements, which could result in delays. Be aware of your jurisdiction’s regulations to ensure smooth processing.

The Private Limited Company Registration Number, also known as the Corporate Identification Number (CIN), is a unique 21-digit alphanumeric code assigned to a private limited company upon its registration with the Registrar of Companies (ROC). This number acts as a distinct identifier for the company and provides crucial information about its registration details, including the state of incorporation and the company structure.

Breakdown of the CIN

An example of a CIN for a private limited company is U72200KA2013PTC097389. The structure of this code can be broken down as follows:

• First Letter: Indicates the listing status. Unlisted companies start with “U,” while listed companies begin with “L.”
• Next Five Digits: Classify the economic activity, pinpointing the specific industry the company operates in.
• Next Two Letters: Represent the Indian state where the company is registered. In this case, “KA” indicates Karnataka.
• Next Four Digits: Signify the year of incorporation, which is 2013 in this example.
• Next Three Letters: Denote the type of company, helping to identify whether it’s a Private Limited Company (PTC), Public Limited Company, or Foreign Company.
• Last Six Digits: Represent the unique registration number issued by the ROC.

How to Obtain Your Registration Number

Once your SPICe+ Form is approved, you will receive an email from the Ministry of Corporate Affairs (MCA) containing your Certificate of Incorporation, PAN, and TAN.

The Certificate of Incorporation is a legal document confirming that your company has been successfully registered. It includes essential details such as the company’s name, registration number, date of incorporation, registered office address, and type of company structure.

Once the Private Limited Company registration process is completed, you will receive the following essential documents that officially establish your company:

Certificate of Incorporation (COI)–The Certificate of Incorporation is issued by the Registrar of Companies (RoC). It serves as proof that your company is officially registered and legally exists under the Companies Act 2013. The COI contains important details like the company’s name, registration number, and date of incorporation.

Permanent Account Number (PAN)–The PAN is automatically generated by the Income Tax Department and issued with the Certificate of Incorporation. It is required for all financial transactions, including filing income tax returns, opening bank accounts, and receiving payments.

Tax Deduction and Collection Account Number (TAN)–The TAN is also generated during the registration process and is necessary for deducting taxes at the source. TAN is mandatory for any company making salary payments or performing any other taxable transactions.

Memorandum of Association (MoA)–The MoA is a crucial document that outlines the company’s objectives, powers, and scope of operations. It defines the relationship between the company and the outside world, including the nature of the business activities.

Articles of Association (AoA)–The AoA defines the company’s internal governance and rules regarding decision-making, management, and operations. It complements the MoA by establishing the company’s policies and procedures.

Director Identification Number (DIN)–Each director receives a Director Identification Number (DIN), which is a unique identifier issued by the Ministry of Corporate Affairs (MCA). This number is required for any filings or legal actions involving the director.

Digital Signature Certificate (DSC)–The Digital Signature Certificate (DSC) is an electronic method of verifying the identity of the directors and subscribers. It is required for signing digital documents submitted to the MCA.

Goods and Services Tax (GST) Certificate (if applicable)–If the company applies for GST registration through the SPICe+ form during incorporation, you will receive the GST Certificate, which is necessary for conducting taxable business under GST laws.