Registering a Private Limited Company in India (2018 Update)

A Private Limited Company registration in India is customary for starting a new business. This structure is developed under the organized business sector governed by specific Act and provisions.

A company in India is incorporated and registered under the Indian Companies Act, 2013 which has appointed the Ministry of Corporate Affairs as a governing body. In this article, we present a step-smart manual for a Private Limited Company Registration in India.

Simplified Guide on Private Limited Company Registration Process:

Among the numerous type of companies under the Companies Act, this article highlights the requirements of a Private Limited Company that has share capital.

It is a body corporate that offers separation of ownership from the management in addition to the limited liability of its members. Registered with a minimum of 2 directors and members, it can have up to a maximum of 15 directors and 200 members.

Here is a simplified and step-wise guide on how to register a company where the legalities are handled by a Company Secretary or a Chartered Accountant.

1. Obtain Digital Signature Certificates:

A Digital Signature Certificate is known as DSC. All the filings, including the registration application, is made online. The DSC procurement is the pre-requisite for the promoters. Any e-form filed in connection with a company requires affixing DSC of the authorized person. In the case of application of incorporation in SPICe forms, the directors and members are required to affix their signature in their respective forms.

2. Reserve Unique Name for Company:

Naming is a significant matter for every business as it later creates the brand value in itself. The first step for company incorporation is to reserve the company name. While the formulation of a company name, the factor of distinctiveness should be kept in mind along with its prescribed provisions. The application of name reservation follows name search by the professionals and checks on whether any other company/ LLP are already registered with the same name or whether a trademark is registered. Further, the applied name must also be in line with the provisions of name availability.

The application is usually made using web-form named RUN (Reserve Unique Name). Here, two alternate names are applied in preferential order with payment of INR 1,000. MCA provides one chance to re-submit the application if none of the names is approved.

Upon approval, the name is reserved for the applicant for a period of 20 days by the issuance of Name Approval Letter. Within the given time, the promoters must process the incorporation application.

3. MoA, AoA and other Documents:

The documentation is a major part for incorporating a company. Therefore, one must take care while drafting it. MoA and AoA of a company are the charters defining the operational boundaries of a company and its internal rules and regulations.

An important clause of MoA (Memorandum of Association) is the object clause where the company needs to prescribe its main business activities. This clause is carefully crafted, knowing that a company cannot indulge in an activity that is outside the prescription of this clause.

The company is a private limited, the below-mentioned three clauses are included in its AoA in addition to the general clauses.

• The number of members is limited up to 200.
• Share Transfers is restricted.
• Prohibition on accepting securities from the public.

Other Documents: Apart from MoA and AoA, below mentioned documents accompany the application for company incorporation.

• Latest Passport size photograph of the directors and shareholders
• Self-attested copy of a PAN Card of all the directors and shareholders. In case of Foreign Nationals, copy of Passport is to be provided.
• Identity Proof of the directors and shareholders: Self-attested copy of Aadhar card and Voter ID/ Passport/ Driving License
• Address Proof of the directors and shareholders: Self-attested Latest Telephone Bill /Electricity Bill/ Bank Account Statement
• Business Address Proof:
  • Electricity Bill, Telephone Bill, Water Bill or Gas Bill for the registered office address is provided which is not older than two months.
  • The owner of the said property should further provide a No Objection Certificate (NOC) to company allowing the use of property for business purpose.
  • If the place of business is not owned by a director or shareholder of company, the rent agreement must be submitted.
• The proposed director of the company needs to provide their consent to act as a director after company incorporation in form DIR-2.
• A declaration in form INC-9 is submitted by the first subscriber(s) and director(s)

4. Application for Private Limited Company Registration:

As the above-listed documents are collected, the promoters can apply for a Private Company registration. This application must be made within 20 days of name approval. An application is submitted through MCA portal in e-form SPICe along with SPICe-MoA and SPICe-AoA.

The e-Form SPICe is a consolidated application for company incorporation, allotment of DIN for directors and company’s PAN and TAN. One can reserve a company’s name with this form. However, only one name applies and hence most of the applicants prefer to file an application under RUN, which is relatively simple.

DIN Application:

For appointment of an individual as a director of a company, (s)he must hold a valid DIN (Director Identification Number). If (s)he does not have any DIN, an application for allotment can be made in this form for maximum of 3 directors.

Application fee:

The Government fee for the registration application is waived off for small and other companies having authorised capital up to 10 Lakh. Although registration fee is reduced for these companies, the stamp duty is still payable to its respective State Government for registration.

As the application is filed by payment of applicable Government fee, the Central Registration Centre (CRC) will review and verify the application and documents. Upon its approval, the Certificate of Incorporation (CoI) is granted that remains a conclusive proof of company’s existence.

The certificate mentions the date of incorporation, Company Identification Number (CIN), Permanent Account Number (PAN) and Tax Account Number (TAN) with the sign and seal of a Registrar. Along with approval of incorporation, the DIN is also allotted to the respective applicant.

With regards to the allotment of PAN and TAN, the amendment u/s 139A of Income Tax Act was introduced by Finance Act, 2018 stating that the numbers shown in the Certificate of Incorporation are the sufficient proof of allotment and there is no need of a physical card.

The issuing of incorporation certificate means that now a company has its existence. This certificate allows a company to carry out business activities and own assets in its own name. The company remains in existence as long as the annual compliance is met regularly as guided by the professional.

This is an updated version of Registering a Private Limited Company in India. This post has been contributed by Shrijay Sheth, co-founder of Legalwiz.in, a legal expertise firm. The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily the author’s employer, organization, committee or other group or individual.

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