When you think of starting a business, the first thing that you consider is the type of business you want to start. You may have some other people with whom you want to make partners, or you would want to be the company’s sole owner. Most entrepreneurs who want to start a small or medium business with utmost flexibility choose a private limited company as their business structure.
However, choosing the business structure is only half the work done. Registering a private limited company is mandatory as per the rules and guidelines set by the Ministry of Corporate Affairs. The registration of the private limited company gives legal rights and existence to the company and allows you to have limited liability. This article will help you understand how you can register a private limited company in India.
What are the features of a private limited company
Here are some main features of a private limited company:
- Separate entity: After registration, the private limited company becomes a separate entity distinct from its owner.
- Loans: A registered private limited company can take loans from banks and NBFCs easily using their online marketplace or platform.
- Legal rights: A registered private limited company has legal rights and can sue or be sued. It can also own property in its name, and owners can not claim it for personal use.
- Limited liability: A registered private limited company provides limited liability to the owners. This means that they are only responsible for the company’s loans or debts up to the amount they have agreed to contribute or have invested in the company. Their personal assets are protected and cannot be used to pay off the company’s liabilities.
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What is the process to register a private limited company
Here are the steps to follow for private limited company registration in India:
Digital Signature Certificate
The first step is to acquire the Digital Signature Certificate from the recognised issuing authorities. DSC is needed to sign the company registration form online and for the shareholders and subscribers in the MOA and AOA.
Director Identification Number
The next step is to apply for the Director Identification Number (DIN). This number is mandatory and is used to identify the company’s directors. You can apply for a DIN by filling out DIR-3 or using the SPICe+ online system.
Name approval
The next step is to reserve the company’s name. To do so, visit the Ministry of Corporate Affairs web portal and fill out Form SPICe+ Part A. The MCA will then analyse the name’s availability and viability before reserving it.
Filling SPICe+ form
You must visit the MCA portal to complete the SPICe+ form thoroughly. This form is used to register the company, issue DIN, TAN, and PAN applications, and register ESIC and EPFO. You must enter details such as the registered office address, director names, share capital, business activities, etc.
Certificate of Incorporation
Once you have submitted the SPICe+ form, the Registrar of Companies (RoC) will review the SPICe+ form. If the form is complete and the information you have entered is accurate, the ROC will issue the Certificate of Incorporation. Along with the certificate, you will also receive the Corporate Identity Number (CIN).
PAN and TAN
The SPICe+ form includes PAN and TAN applications, so you don’t have to apply for them separately. The Income Tax Department assigns the PAN in addition to the company’s Certificate of Incorporation. The Ministry of Corporate Affairs will send you an email with the company’s TAN, PAN, and Certificate of Incorporation.
Other factors
Once the company is registered, you need to open a bank account in its name and issue share certificates to all the directors and shareholders of the company within two months of the company’s incorporation.
Conclusion
Registering a private limited company was a tedious task before the introduction of the SPICe+ form. Now, all the licenses and certificates are issued through a single online form, making it relatively easy to register a private limited company. You need to visit the MCA portal and fill out the SPICe+ form, and your private limited company will be registered in a matter of a few days.
