The term “private company” has been defined under Section 2(68) of The Companies Act, 2013. A private company means a company, which has such minimum paid-up share capital as may be prescribed and which by its articles provide the following:-
- Restricts the right to transfer its shares;
- Except is case of one person company (OPC), limits the number of its members to 200 excluding present and past employees who continue to be the members of the company (here joint members shall be counted as one); and
- Prohibits any invitation to the public to subscribe for any securities of the company.
- There is a Limited risk to personal assets in Private Limited Company.
- Private Limited Company is a Separate Legal Entity.
- In the Private Limited Company there would Limited Liability for members.
- A company being an independent legal entity can sue and be sued in its own name.
- A company has perpetual succession, that is continued or uninterrupted existence until it is legally dissolved.
Documents/Details Required for Incorporation of a Private Company
Following self-attested documents of the Proposed Director/Nominee is required:
- Share capital amount and proposed ratio for holding shares.
- Two identity proof documents of Directors and Shareholders – Copy of Aadhaar Card/ Voter ID Card/ PAN Card (compulsory).
- Residence Address proof, residence proof of a director include any latest utility bill (not older than month) in your name like electricity bill, Gas bill, water bill, mobile or internet bill or passbook front page & latest transaction page or internet banking statement with latest transaction covering your name & address as mentioned in your id proof.
- One address proof document of registered office (like water, telephone, electricity bill, gas bill or property sales deed in the name of the owner of the property along with his or her NOC for registration of the company on the address
- Passport size photo of the proposed director & shareholders.
- Email id & Mobile Number, all directors email id and Mobile Number is required and one company’s Email id is also required
- NOC of the Owner of the Property NOC from the owner of the property is compulsorily required
- Occupation details, Email address, Contact details of directors as well as shareholders.
- Affidavits for non- acceptance of deposits, but now this is required to be prepared after incorporation of the company.
- Nationality proof of foreign national subscriber (if any), identity proof and address proof of foreign national is required,
Also some other notable points are: –
- Authorised and paid-up Share Capital: the earlier minimum number of the share capital was Rs. 1,00,000, but now there is no such minimum capital compulsion. The minimum share capital can be as prescribed by their Article of Association.
- Activities of the Company: List of proposed activities of the company shall be prescribed in its Articles during incorporation.
- Proposed Name of the company: a name of the company (name must be unique & not in general nature) and there should not be any existing company exits similar or same to the proposed name.
Documents/Details Required for GST Registration of a Private Company After Incorporation
- Utility Bill: Only utility bill as Electricity Bill is required or latest Property Tax Receipts is required, either of two is mandatory for GST.
- Rent Agreement: Notarised Rent Agreement or proper Lease Deed between owner of the property and one company signed by Director.
- Board Resolution: Board resolution for GST Registration and person authorised in the GST (if more than one director or authorised person is other than single director) is mandatorily required.
Naming Criteria of a Private Company
- Any company should have a short, unique and meaningful name shall not be identical with or too nearly resembles the name of an existing company.
- No company shall have a name which, in the opinion of Central Government, is undesirable or the name proposed resembles any connection with Government or State patronage, unless prior approval of the Central Government is obtained.
- The name should not be such that its use by the company will constitute on offence under any law.
- The name should not be illegal or offensive.
- The name should not be misleading for the public.
- The Companies Act 2013 provides that the name of a private limited company must end with the words “Private Limited”.
Eligibility for registering a Private Company
- The minimum age of the person registering the company should be at least 21.
- A resident or citizen of India can become a shareholder or director of the company.
- A minimum of 2 shareholders, who are adults, must be present during the whole process.
- One of the Directors of a private limited company has to be an Indian Citizen and Indian Resident.
- The other director(s) can be a Foreign National.
- The shareholders can be natural persons or an artificial legal entity.
Minimum requirements of a Private Company
- Minimum 2 members
- Minimum 2 directors
Maximum requirements of a Private Company
- Maximum 200 members
- Maximum 15 directors
Exemptions for a Private Limited Company
Following compliances are not required to be done by a Private Limited Company related to meetings & other compliances: –
- Appointment of Independent Directors is not applicable.
- Appointment of Woman Directors is not applicable.
- Appointment of Woman Independent Directors is not applicable.
- Composition of Audit Committee is not applicable.
- Composition of Nomination & Remuneration Committee is not applicable.
- Composition of Risk Management Committee is not applicable.
- Private Company having Paid-up Share Capital of less than Rs. 50 crore and Public Borrowings from financial institutions, banks or public deposits of less than Rs. 50 crore, may appoint an individual as auditor for more than one term of 5 consecutive years; and an audit firm as auditor for more than 2 terms of 5 consecutive years.
- Private Companies which, issued Non-Convertible Debentures (NCDs) or Non- convertible Redeemable Preference Shares on Private Placement basis in terms of specified SEBI Regulations & listed the same shall not be considered as listed company. (effective from 1.04.2021).
- Facilitation of Demat facility is not required in case of Private Companies.
- Private Company can transfer the share in physical mode.
- Related party transaction is not applicable for private companies.
- Related parties can vote on any resolution.
- Private company upon receiving the consent of 90% of its members in writing or in electronic mode, may prescribe for lesser period for sending the Offer Letter of Right Issue. It can also provide lesser time period for subscription of Right Issue.
- A Private Company is free to decide the Voting Rights on its shares.
- A Private Company can issue shares to its employees under Employee Stock Option Scheme by passing Ordinary Resolution instead of Special Resolution.