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Private Limited Company

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.

Advantages

  • 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: 

Also some other notable points are: – 

Documents/Details Required for GST Registration of a Private Company After Incorporation

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

  1. Minimum 2 members
  2. Minimum 2 directors

Maximum requirements of a Private Company

  1. Maximum 200 members
  2. 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: –

FAQs

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:- i. Restricts the right to transfer its shares; ii. 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 iii. Prohibits any invitation to the public to subscribe for any securities of the company.
There should be at least two members and two directors in a Private Company.
3. What is the maximum number of members and directors a Private Company can have?
There can be a maximum of 200 members and 15 directors in a Private Company.
4. What changes are required to be made in Articles and Memorandum of a Private Company to convert it into Public company?
Alteration of its articles thereby deleting the 3 restrictions, changing its name thereby deleting the word “private” from its name, increase the number of members to at least 7 and number of directors should be increased to at least 3.
5. What changes are required to be made in Articles and Memorandum of a Private Company to convert it into Public company?
A Private Company may convert itself into an OPC by passing a Special Resolution in the general meeting after obtaining NOC in writing from its members and creditors. The company shall file an application in Form INC-6 for its conversion into One Person Company.
6. What are the documents required for incorporation?
Copy of Aadhaar Card, Voter ID Card, PAN Card (compulsory), Passport, Driving license, Water bill, Telephone bill, Mobile bill or Copy of bank pass book or Net banking statement mentioning address of the applicant, Passport size photo of the proposed director & shareholders, copy of the rent agreement with NOC from Landlord, PAN Card of the company, etc.
7. How much does it approximately cost for registration of a Private company?
The cost could be anywhere between Rs. 6000 to Rs. 10000.
8. Do Private limited companies benefit small businesses or start-ups?
Yes, small business and start-ups get benefits of getting themselves registered as a private company. They get the advantage of credibility and good reputation in the eyes of big financial institutions, clients and suppliers. Also, they get easy loans from banks.
9. What are the eligibility criteria to be a shareholder or director for a Private limited company?
The person should meet the conditions like the minimum age of the person should be 21 and resident or citizen of India to become a shareholder or director of the company.
10. Which forms are required for Private limited Company registration?
INC – 32 (SPICE+), INC – 33 (e-MOA), INC – 34(e-AOA), INC – 35 (AGILE PRO), INC – 9, DIR – 12, DIR – 2 and INC – 22.
11. What is DIN?
DIN is Director Identification Number. Any person planning to become a director in a company must apply for a DIN, issued by the Ministry of Corporate Affairs.
12. Is a foreign entity authorized to be a Director or Shareholder in a Private company?
Yes, every foreign national, entity or a NRI can become a director or shareholder of a private limited company in India.

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