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Private Limited Company

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Overview

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);
  • 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:-

  • 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.

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 & Maximum requirements of a Private Company

  • Minimum 2 members
  • Minimum 2 directors
  • Maximum 200 members
  • Maximum 15 directors

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.

There can be a maximum of 200 members and 15 directors in a Private 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.

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.

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.

The cost could be anywhere between Rs. 6000 to Rs. 10000.

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.

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.

INC – 32 (SPICE+), INC – 33 (e-MOA), INC – 34(e-AOA), INC – 35 (AGILE PRO), INC – 9, DIR – 12, DIR – 2 and INC – 22.

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.

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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