Starting a business is an exciting venture, and one of the first crucial steps is registering your company. A Private Limited Company (PLC) is one of the most popular business structures due to its numerous benefits. Whether you’re a budding entrepreneur or a seasoned business person, understanding the registration process is essential. Let’s dive into the detailed steps on how to register a Private Limited Company in a way that’s straightforward and easy to follow.
Understanding Private Limited Company
Definition
A Private Limited Company (PLC) is a type of business entity that is privately held and offers limited liability to its shareholders. It operates as a separate legal entity from its owners, which means the company can own property, incur debt, sue, and be sued in its name. Check out the best Private Limited Company Registration in Hyderabad.
Characteristics
- Limited Liability: Shareholders’ liability is limited to the amount they invested in the company.
- Separate Legal Entity: The company is considered a separate legal entity from its owners.
- Perpetual Succession: The company continues to exist even if the owners or directors change.
- Restrictions on Transfer of Shares: Shares of a PLC cannot be publicly traded and are usually transferred privately.
Pre-requisites for Registration
Before diving into the registration process, it’s essential to understand the prerequisites:
Minimum Number of Directors
A PLC must have at least two directors. At least one of the directors should be a resident of the country where the company is being registered.
Minimum Capital Requirement
There is no minimum capital requirement for starting a PLC. However, having a nominal amount of authorized capital (e.g., INR 1 lakh in India) is recommended.
Digital Signature Certificate (DSC)
A DSC is required for the digital signing of documents. All proposed directors need to obtain a DSC.
Director Identification Number (DIN)
DIN is a unique identification number required for the proposed directors of the company. This number is necessary for the incorporation process.
Choosing a Unique Name
Importance of a Unique Name
A unique name helps distinguish your company from others and avoids legal complications. It’s important to choose a name that aligns with your business objectives and is easy to remember.
Checking Name Availability
Before finalizing the name, check its availability on the Ministry of Corporate Affairs (MCA) website or relevant authority in your country. This ensures that the name is not already taken by another entity.
Name Reservation Process
Once you have a unique name, reserve it through the Name Reservation Form (Form INC-1) on the MCA portal or the equivalent form in your country. This process usually involves paying a small fee. Jethani & Associates is the best CA in Hyderabad.
Obtaining Digital Signature Certificate (DSC)
What is a DSC?
A Digital Signature Certificate (DSC) is an electronic form of a signature that is used to authenticate digital documents. It ensures the security and authenticity of the documents being filed online.
How to Obtain a DSC?
You can obtain a DSC from government-authorized agencies or certifying authorities. The process involves submitting an application along with identity and address proof.
Applying for Director Identification Number (DIN)
What is a DIN?
A Director Identification Number (DIN) is a unique identifier for individuals who wish to become directors of a company. It is mandatory for all directors of a PLC.
Steps to Apply for a DIN
- Obtain DSC: Ensure you have a Digital Signature Certificate.
- Fill Form DIR-3: Submit Form DIR-3 on the MCA portal with the necessary documents.
- Verification: The form is verified by the authorities, and upon approval, the DIN is allotted.
Preparing the Required Documents
Before filing for incorporation, gather the necessary documents:
Identity Proof
- Passport
- Voter ID
- Driving License
Address Proof
- Utility bills (not older than two months)
- Bank statements
Other Necessary Documents
- Passport-sized photographs of directors
- Proof of registered office address
Drafting the Memorandum of Association (MOA)
What is an MOA?
The Memorandum of Association (MOA) is a legal document that outlines the fundamental details of the company, including its name, registered office, and objectives.
Key Components of an MOA
- Name Clause: The name of the company.
- Registered Office Clause: The state where the registered office is located.
- Objective Clause: The main objectives and activities of the company.
Drafting the Articles of Association (AOA)
What is an AOA?
The Articles of Association (AOA) is a document that defines the internal rules and regulations governing the company’s operations.
Key Components of an AOA
- Share Capital Clause: Details about the company’s share capital.
- Directors Clause: Information about the directors and their powers.
- Meetings Clause: Procedures for conducting meetings.
Filing the Incorporation Form
Details of Form SPICe+
Form SPICe+ (Simplified Proforma for Incorporating a Company Electronically Plus) is the standard form used for company incorporation in India. It integrates various services like name reservation, DIN allotment, and incorporation.
Filling Out the Form Correctly
Ensure all details are accurately filled in the form, including company details, director details, and registered office address. Double-check for any errors before submission.
Submitting the Required Documents
List of Required Documents
- MOA and AOA
- Identity and address proof of directors
- Proof of registered office
Procedure for Submission
Upload the scanned copies of the required documents along with Form SPICe+ on the MCA portal. Ensure all documents are in the prescribed format.
Paying the Registration Fees
Fee Structure
The registration fee varies based on the authorized capital of the company. Refer to the fee calculator on the MCA portal or relevant authority for accurate details.
Payment Methods
Fees can be paid online through net banking, credit/debit cards, or other accepted payment methods.
Verification and Approval Process
What Happens After Submission?
After submission, the application and documents are scrutinized by the Registrar of Companies (RoC). If all details are correct, the incorporation process proceeds.
Timeline for Approval
The approval process typically takes 7-10 working days. Any discrepancies or additional information required may extend this timeline.
Receiving the Certificate of Incorporation
What is a Certificate of Incorporation?
The Certificate of Incorporation is an official document issued by the RoC that confirms the formation and legal existence of the company.
How to Obtain It?
Once the application is approved, the Certificate of Incorporation is sent to the registered email address. It can also be downloaded from the MCA portal.
Post-Registration Compliance
Maintaining Statutory Registers
A PLC must maintain various statutory registers, such as the Register of Members, Register of Directors, and Register of Charges.
Filing Annual Returns
Annual returns and financial statements must be filed with the RoC annually. This ensures the company remains compliant with regulatory requirements.
Other Compliance Requirements
- Holding Annual General Meetings (AGM): Conduct AGMs within six months from the end of the financial year.
- Appointment of Auditor: Appoint an auditor within 30 days of incorporation.
Conclusion
Registering a Private Limited Company might seem like a daunting task, but with the right guidance and understanding of each step, it becomes manageable. From choosing a unique name to maintaining post-registration compliance, each stage is crucial for the smooth operation of your business. Follow this guide meticulously, and you’ll be on your way to establishing a legally recognized and successful company.
FAQs
- What is the minimum number of shareholders required for a Private Limited Company?
- A minimum of two shareholders is required to form a Private Limited Company.
- Can a foreign national be a director in a Private Limited Company?
- Yes, a foreign national can be a director, provided at least one director is a resident of the country where the company is registered.
- What is the validity period of a Digital Signature Certificate (DSC)?
- A DSC is typically valid for 1 to 2 years and can be renewed thereafter.
- Is it mandatory to have a physical office address for registration?
- Yes, a registered office address is mandatory for the incorporation process.
- What are the consequences of not complying with post-registration requirements?
- Non-compliance can lead to penalties, fines, and in severe cases, the company’s deregistration.