A private company is a company which is owned by non-governmental organisations or a relatively small number of shareholders or members of a company. Usually, a private company does not offer or trade its shares to the general public on the stock exchanges, but rather the private stock of the company is owned and traded.
Section 2 (68) of the Companies Act, 2013 defines a private company as:
“A Company having a minimum paid-up share capital as may be prescribed, and which by its articles,— (i) restricts the right to transfer its shares; (ii) except in case of One Person Company, limits the number of its members to two hundred; (iii) prohibits any invitation to the public to subscribe for any securities of the company.”
This type of company offers limited liability for its shareholders with certain restrictions placed on the ownership. An LLP has partners, who own and manage the business. Whereas in private limited company registration, directors may be different from shareholders.
Forms of Private Limited Company:
The Companies Act, 2013 allows the incorporation for shareholders and members in one of the following three forms of Private Limited Company depending on the company requirements:
1) Company Limited by Shares – In these companies, the members’ liability is limited to the nominal share amount as mentioned in the Memorandum of Association.
2) Company Limited by Guarantee – In a private limited company limited by guarantee, the members’ liability is limited to the amount of liability each member undertakes in the Memorandum of Association.
3) Unlimited Companies – Unlimited corporations are those types of businesses that have no restrictions on their members’ liability. Each member’s liability extends over the entire amount of the company’s debts and liabilities.
Checklist for Registering a Company in India:
As defined by the Companies Act 2013, before registration, it needs to be guaranteed that the following checklist requirements are met.
A private limited company must have at least two directors, with a maximum of fifteen. A minimum of one of the company’s directors must be a resident of India.
The name of your business must be unique. The suggested name should not match with any existing companies or trademarks in India.
Minimum Capital Contribution:
There is no minimum capital amount for a company. A company should have an authorized capital of at least ₹1 lakh.
The registered office of a company does not have to be a commercial space. Even a rented home can be the registered office, so long as an NOC is obtained from the landlord.
The documents required for a private limited company are:
i. ID proof: PAN card and passport of Indian and foreign directors, respectively
ii. Address proofs: Ration card or Aadhar card or driver’s license or voter ID
iii. Residence proofs: Bank statement or electricity bill of the premise
iv. Notarized rental agreement
v. NOC from the property owner
vi. A copy of the sale deed or property deed (for an owned property)
Process to register a Private Limited Company
The steps to get a private limited company are:
1: Apply for DSC (Digital Signature Certificate)
2: Apply for the DIN (Director Identification Number)
3: Apply for the name availability
4: File the Memorandum of Association and Articles of Association to register the private limited company
5: Apply for the PAN and TAN of the company
6: Certificate of incorporation will be issued by Registrar of Companies with PAN and TAN
7: Open a current bank account on the company name