Private Limited Company

About Private Limited Company Complete Guide

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private limited company is a company which is privately held for small companies. The legal responsibility of the members of a Private Limited Company is proscribed to the quantity of shares respectively held by them. Shares of Private Limited Company can’t be publicly traded. All the features of Private Limited Company is mentioned within the article.

Characteristics of Private Limited Company

  1. Members– To begin an organization, a minimal variety of 2 members are required and a most variety of 200 members as per the provisions of the Companies Act, 2013.
  2. Limited Liability– The legal responsibility of every member or shareholder is proscribed. It implies that if an organization faces loss underneath any circumstances then its shareholders are liable to promote their very own belongings for fee. The private, particular person belongings of the shareholders are usually not in danger.
  3. Perpetual succession– The firm retains on present within the eyes of regulation even within the case of demise, insolvency, the chapter of any of its members. This results in the perpetual succession of the corporate. The lifetime of the corporate retains on present without end.
  4. Index of members– A non-public firm has a privilege over the general public firm because it don’t need to preserve an index of its members whereas the general public firm is required to take care of an index of its members.
  5. A variety of administrators– When it involves administrators a personal firm must have solely two administrators. With the existence of two administrators, a personal firm can come into operations.
  6. Paid-up capital– No minimum paid up capital required for starting a private Limited company.
  7. Prospectus– Prospectus is an in depth assertion of the corporate affairs that’s issued by an organization for its public. However, within the case of a private limited company, there isn’t a such must challenge a prospectus as a result of this public shouldn’t be invited to subscribe for the shares of the corporate.
  8. Minimum subscription– It is the quantity acquired by the corporate which is 90% of the shares issued inside a sure time frame. If the corporate shouldn’t be in a position to obtain 90% of the quantity then they can not begin additional enterprise. In the case of a personal restricted firm, shares could be allotted to the general public with out receiving the minimal subscription.
  9. Name– It is necessary for all non-public firms to make use of the phrase non-public restricted after its identify.

Procedure to register Private Limited Company

Once a reputation for the corporate is determined, the next steps need to be taken by the applicant: 

Step 1: Apply for Digital Signature Certificate (DSC) and Director Identification Number (DIN)

Step 2: Apply for the identify availability

Step 3: File the MOA and AOA to register the non-public restricted firm

Step 4: Apply for the PAN and TAN of the corporate

Step 5: Certificate of incorporation will probably be issued by ROC with PAN and TAN

Step 6: Open a present checking account on the corporate identify

Requirements for Private Limited Company Registration

The necessities for non-public restricted company registration are:

Members in Private Limited Company
Members- A minimal variety of two and a most variety of 200 members or shareholders are required as per the businesses’ act 2013 earlier than registration of the corporate.


Directors in Private Limited Company

Directors- A minimal variety of two administrators is required for registering the non-public restricted firm. Each of the administrators ought to have DIN i.e. director identification quantity which is given by the ministry of company affairs. One of the administrators have to be a resident of India which implies he/she ought to have stayed in India for not lower than 182 days in a earlier calendar 12 months.

Name : Private Limited Company

Name- It is among the main parts of a personal restricted firm. The identify of the corporate incorporates three components i.e. the identify, the exercise, and personal restricted firm. It is important for all non-public firms to make use of the phrase non-public restricted firm on the finish of its firm identify. Every firm has to ship 5-6 names for approval to the registrar of the corporate and all of the names must be distinctive and expressive. The identify for approval shouldn’t resemble with every other firms identify. So selecting the best firm identify is a vital element is it’ll stick with the corporate all through its life.

Registered office address

Registered workplace address- While going for the registration of the corporate, the proprietor ought to present the short-term tackle of the corporate till it doesn’t get register. However when the corporate has been registered then the everlasting tackle of its registered workplace must be suited with the registrar of the corporate. The Registered workplace of the corporate is the place the corporate’s important affairs are been performed and the place all of the paperwork are positioned.

DSC : Private Limited Company

Obtaining a digital signature certificate- In at the moment’s fashionable world every little thing is completed on-line. All paperwork are submitted electronically and for that, each firm should get hold of a digital signature certificate which is used to confirm the authenticity of the paperwork. A digital signature is obtained by all the administrators that are marked on all of the paperwork by each director.

professional certificate : Private Limited Company

Professional certification- In an organization there are a lot of professionals which have required for a lot of functions. For incorporating a personal restricted firm certification by these professionals are needed. Various professionals corresponding to firm secretary, chartered accountants, price accountants, and many others are required to make their certification on the time of firm incorporation.

Advantages of Private Limited Companies

Ownership : Private Limited Company


In a public firm, regulation and possession of shares could be bought to the general public on an open market. On the opposite hand, in a personal firm, shares could be bought or transferred to different individuals by the selection of the proprietor. Shares of such firms are owned by founders, administration, or a bunch of personal traders. Shares right here are usually not bought within the open market. Thus there will probably be much less variety of shareholders. This means much less complexity and confusion in decision-making and administration.

Minimum number of shareholders


For a personal firm, a minimal variety of required shareholders is 2, whereas, for a public company, you require a minimal of seven shareholders.

Legal Formalities : Private Limited Company


Legal formalities are generally very costly and time-consuming, aren’t they? If you’re planning to start out a public firm, you higher be ready as a result of there’s a lengthy listing of authorized formalities for forming a public firm. Private firms have a relatively shorter listing.


A public firm is required to reveal their monetary studies to the general public each quarter, as it’ll have an effect on public funding; non-public firms are usually not subjected to any such compulsion.


Management and decision-making turn out to be extra advanced and complicated in public firms as extra variety of shareholders is to be consulted. This advanced process is eradicated in a personal firm because the variety of shareholders is much less.


Managers of Public firms are centered on growing the worth of shares, whereas managers of the non-public firm are extra versatile within the quick time period and long run enterprise selections.


Private firms are usually not pressurized by the inventory market and also you don’t have to fret about shareholder expectations and interference so long as they work throughout the regulation. Shareholders in public firms are centered on present earnings and so they exert strain on the corporate to extend earnings.


Managers of public firms are pressurized to extend earnings within the quick time period as a way to improve the worth of their inventory. Private firms can give attention to long-term earnings as such strain is eradicated.


You will probably be needing some huge cash for a public firm. A public firm requires a minimal share capital of Rs. 5,00,000. For a personal firm, the sooner minimal variety of the share capital was Rs. 1,00,000, however now there isn’t a such minimal compulsion. Therefore there isn’t a strain of fund necessities.


It is clearly not applicable, for rivals to know about your corporation secrets and techniques. Confidential data corresponding to government compensation, authorized settlements, and different important data can’t be saved reserved in public firms. Such data is safer in a personal firm.

Documents required

  • Share capital quantity and proposed ratio for holding shares.
  • A quick description of the corporate and the enterprise.
  • Name of the town the place the registered workplace of the corporate is situated.
  • Ownership and sale deed (In case your personal premise).
  • Identity proof of the Directors and Shareholders (PAN Card).
  • Address proof of the registered workplace (Electricity invoice, phone invoice, and many others.)
  • Address proof of the Director or the Shareholder (Voter ID, Passport, Driving license, and many others.)
  • A duplicate copy of the newest electrical energy invoice, phone invoice, or cellular invoice for administrators.
  • Occupation particulars of administrators in addition to shareholders.
  • Email tackle of the administrators and shareholders.
  • Contact particulars of administrators and shareholders.
  • Passport measurement photograph of administrators and shareholders.
  • In case the property is on lease then it’s good to submit a replica of the lease settlement with No Objection Certificate (NOC) from the owner.
  • Affidavits for non- acceptance.
  • NOC for a change within the unique subscribers of MOA.
  • MoA and the AoA subscriber sheets.
  • PAN Card of the corporate.
  • In case you’re a overseas nationwide subscriber then it’s good to present Nationality proof.

Therefore, a Private Limited Company is easier in comparison with a Public firm. It is relatively inexpensive and fewer time-consuming.

For any additional question about the company registration of Private Limited Company, be happy to contact us at Camsol Advisory

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