In order to boost your growth for startup , Private limited company formation in India is must. It is a privately held business entity with limited liabilities. It allows a significant degree of separation between operations and ownership. It gives investors a choice of exiting the company without any hassle by just selling the shares without being liable for company affairs. If a business is planning to go global, then the Private Limited Company is the only form which allows 100% Foreign Direct Investment, without any prior government approval.
To set up a private limited company one needs to :
1) Choose a name:The availibility of the name is subject to availibility . The name of the company is its trade name or brand name along with its principal activities, and this company name is a registered name by which an incorporated company is identified. It is critical that one chooses a unique name which does not resemble the name of any existing LLP, any registered private company or trademarks.
2)Have a company address:‘Company Address’ is the address of the Registered Office of the proposed company which is used for all official communications. A temporary address is required, at the time of registration, which could be the address of any of the including Directors. Post registration process applicant has to provide the permanent business address of the registered office with all the documentary proofs of address, ownership.
3)Appoint alteast 2 direcrtors:Minimum 2 Directors are required to manage the affairs of the company who can be same as shareholders. At least one of the directors has to be a Resident of India. To be a Director of a private limited company, one must have a DIN(Director Identification Number). However as per the latest amandments in companies act , now a single person can also form a private limited company and it is commonly knows as one person company.
4)Apply for DIN & DSC for each director:DIN is an eight digit number allotted to every director. No person can become a director without first applying for DIN. It is a unique identification number for an existing director or a person intending to become one, and it is allotted by the Ministry of Corporate Affairs (MCA). Digital Signature Certificate (DSC) is a digital signature which can be attached to an electronic document to verify the applicant’s identity.
5)Have lateast two shareholderMinimum 2 shareholders are required in a company limited by shares. They can be Natural or Artificial Persons such as registered companies or LLP. A shareholder can be same as the director of the company. Maximum of 200 shareholders are allowed, shareholders are the owners of the company, and they have certain rights as shareholders need to vote for appointing directors and agree on changes to the company.
6)Draft Memorandum of association & article of association:Memorandum of Association (MOA) MOA is a document which contains the objective and power of the company and defines the relationship of the shareholders with the company. It must be drafted at the time of incorporation and must contain six clauses revealing the company name, registered company address, its limited liabilities, share capital, company objects, and association of the shareholders and other stakeholders with the company.
Articles of Association (AOA)
AOA are the by-laws of the company which specifies the regulations for a company’s operation. It defines the roles and duties of the directors and other officers of the company. Information such as the total number of members, share capital, rules for a meeting of the company, voting power of members must be included in the AOA. The company may alter it by passing the resolution at a general body meeting of shareholders. Also, AOA may or may not be registered.
7)File INC29 to register private limited with MCA:INC 29 is the single integrated form issued by the ministry of corporate affairs for the incorporation of the company. INC-29 is a single window to get Director Identification Number (DIN), Name Approval and Incorporation application process. It’s a fast track mode to get the company incorporated in the expedited manner
8)Obtaion certificate of incorporation from ROC:Certificate of Incorporation is a certificate issued by the Ministry of corporate affairs/Registrar of companies for the commencement of business; it is a confirmation of and conclusive evidence of incorporation of a company.
Documents Required For Registering A Private Limited Company
1) All directors and shareholders need to provide Self-attested copy of
-ID Proof (Aadhar card/ Voter ID/ Driving license)
2) Address Proof in the name of director (Any utility bill i.e., mobile bill/water bill/ electricity bill, or bank statement which should not be older than two months)
3) 4 Passport Size Photographs
4) Address proof of Registered office
5) Any utility Bill (i.e., mobile bill/water bill/ electricity bill) of the registered office