What is a Private Limited Company?

A Private Limited Company in India is a privately held entity with limited liability. It is one of the most popular business structures due to the following advantages:

• Limited Liability Protection: Shareholders are only liable for the amount of their shareholding, safeguarding personal assets from company liabilities.
• Separate Legal Entity: The company is considered a distinct legal entity, allowing it to own property, enter contracts, and initiate legal actions under its name.
• Minimum Shareholders: A minimum of two shareholders is required, with a maximum of 200.
• Minimum Directors: At least two directors are needed, with one being a resident Indian
• Minimum Capital: The company must have a minimum paid-up capital of ₹1 lakh.
• Company Name: The name must end with Private Limited.
• Restricted Share Transfer: Shares can only be transferred with approval from the Board of Directors.
• No Public Invitation: The company cannot invite the public to subscribe to its shares or debentures.
• Compliance Requirements: Proper financial records must be maintained, annual general meetings must be held, and annual returns must be filed with the ROC.

Types of Private Limited Companies

• Company Limited by Shares: Shareholders' liability is limited to the amount mentioned in the Memorandum of Association.
• Company Limited by Guarantee: Member liability is based on the guarantee specified in the Memorandum of Association.
• Unlimited Companies: Members have unlimited personal liability for the company's debts.

Advantages of a Private Limited Company

• Limited Liability: Shareholders' personal assets are protected from the company’s financial liabilities.
• Distinct Legal Identity: The company has its own legal identity, separate from its owners.
• Continuity: The company remains operational regardless of changes in shareholders or directors.
• Ease of Fundraising: Private limited companies can raise capital through shares from investors or venture capitalists.
• Tax Benefits: Certain tax benefits and exemptions are available.
• Credibility: The Private Limited title adds credibility to the business.

Disadvantages of a Private Limited Company

• Compliance Burden: Regulatory filings and audits can be time-consuming.
• Complex Setup: Registration and management costs are higher than simpler business structures.
• Restricted Share Transfer: Shares can't be easily transferred without approval.
• Public Disclosure: Financial information is publicly available.
• Complex Exit: Exiting the company can be complicated compared to other business structures.

Steps for Company Registration in India

• Obtain a Digital Signature Certificate (DSC) for each director and shareholder.
• Obtain a Director Identification Number (DIN).
• Reserve the company name by filing the SPICe+ Part A form.
• Submit company details via the SPICe+ Part B form, including capital structure, registered office address, and director information.
• Draft and submit the Memorandum of Association (MOA) and Articles of Association (AOA).
• File the AGILE-PRO-S form to register for GST, EPFO, ESIC, and other necessary licenses.

Certificate of Incorporation

Once the documents are verified, the MCA will issue the Certificate of Incorporation (COI) along with the Company Identification Number (CIN), Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).

Post-Registration Compliance

After the company is registered, it’s crucial to maintain compliance with annual filings and regulatory requirements to ensure smooth operations.

Register Your Company with Oneasy

At Oneasy, we provide expert support for Private Limited Company registration, ensuring a smooth and compliant process. We handle everything from document preparation to name reservation and compliance management, allowing you to focus on growing your business.