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Private Limited Company Registration

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What is a Private Limited Company?

A Private Limited Company (PLC) is one of the most common types of legal entityin India. Private Limited Companies are governed by the Companies Act, 2013 and require a minimum of 2 Directors and 2 Shareholders with one of the Directors being an Indian Resident and Indian Citizen.

To register a company in India, the following are minimum requirements:

  • 2 Directors – 1 Person should be an Indian National and Indian Resident
  • 2 Shareholders – The Directors can be shareholders
  • Registered Office in India

100% Foreign Direct Ownership (FDI) is permitted in most sectors in India and there is no restriction on foreign shareholding of a private limited company. Hence, most foreign subsidiaries are established in India as private limited company.

Useful Links
  • GST Registration for New Business
  • Documents Required for GST Registration
  • GST Registration Online: A Guide

Documents Required for Company Registration

  • The proposed directors of a private limited company must present the following documents as proof of identification in order to register a company:

    Indian Nationals: PAN card mandatory

    Foreign Nationals: Passport is mandatory

    In addition to the above document, the Directors must submit one of the following documents that contain the address of the Director.

    Indian Nationals: Passport / Driver’s License / Election ID / Ration Card / Aadhar ID

    Foreign Nationals: Drivers License / Bank Statement / Residence Card

    Finally, as proof of residency, the prospective Directors must produce one of the following documents. This document must have been generated within the last two months:

    Indian Nationals: Bank Statement / Electricity Bill / Phone Bill

    Foreign Nationals: Bank Statement / Electricity Bill / Phone Bill

    If one of the company’s shareholders is a company based in India or abroad, the following documents must be submitted:

    • Board resolution authorizing investment in the company
    • Incorporation Certificate of the Company
    • Address proof of the company

  • Capital Required to Start a Company

    A company can be started in India with a very minimum amount of capital. There is no fixed amount and the shareholders of the company being incorporated can determine the capital they wish to contribute. While setting up the capital structure of the company, the following are some of the concepts to be kept in mind:

    Face Value of Share: The face value of a share is the price per share with which the company is incorporated. Normally, the face value of share is Rs. 1 or Rs. 10 or Rs. 100 or Rs. 1000 or Rs. 10,000.

    Authorised Capital: Authorised capital is the total value of shares a company can issue to shareholders. Normally, all companies are incorporated with an authorized capital of Rs. 1 lakh or Rs. 10 lakhs. If a higher authorized capital is required, the company would be required to pay additional fees to the Ministry of Corporate Affairs. The authorised capital of a company can be increased at any time after incorporation.

    Paid-up Capital: Paid-up capital of a company is the number of shares issued to shareholders for which they have paid or deposited money to the company. Paid-up capital of a company cannot be more than the authorized share capital of the company.

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Private Limited Company Compliances

  • Auditor Appointment
  • Director DIN KYC
  • Commencement of Business
  • MCA Annual Filings
  • Income Tax Filing

Advantages of Private Limited Company

Separate Legal Entity : A company is both a legal entity and a juristic person. Therefore, a company has broad legal rights to like acquiring property, incurring debts, hiring people, etc. As a company is a separate legal entity, the company’s members (shareholders or directors) are not personally liable for the company’s liability.
Limited Liability: A private limited company is a separate legal entity with limited liability provisions. Therefore, the shareholders are not liable for the losses of the company – for an amount more than what was invested by them into the company as share capital.
Uninterrupted Existence:  company has ‘perpetual succession,’ which means it will continue to exist until it is legally dissolved. Because a company is a separate legal entity, it is unaffected by the death or other departure of any of its members, and it continues to exist regardless of membership changes.
Fund Raising :A private limited company has multiple options for fundraising. A company can raise funds from shareholders, investors, angels, venture capital funds, private equity funds, foreign funds, NBFCs, banks and other financial institutions. Only a company can raise debt and equity funds from investors.

Private Limited Company FAQ's

Yes, NRIs, foreign nationals, and foreign entities can register a company and invest in India, subject to the Foreign Direct Investment norms set by the RBI. However, incorporation rules in India require for one Indian national to mandatorily be a part of the company on the Board of Directors.

You can use the IndiaFilings company name availability search tab to search for available names in India. It is important to note that IndiaFilings would just provide available choices, based on identical names already registered.

GST registration is mandatory for certain businesses. Companies dealing with e-commerce operations or any other interstate activity and companies with turnover of more than Rs. 40 Lakhs are required to obtain the same. GST registration takes just 3-5 working days with IndiaFilings.

A company is required to maintain certain compliances once it is incorporated. An auditor needs to be appointed within 30 days and income tax filing and annual return filing need to be done every year. Apart from these, mandatory compliances like ‘Commencement of Business’ forms, and DIN eKYC also need to be done.

The Board of Directors is required to appoint a practicing Chartered Accountant within 30 days of Incorporating a Private Limited Company.

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