Private limited companies are privately owned companies that cater to small businesses. Shares of a Private Limited Company cannot be traded publicly. The liability of members of the company is limited to the amount of shares they hold, respectively. The article discusses all aspects of Private Limited Company and .
Characteristics of Private Limited Company
- Members– As per the Companies Act, 2013, a company should have at least two members and a maximum of 200 members.
- Limited Liability– Members and shareholders are limited in their liability. A company’s shareholders are liable for payment if it suffers a loss regardless of the circumstances. It does not pose a risk to the shareholders’ personal, individual assets.
- Perpetual succession– In the event of death, insolvency, bankruptcy of a company member, the company continues to exist under the law. In this way, the company is perpetually inherited. As long as the company exists, it will continue to exist.
- Index of members– A private company has a privilege over the public company as it don’t have to keep an index of its members whereas the public company is required to maintain an index of its members.
- A number of directors– Private companies only need two directors when it comes to directors. Private companies can be formed with two directors.
- Paid-up capital– A minimum paid-up capital of Rs 1 lakh, or such higher amount as the Board may prescribe, is required.
- Prospectus– Companies issue prospectuses to their public as detailed statements about their affairs. Unlike a private limited company, a private limited company does not need to issue a prospectus, as its shares are not sold to the public.
- Minimum subscription–90% of the shares issued within a certain time frame are received by the company. It will not be possible for the company to continue doing business if they fail to receive 90% of the amount. It is possible to allot shares to the public without receiving the minimum subscription amounts in the case of a private limited company.
- Name– Private companies are required to use the word limited after their name.
Procedure to register Private Limited Company
An applicant must take the following steps once a name has been chosen for the company:
Step 1: Obtain a DSC (Digital Signature Certificate) and DIN (Director Identification Number)
Step 2: Check the availability of a name
Step 3: Register the private limited company by filing an MOA and an AOA
Step 4: Obtain company PANs and TANs
Step 5: The ROC will issue the certificate of incorporation along with the PAN and TAN
Step 6: Open an account in the name of the company with a current bank
Requirements for Private Limited Company Registration
Private limited companies must meet the following requirements:
As per the Companies’ Act 2013, the minimum number of members or shareholders is two and the maximum number is 200.
Directors- For a private limited company to be registered, there must be at least two directors. The ministry of corporate affairs gives each director a DIN, or director identification number. In a previous calendar year, at least one director must have spent at least 182 days in India.
Name – A private limited company’s constitution is one of its major components. This company’s name consists of three parts: its name, its activity, and its status as a private limited company. Every private company must end its company name with the words private limited company. All company names must be unique and expressive and submitted to the registrar for approval. There should be no similarity between the name for approval and the name of any other company. Since the company name remains with the company throughout its life, choosing the right one is crucial.
Registered office address- A temporary address should be provided by the owner of the company when doing company registration. The permanent address of the registered office of the company should be provided to the company’s registrar once it has been registered. All the company’s documents are kept at its registered office where all the company’s business is conducted.
Digital signature certificates can be obtained online today. A digital signature certificate is required for every company that submits electronic documents so that the authenticity of the documents can be verified. Directors obtain digital signatures and mark them on all documents.
Several professionals are required in a company for various purposes. These professionals must be certified in order to incorporate a private limited company. A company incorporation requires the certification of various professionals, such as a company secretary, a chartered accountant, a cost accountant, etc.