What is a Private Limited Company and How to Register in India?

There are many types of companies present in India. In India, anyone can register their company as a legal entity under the Companies Act and the registration depends on the type of company.

One of the common types of company is the ‘Private Limited Company’, and the requirements to register a company as a Private Limited Company are easier when compared to registration as another legal entity.

A Private Limited Company can be defined as a company that is a privately owned business entity. The Pvt Ltd company must not have more than 200 shareholders.

The liability arrangement is a limited partnership that is the liability of a shareholder extends only up to the number of shares held by them. A Pvt Ltd Company is governed by the Ministry of Corporate Affairs (MCA).

The characteristics of a Private Limited Company can be listed below:

1. Membership– a private limited company requires at least 2 shareholders. To be registered as a private limited company, there have to be 2 directors to run the company.
2. Limited Liability Structure– the liability of each shareholder is limited, and if the company faces any kind of loss; the shareholders sell their assets to compensate for the loss.
3. Separate Legal Entity: a private limited company is a separate legal entity that is perpetual and does not end by loss of any kind. The company will always be a legal entity as per the law.
4. Minimum Paid Capital: every company that is registered as a private limited company needs to have a minimum paid capital of 1 lakh INR.

Eligibility Criteria:

To register your company as a Pvt Ltd Company, one has to meet a set of requirements. The eligibility criterion is listed below:

• There must be at least 2 Directors and the directors have to meet the conditions- having a DIN or a director identification number given by the Ministry of Corporate Affairs and at least one must be a resident of India or live in 182 days in India to be eligible for registration.
• A proper/main name of the company that is unique and represents the activity carried out by the company along with Pvt.Ltd at the end.
• A digital signature certificate and professional certification
• The registered office should be filed with the ROC.

Required Documents:

1. ID proof: PAN card and passports of Indian and foreign directors.
2. Address proofs: Ration card or Aadhar card or driver’s license or voter ID.
3. Residence proofs: Bank statement or electricity bill of the premise.
4. Notarized rental agreement.
5. NOC from the property owner.
6. A copy of the sale deed or property deed.

Registration Procedure:

• Firstly, you have to apply for a Director Identification Number and Digital Signature Certificate to register your company.

• Select a name and then apply for the name availability as well as register the name legally.

• Later, you need to apply for the PAN and TAN of the company to maintain the finances.

• Open a bank account solely for the company and then obtain the certificate of incorporation that is issued by ROC.

• By following these simple steps your company will successfully be registered as a Private Limited Company.

• Examples of private limited companies are Ola, Flipkart, Snapdeal, etc.