Legal Requirements for Private Limited Company Registration in India

Private Limited Company registration is one of the most popular choices for entrepreneurs in India. It provides limited liability to its shareholders and allows for easy fundraising. However, registering a Private Limited Company (Pvt Ltd) requires meeting several legal requirements. Below is a comprehensive guide to the legalities involved in setting up a Private Limited Company in India.

Minimum Number of Directors and Shareholders

To register a Private Limited Company, there must be:

• Minimum of 2 Directors: One of the directors must be an Indian resident.
• Minimum of 2 Shareholders: The shareholders can be individuals or companies, and a single person can act as both a director and a shareholder. However, the maximum number of shareholders can be 200 at maximum.

Director Identification Number (DIN)

Each director must have a Director Identification Number (DIN) issued by the Ministry of Corporate Affairs (MCA). DIN is a unique identification number required for anyone who intends to be a director of a company.

Digital Signature Certificate (DSC)

All proposed directors must obtain a Digital Signature Certificate (DSC). DSCs are required to sign electronic documents while registering the company, filing returns, and performing other online legal procedures with the Registrar of Companies (ROC).

Name Approval for the Company

The ROC must approve the company name. The name should be unique and must not violate any trademark rules. It must adhere to the following:

• The name should end with "Private Limited."
• The proposed name should not be identical or similar to an already registered company or trademark.

Once the name is approved, it is reserved for 20 days.

Registered Office Address

A Private Limited Company must have a registered office in India, where official correspondence from the MCA will be sent. This address is mandatory to provide during the registration process, and proof of address (like an electricity bill or rent agreement) should be submitted.

Memorandum of Association (MOA) and Articles of Association (AOA)

The Memorandum of Association (MOA) defines the objectives, scope, and activities of the company. The Articles of Association (AOA) lays down the rules and regulations governing the company's internal operations. Both MOA and AOA are required to be submitted to the ROC at the time of registration.

Share Capital

• The minimum authorised share capital of a Private Limited Company is INR 1 lakh. However, the maximum authorised capital is not specified.
• Paid-up capital: Although the minimum paid-up capital is not mandatory as per recent changes in the Companies Act, the amount to be invested should be mentioned during registration.

Incorporation Forms

The incorporation of a Private Limited Company requires the filing of the following forms with the Registrar of Companies (ROC):

• SPICe+ (Simplified Proforma for Incorporating a Company Electronically Plus): This is the integrated form for company incorporation, including the application for DIN, PAN, TAN, and EPFO/ESIC registration.
• AGILE-PRO-S: This form is required for GSTIN, EPFO, ESIC, and bank account opening.
• INC-9: This is a declaration form that must be digitally signed by the company's directors and shareholders.

PAN and TAN Application

The company must apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN). These are essential for tax filing and deduction purposes and are usually part of the SPICe+ form.

Certificate of Incorporation

Once all the required documents are submitted and verified, the ROC issues a Certificate of Incorporation (COI). This certificate serves as official proof of the company’s existence and includes the company’s Corporate Identity Number (CIN).

Compliance with the Companies Act, 2013

Post-registration, the company must comply with the provisions of the Companies Act 2013. It includes:

• Appointment of an Auditor within 30 days of incorporation.
• Holding the First Board Meeting within 30 days of incorporation.
• Issuance of Share Certificates to the shareholders within two months of incorporation.
• Annual General Meeting (AGM): A Private Limited Company must hold an AGM every financial year and file annual returns with the ROC.

Additional Compliance and Licenses

Depending on the nature of the business, additional registrations or licenses might be required, such as:

• Goods and Services Tax (GST) Registration
• Import Export Code (IEC) for businesses involved in import and export.
• Shops and Establishment License as per state laws.

Conclusion

The process of registering a Private Limited Company in India involves several legal steps and documentation. Meeting these legal requirements is crucial to ensure that the company operates smoothly and remains compliant with the law. For entrepreneurs and businesses looking to start a Private Limited Company, understanding these requirements and working with professionals like company secretaries or legal experts can simplify the process and help avoid potential delays.