Company Incorporation (Private Ltd/LLP)
Company Incorporation (Private Ltd/LLP)
Company Incorporation (Private Limited / LLP) is the legal process of registering a business entity under the Companies Act, 2013 or the Limited Liability Partnership Act, 2008, respectively. Both Private Limited Companies (Pvt Ltd) and Limited Liability Partnerships (LLP) are popular business structures in India, offering distinct advantages depending on the nature and scale of operations. A Private Limited Company is a separate legal entity with limited liability for its shareholders. It allows for easy transfer of shares, attracts investors, and provides greater credibility in the eyes of banks and clients. It is best suited for startups and growing businesses aiming for external funding or rapid expansion.
Private Limited Company Registration in India
When starting a business in India, many entrepreneurs opt for a Private Limited Company due to its structured framework and limited liability protection for shareholders. This business model offers a clear separation between ownership and management, with directors handling operations and shareholders holding ownership rights. On the other hand, in a Limited Liability Partnership (LLP), the partners manage the business directly, making it more flexible in terms of internal structure.
At Stride Tax, we provide affordable and reliable solutions for company incorporation in India, including private limited company registration and startup registration. Our expert team manages the entire registration process online, ensuring full compliance with the Ministry of Corporate Affairs (MCA) guidelines. From obtaining DIN and DSC to filing incorporation documents, we take care of every step, making it easy for you to launch your business without delays or legal hassles.
What is a private limited company?
In India, a Private Limited Company is one of the most preferred business structures, especially among startups and growing enterprises. Its popularity stems from a range of advantages such as limited liability protection, a distinct legal identity, and relatively simple processes for incorporation and management. These features make it an attractive option for entrepreneurs looking to build a scalable and secure business.
A Private Limited Company is legally separate from its owners, requiring a minimum of two members and two directors to function. This structure offers clear benefits that justify registering a Pvt Ltd company:
Limited Liability: Shareholders are only liable for the company’s debts up to the value of their shares, protecting their personal assets from business losses.
Separate Legal Entity: The company has an independent legal existence. It can own property, enter contracts, sue, or be sued in its own name.
Ownership Limits: A minimum of two and a maximum of 200 shareholders are permitted.
Director Requirements: At least two directors are needed, with one being an Indian resident.
Minimum Capital: The required paid-up capital is ₹1 lakh or more as prescribed.
Naming Convention: The company name must end with “Private Limited.”
Restricted Share Transfer: Share transfers are limited and require board approval, maintaining ownership control.
No Public Fundraising: Private companies cannot invite the public to invest in shares or debentures.
Regulatory Compliance: Must comply with MCA norms, including annual filings, board meetings, and financial reporting.
Types of Private Limited Companies:
Entrepreneurs planning to start a company or register a business in India should be aware of the different types of private limited companies they can choose from, depending on their business needs and liability preferences:
Company Limited by Shares: This is the most common type of private limited company. In this structure, shareholders’ liability is limited to the value of shares they hold, as specified in the Memorandum of Association (MoA). It provides financial protection to shareholders in case of business losses.
Company Limited by Guarantee: In such companies, members agree to contribute a specific amount towards the company’s liabilities, but only if the company is wound up. This model is often used for non-profit organizations or entities formed for charitable purposes.
Unlimited Company: Here, members have unlimited personal liability for the company’s debts and obligations. Although the company has a separate legal identity, members may be held personally responsible for liabilities, making it a less common choice for business incorporation.
Requirements for Registering a Company in India:
Directors and Members:
To register a Private Limited Company in India, a minimum of two directors and up to 200 members are required, in accordance with the Companies Act, 2013. Each director must obtain a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA) as part of the incorporation process. Additionally, at least one director must be a resident of India, meaning they must have stayed in the country for at least 182 days in the previous calendar year.
Company Name:
When choosing a name for your PVT LTD company registration, it’s important to ensure the name reflects the core business activity. The selected name must also be unique and compliant with MCA naming guidelines, avoiding resemblance to any existing company or trademark.
Registered Office Address:
After completing the company incorporation process, the business must submit the registered office address to the Registrar of Companies (RoC). This address serves as the official location for company operations and is where all statutory records and correspondence are maintained. It’s essential for receiving legal notices, official communication, and for fulfilling compliance requirements.
Company Registration Online Process - How to Register a Company in India?
Step 1: Obtain a Digital Signature Certificate (DSC)
All proposed directors and shareholders must acquire a Digital Signature Certificate (DSC) issued by certified authorities regulated by the Controller of Certifying Authorities (CCA). This step requires submitting documents like a passport-sized photo, PAN, Aadhaar card, email ID, and mobile number. Foreign nationals must provide notarized and apostilled documents, if applicable.
Step 2: Apply for Director Identification Number (DIN)
Anyone intending to act as a director must secure a Director Identification Number (DIN). This number is mandatory and must be included in the incorporation application.
Step 3: Reserve Your Company Name (SPICe+ Part A)
Fill out SPICe+ Part A to propose and reserve your company name. You’ll be required to choose the company’s type, category, and industrial activity, along with submitting two unique name options that reflect the business’s core activities.
Step 4: Submit Detailed Company Information (SPICe+ Part B)
In SPICe+ Part B, provide detailed information such as:
Registered office address
Share capital details
Information about directors and shareholders
PAN and TAN application
Required document attachments
Applicable stamp duty
Step 5: Draft and File Incorporation Documents (MOA & AOA)
Prepare the Memorandum of Association (MOA) and Articles of Association (AOA)—key documents defining your company’s objectives and internal rules. These must be digitally signed by all subscribers and a professional before submission to the MCA.
Also, file the AGILE-PRO-S form to register for:
GST
EPFO & ESIC
Bank account
Shop & Establishment License (subject to state regulations)
Certificate of Incorporation (COI)
After the Ministry of Corporate Affairs (MCA) verifies all documents, you’ll receive the Certificate of Incorporation, which includes your Company Identification Number (CIN), PAN, and TAN—officially establishing your company.