IPLF: Providing smooth services for Private Limited Companies Registration
With the more emerging business atmosphere and different private companies coming into the market, it becomes very important to understand the registration of the private limited companies. Before moving further on the registration aspects, let us first of all deal with some of the definitions.
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What are Private Limited Companies?
According to Section 2(68) of the Indian Companies Act, 2013, a Private Limited Company is defined as “private company” means a company having a minimum paid-up share capital as may be prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred:
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that—
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe to any securities of the company
The companies fulfilling the above-mentioned criteria are registered as privately held entities. The usage of the term “Limited” is suggestive of the fact that the liability of the members of the company i.e. owner and other members is limited to a certain extent. Moreover, there are certain restrictions in this form of a company, along with some privileges offered. Some of these are-
- Shareholders: The minimum number of shareholders that are required to initiate a Private Limited Company is two while the maximum number of the shareholders cannot exceed two hundred, in consonance with the Companies Act, 2013.
- The number of directors: A Private Limited Company needs a minimum of two directors. Out of those two directors, it is necessary that at least one director has stayed in India for a total period of more than or equal to 182 days in the previous calendar year. It is also possible that the directors and the shareholders are the same people.
- Capital: The minimum amount of share capital that was required to start a private limited company was Rs. 1, 00,000 (One Lakh) which have been omitted by the Companies (Amendment) Act, 2015 (21 of 2015), notified on 26th May 2015, with effect from 29th May 2015 vide notification S.O.1440(E).
- Limited Liability: As indicated by the usage of the word “Limited”, the liability of each shareholder or member is limited. This implies that if the company, by chance runs into a loss, the company shareholders would be liable to sell their company shares to the tune of the amount required to clear the debt or liability. This further implies that the individual or personal assets of shareholders or members are not at risk.
- Perpetual succession: As per the Companies Act, 2013, perpetual succession refers to the situation in which the company continues to exist even when an owner or any member dies, goes bankrupt, exits from the business, and/or transfers his shares to another person.
- Prospectus: A prospectus is a detailed statement that is issued by a company that desires to go public. However, there are no obligations on Private Limited Companies to issue a prospectus because the public at large is not invited to subscribe for the shares of the company.
How IPLF works for getting your Company registered?
- Before the process of registration, our team conducts a name check on the availability of the proposed company name and then selects up to six names in order of preference.
- Once the proposed name is approved or is available, we then apply for company registration within 60 days of the name approval.
- It is advisable to obtain a Digital Signature Certificate (DSC) if it’s not available with the party. It is an essential requirement during the form submission.
- Director Identification Number (DIN) should be mandatorily obtained by all the directors. Thereby, it is advisable to obtain the DIN of a director, if not available.
- The next process involves drafting a suitable Memorandum of Association (MOA) and Articles of Association (AOA), which are duly stamped with payment of stamp duty and signed by at least two subscribers, witnessed by at least one person.
- Thereafter, Form 1 should be filed for Declaration of Compliance, and Form 18 should be filed to provide notice of the situation of the registered office of the company. Finally, Form 32 should be filed for providing details of Directors, Secretary, etc.
- Pursuant to this, the Company is registered within 10 – 15 business days and a Certificate of Incorporation and Corporate Identification No (CIN) is issued.
The strong team at IPLF has worked and helped various clients in getting their companies registered. To know more, contact the IPLF team.
Author: Saransh Chaturvedi an associate at IP & Legal Filings, in case of any queries please contact/write back to us at firstname.lastname@example.org.