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A Private Limited Company registration in India is customary for starting a new business. This structure is developed under the organized business sector governed by specific Act and provisions.
A company in India is incorporated and registered under the Companies Act, 2013 which has appointed the Ministry of Corporate Affairs as a governing body.
Among the numerous types of companies under the Companies Act, this article highlights the requirements of a Private Limited Company that has share capital.
It is a body corporate that offers separation of ownership from the management in addition to the limited liability of its members. Registered with a minimum of 2 directors and members, it can have up to a maximum of 15 directors and 200 members.
Here is a simplified and step-wise guide on how to register a company where the legalities are handled by a Company Secretary:
1. Obtain Digital Signature Certificates:
A Digital Signature Certificate is known as DSC. All the filings, including the registration application, is made online. The DSC procurement is the pre-requisite for the promoters. Any e-form filed in connection with a company requires affixing DSC of the authorized person. In the case of application of incorporation in SPICe forms, the directors and members are required to affix their signature in their respective forms.
2. Reserve Unique Name for Company:
Naming is a significant matter for every business as it later creates the brand value in itself. The first step for company incorporation is to reserve the company name.
The person shall make an application for name approval considering the provisions laid down by the Act. Further, following general practise are adhered to choose and apply the name:
The application is usually made using web-form named RUN (Reserve Unique Name). Here, two alternate names are applied in preferential order
Upon approval, the name is reserved for the applicant for a period of 20 days by the issuance of Name Approval Letter. Within the given time, the promoters must process the incorporation application.
3. Drafting of Memorandum of Association (MOA), Articles of Association(AOA)
The documentation is a major part for incorporating a company. Therefore, one must take care while drafting it. MoA and AoA of a company are the charters defining the operational boundaries of a company and its internal rules and regulations.
An important clause of MoA (Memorandum of Association) is the object clause where the company needs to prescribe its main business activities. This clause is carefully crafted, knowing that a company cannot indulge in an activity that is outside the prescription of this clause.
4. Application for Private Limited Company Registration:
The promoters can apply for a Private Company registration. This application must be made within 20 days of name approval. An application is submitted through MCA portal in e-form SPICe along with SPICe-MoA and SPICe-AoA.
The e-Form SPICe is a consolidated application for company incorporation, allotment of DIN for directors and company’s PAN and TAN. One can reserve a company’s name with this form. However, only one name applies and hence most of the applicants prefer to file an application under RUN, which is relatively simple.
For appointment of an individual as a director of a company, one must hold a valid DIN (Director Identification Number). If he/she does not have any DIN, an application for allotment can be made in this form for maximum of 3 directors.
The Government fee for the registration application is waived off for small and other companies having authorised capital up to 10 Lakh. Although registration fee is reduced for these companies, the stamp duty is still payable to its respective State Government for registration.
As the application is filed by payment of applicable Government fee, the Central Registration Centre (CRC) will review and verify the application and documents. Upon its approval, the Certificate of Incorporation (CoI) is granted that remains a conclusive proof of company’s existence.
The certificate mentions the date of incorporation, Company Identification Number (CIN), Permanent Account Number (PAN) and Tax Account Number (TAN) with the sign and seal of a Registrar. Along with approval of incorporation, the DIN is also allotted to the respective applicant(without DIN).
“With regards to the allotment of PAN and TAN, the amendment u/s 139A of Income Tax Act was introduced by Finance Act, 2018 stating that the numbers shown in the Certificate of Incorporation are the sufficient proof of allotment and there is no need of a physical card”.
On receipt of Certificate of Incorporation, the Private Limited Company comes into existence in the eyes of law. This certificate allows a company to carry out business activities and own assets in its own name. The company remains in existence as long as the annual compliance is met regularly as guided by the professional. Also, the amount of subscribed and paid-up share capital shall be deposited in the Current Account in the name of the company.
With the emergence of Ease of doing Business, Registration of Private Limited Company in India can be processed with ease by consultation of Practising Professional. Process of Incorporation of Private Limited Company in India has become smooth and hassle free with the introduction of Simplified Proforma for Incorporating Company Electronically (SPICe) E-forms which is time-saving, cost-effective and free of drudgery.
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