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PRIVATE LIMITED COMPANY

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PRIVATE LIMITED COMPANY

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Private Limited Company is the most prevalent and popular type of corporate legal entity in India. Private limited company registration is governed by the Ministry of Corporate Affairs, Companies Act, 2013 and the Companies Incorporation Rules, 2014. To register a private limited company, a minimum of two shareholders and two directors are required. A natural person can be both a director and shareholder, while a corporate legal entity can only be a shareholder. Further, foreign nationals, foreign corporate entities or NRIs are allowed to be Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.

Unique features of a private limited company like limited liability protection to shareholders, ability to raise equity funds, separate legal entity status and perpetual existence make it the most recommended type of business entity for millions of small and medium sized businesses that are family owned or professionally managed.

The average time taken to complete company formation is about 5 – 7 working days, subject to government processing time and client document submission. Get a free consultation for private limited company registration and business startup by scheduling an appointment with an Advisor.

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    REASONS TO REGISTER A PRIVATE LIMITED COMPANY

    1. Separate Legal Entity: Private Limited Company is a legal entity and a juristic person established under the Companies Act. Hence, a company has a range of legal capacities including opening of a bank account, hiring of employees, taking on equity or obtaining licenses and more as an independent corporate entity. The members (Shareholders/Directors) of a company have no personal liability to the creditors of a company for company’s debts.
    2. Uninterrupted Existence: Private Limited Company has ‘perpetual succession’, meaning uninterrupted existence until it is legally dissolved. A company being a separate legal person, is unaffected by the death or other departure of any member and continues to be in existence irrespective of the changes in ownership.
    3. Easy Transferability: Ownership of a business can be easily transferred in a company by transferring shares. The signing, filing and transfer of share transfer form and share certificates are sufficient to transfer ownership of a company. In a private limited company, the consent of other shareholders may be required to effect share transfers.
    4. Borrowing Capacity: Private Limited Companies can raise equity funds in India. Companies can also issue equity shares, preference shares, debentures and accept deposits with RBI permission. Banks and Financial Institutions prefer to provide funding to a company rather than partnership firms or proprietary concerns.
    5. Owning Property: Private Limited Company being an artificial person, can acquire, own, enjoy and alienate property in its name. The property owned by a company could be machinery, building, intangible assets, land, residential property, factory, etc., No shareholder can make a claim upon the property of the company – as long as the company is a going concern.

    DOCUMENTS REQUIRED

    1. Copy of Pan card of directors and members: PAN Card for Indian Nationals and affidavit for not having pan for foreign nationals
    2. Identity Proof of directors and members: copy of Passport/ Driving License/ Aadhar Card/ Voter id card
    3. Address Proof of directors and members : Copy of Electricity Bill/ Water Bill/ Telephone Bill/ Bank Statement (Not older than 2 months)
    4. Proof of Registered Office: Copy of Electricity Bill/Telephone bill/ Water bill (Any of these documents shall not be more than 2 months old) and NOC from Land Owner to use premises as Registered Office. Rent agreement if rented.
    5. Digital Signatures of directors and member: Valid digital sign is required for every member and director.

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      FREQUENTLY ASKED QUESTIONS

      How do I start a private limited company?

      Starting a company is easy through Corpium advisory. All that is required are PAN card, ID Proof and address proof of  directors and members along with address proof for the registered office address. A company can be started in about 5 – 7 days.

      What is limited liability protection?

      Limited liability is the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, in a private limited company the liability of the shareholders in respect of the company’s liabilities is limited. In other words, the liability of the shareholders of a company is limited only to the value of shares taken up by them.

      What is authorised capital of the private limited company?

      Authorised capital is the maximum value of equity shares that can be issued by a company. On the other hand, paid up capital is the amount of shares issued by the company to shareholders. Authorised capital can be increased after incorporation at anytime to issue additional shares to the shareholders.

      Can NRIs and foreign nationals or foreign entities register a company?

      Yes, NRIs, foreign nationals and foreign entities can register a company and invest in India, subject to the Foreign Direct Investment norms set by the RBI. However, minimum one director of company must be Citizen of Indian.

      Who can be a director in a company?

      Any person over the age of 18 years can become a director in a company. Also, there are no conditions on residency or citizenship. Hence, NRIs and Foreign Nationals can easily start and manage a private limited company in India.

      Is an address required in India for starting a company?

      Yes, every company registered in India must have a registered office where all official communication is sent by the MCA, governmental agencies, financial institutions, etc., The registered office of a company can be in any state of India.