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INTRODUCTION

All Business entities incorporated in India are required to comply with various provisions of the laws & the rules made thereunder. Business entities are required to obtain various licenses, certificates & approvals from several regulatory authorities and comply with various rules and regulations under various Laws.

Private Limited Company is the most preferred business structure by entrepreneurs today. Private Limited Company offers limited liability for its members, easy to maintain and offers greater flexibility while expanding allowing for easier access to bank loans, private equity, etc., However, there are some dos and don’ts involved while setting up a private limited company which you should be aware of for smooth incorporation. In this article, we look at the steps involved in the formation of a Private Limited Company.

Private Limited Companies are governed by the Companies Act, 2013 read with respective rules made thereunder. The MCA has made the process of company registration simple, thereby enhancing the ease of doing business in India.

DEFINITION U/S 2(68)

“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 for any securities of the company;

BASIC REQUIREMENTS FOR INCORPORATION OF PRIVATE LIMITED COMPANY

1. Minimum Two Person:

Register your company with at least two persons to act as the initial shareholder & director. The company can have up to 200 shareholders & 15 directors. The same person can become a director as well as shareholders. A Body corporate can be a shareholder.

2.  Resident Director:

One director of the company should be resident in India. A Person is known as a Resident Indian when he/she stays in India for not less than 182 days during the financial year.

3. Registered Address:

For registration of the company, you need to submit the proof of Registered Office & NOC from the owner. You may register a company on a communication address in case of difficulty; however, within 30 days, the company must have its registered address. The registered office of a company does not have to be a commercial space. Even a rented home can be the registered office, so long as an NOC is obtained from the landlord.

4. Capital Requirement:

There is no minimum capital amount for a company. A company should have an authorized capital of at least Rs. 1 lakh. However, the MCA Fee and the Stamp Duty is calculated on the authorised capital and the location of the registered office of the company. Investment can be made as per requirements of business.

5. New & Unique Name:

The name of the proposed new company must be unique and eligible, in view of name guidelines as prescribed under section 4 of the Companies Act, 2013 read with respective rules made thereunder. The suggested name should not match with any existing companies or trademarks in India.

6. DSC:

DSC must be obtained for all proposed Directors & Subscribers.

ABOUT SPICe+ FROM

Keeping in view the ease of doing business, Ministry of Corporate Affairs (MCA) have been introduced SPICe+ and the allied Forms. SPICe+ has been divided into two parts viz., SPICe+ Part A and SPICe+ Part B. All the new company incorporation have to be done by the online filing of SPICe+ form. The other forms that need to be filed along with SPICe+ are AGILE-PRO, SPICe+MOA and SPICe+AOA.

This form provides the facility for incorporation of any company including Private company, OPC, Producer company, Unlimited company, IFSC Company, Section 8 company, Nidhi company or any other company.

Features of SPICe+ Form

  • The part A provides a person with the facility for reservation of name for his new company.
  • Part B offers the services which are as follows:

1. Incorporation

2. DIN allotment

3. Registered office

4. Mandatory issue of PAN

5. Mandatory issue of TAN

  • AGILE PRO offers the services which are as follows:

1. Mandatory issue of EPFO registration

2. Mandatory issue of ESIC registration

3. Mandatory issue of Profession Tax registration (only for companies to be registered in Maharashtra, Karnataka and West Bengal)

4. Mandatory Opening of Bank Account for the Company

5. Allotment of GSTIN (if so applied for)

6. Mandatory issue of Shops and Establishment Registration Number (Only for Delhi Location)

DETAILS REQUIRED FOR ALL PROPOSED DIRECTORS & SHAREHOLDERS

Sr. No.

Particulars

1.

Father’s name

2.

Address (present and permanent)

3.

DIN/PAN

4.

Date of Birth

5.

Contact number

6.

Email address

7.

Place of birth

8.

Occupation

9.

Educational Qualification

10.

Duration of stay at current address

11.

Designation and holding in the company
12. Nationality and citizenship

DOCUMENTS REQUIRED FOR INCORPORATION OF PRIVATE LIMITED COMPANY

[1] Promoter Documents:

1. Passport size Photograph

2. Pan Card (Passport for foreign nationals & NRIs)

3. Aadhar Card

4. Director Consent through form DIR-2

5. Specimen Signature

6. Proof of Residence: (Latest copy of any one)

  • Bank Statement
  • Electricity Bill
  • Telephone Bill
  • Mobile Bill

7. Proof of Residence: (Latest copy of any one)

  • Voters Identity Card
  • Passport
  • Driving License

8. The interest of first director(s)in other             entities

(Note: In case of NRI or Foreign National, documents of director (s) must be notarized or apostilled)

[2]  Registered Office proof :

1. Proof of Premises (notarized rental agreement /sale deed /property deed  in English)

2. NOC From the Owner of Premises

3. Office Rent Receipt (Not older than one month)

4. Utility Bill (Any One should not be older than two months)

  • Telephone Bill
  • Mobile Bill
  • Electricity Bill
  • Gas Bill 

[3] if apply for GSTIN:

Proof of principal place of business & Declaration of Authorised signatory for GSTN is also required.

[4] Name of Bank for opening of Bank account.

STEPS FOR INCORPORATION OF PRIVATE LIMITED COMPANY

Step-1

SPICe+ Part-A- Application for the name availability.

Step-2

Obtaining Digital Signature Certificates (DSC)

Step-3

Preparation of Incorporation Documents

Step-4

Filing of Various E-Forms for Incorporation of Private Limited Company:

SPICe+ Part-B and the sequence of uploading linked forms to SPICe+

  • eMOA[if applicable]
  • eAOA [if applicable]
  • URC-1[if applicable]
  • AGILE-PRO-S[mandatory in all the cases]
  • INC-9 [Auto generated]

Once the SPICe+ is filled completely with all relevant details, the same would then have to be converted into pdf format, with just a click of the mouse button, for affixing DSCs. Thereafter all digitally signed applications can be uploaded along with the linked forms as per the hitherto process. Now make payment. On successful payment receipt will be generated.

Step-5

Pay Stamp duty

Step-6

MCA will issues a certificate of incorporation with a PAN and TAN

Step-7

Post Incorporation Compliance:

  • Conduct the first Board Meeting within 30 days of incorporation & file appointment of first auditor and file ADT-1. If registered office not available at the time of incorporation than the company shall furnish to the Registrar verification of its registered office within a period of 30 days of its incorporation in INC-22.
  • Deposit Share subscription amount in Bank of Company and issue share certificates to Shareholders within 60 days of incorporation.
  • File INC-20A within a period of 180 days of the date of incorporation of the company that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him.

Step-8

Apply for Business Licenses as per applicability to your business

  • Udyam Registration
  • Import Export Code
  • ISO
  • FSSAI
  • Drug License
  • APEDA Registration etc.,

Step-9

Annual Mandatory Compliance

  • ITR Return
  • GST Return if applicable
  • DIN eKYC
  • Each year, at least four board meetings should be held (The time between two consecutive meetings should not be more than 120 days)
  • It is mandatory to hold an annual general meeting once a year.
  • MCA Annual Return Filing
  • Maintenance of Statutory records etc.,

USEFUL LINKS FOR INCORPORATION OF PRIVATE LIMITED COMPANY

MCA Site https://www.mca.gov.in/
FAQ’s SPICe+ FAQs on Company Incorporation & Allied Matters
FAQ’s AGILE Pro https://www.mca.gov.in/MinistryV2/agile.html

CONCLUSION

The process of company formation has significantly changed over a period of time. The Ministry in order to achieve the objective of Ease of Doing Business have modified and simplified the process of starting a business in India. This amendment of providing various services in a single application on a web-based platform has resulted in saving time and cost for forming a company in the country.

DISCLAIMER

This article is based on the relevant provisions and to the best of my knowledge at the time of preparation of this article and moreover in no event author shall be liable for any direct and indirect result from this article and this is only a knowledge sharing initiative provided solely for information, this article is not a professional advice or recommendation. 

AUTHOR

CS JINAL SHAH, JINAL SHAH & CO. Company Secretary in Practice from Surat, Gujarat and for any query/suggestion can be reached at jinalshahco@gmail.com.

Author Bio

I am Jinal Shah, Surat based Practicing Company Secretary, a member of ICSI since 2018. Founder of JINAL SHAH & CO. (Compliance Partner for YOUR BUSINESS) View Full Profile

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