Private Limited Company Registration

What is a Private Limited Company

Starting a business is the toughest decision one can take but it gives you the maximum fulfillment of your dreams and desires. Your decision to begin your entrepreneurial journey starts with the decision of selecting the right business structure to follow. Anyone can choose a private limited company to build a scalable business. It’s the most famous legal structure for the business with multiple benefits such as limited liability, separate legal entity, ease in share transfer etc.

Private limited company is governed by MCA (Ministry of corporate affairs) under Companies Act, 2013. Private limited company can be registered with minimum of 2 directors and 2 shareholders, where shareholder and director can be same person. The maximum number of directors can be 15 and the maximum members can be 200.

The shares division depends on the percentage of the capital amount invested in a company. The profit is also divided as per the share holding of the shareholders.

The capital in a private limited company is the amount which shareholders are planning to introduce in the company. In a private limited company, the capital amount can be -

• Authorized share capital
• Paid up capital

The minimum amount of authorized share capital, with which a company can initiate the registration process, is 1 lac INR. However, there is minimum cap on limit of paid up capital.

Just like any other company, private limited company also has a certain set of rules and guidelines which are confined in MOA and AOA. Memorandum of Association (MOA) and Articles of Association (AOA) are the master documents of the private limited company determining the guidelines, mutual rights and duties between directors and shareholders. MOA comprises of 6 clauses –

• Name clause – under this the name of the company is specified. The name is selected as per the Rule 8 of Companies Act, 2013. It should not be identical to any existing company’s name or with any trademark.
• Registered Office clause – This clause helps to determine the state jurisdiction of Registrar of Companies.
• Object clause – In this clauses, one defines the object of the company. The object comprises of all the activities or work to be carried in the organization. The company involve in any activities outside their company’s object.
• Liability clause – under this clause, the liability of the shareholders is defined. In case of the company limited by shared, the liability of the members or the shareholders is restricted by the amount each member has agreed to contribute.
• Capital clause – This clauses defines the maximum number of share the company can issue.
• AOA (articles of association) - defines the set of rules and regulations for the management. It lays down the internal guidelines to be followed in the organization. It consist of the rules regarding the transfer of shares, an audit of the company, voting rights of the shareholders, the appointment of directors, share capital etc.

Minimum Requirements For Company Registration

• A minimum of 2 Shareholders must be present, during the whole process
• There should not be less than two directors, as it is a compulsory requirement.
• 1 Lac Share Capital is the pre-determined minimal amount.
• DPIN for all the directors.
• At least one designated partner should be an Indian Resident.