A Pvt. Ltd. Company (PLC) can only commence its operations after getting a Certificate of Incorporation from the Registrar of Companies (RoC). A Private Ltd. Company has legal protection and is indebted to its shareholders. A minimum of two directors is a must for a Pvt. Ltd. Firm. Within a Private company, an individual is often appointed as both director and shareholder. A PLC generally gets its incorporation certificate within 15 days of application.
In this text, we’ll understand the method of Company Registration as a Private Limited Company. It is a process through which all the businesses are registered from the MCA portal (Ministry of Corporate Affairs). The method is easily administered online. Registering a firm comes with many different benefits. The process is overall simple but requires several steps to be completed and thus requires expert supervision.
Benefits of PLC Registration
- A Pvt. Ltd. firm can have no. Of directors ranging between 2 to 50.
- It is considered a separate legal entity.
- Directors have limited liabilities and cannot be held responsible for the affairs of the company on a personal level.
- Directors are indebted to company creditors.
- In case of default, the banks and creditors can only liquidate the company’s assets and not the personal assets of the director.
- The directors are allowed to avail Tax benefits as administrators.
- A registered company can be sued or can sue in its name.
- Registered companies generally get a far better avenue to borrow funds from creditors compared to other entities.
Checklist for PLC Registration
- For Directors: A Minimum of two directors should be there with one resident director for the company.
- Capital requirement: Investments of the company must be made as per business category however, there is no least capital requirement for a corporation registration.
- The Company must have a unique name that should not be identical to any already existent entity.
- Any Private firm must have a permanent registered office for communication.
Steps for Incorporation through PLC Registration
A corporation can be registered through the RUN form using the following procedure:
- Create a simple login account and go to the registration dashboard using your login credentials.
- Enter the company name which the promoters want to use and check its uniqueness using the MCA database.
- If an already existing entity wants to change its name, then CIN is required for the RUN e-form.
- The applicant should enter the name they want to use for the name of the corporation or for the creation of a replacement firm.
- Post this the objects of the proposed company must be entered with other documents to support the proposed name registration.
Validity Period for a Reserved Name
An approved name from MCA is valid for:
- For a new firm: 20 days from the approval date.
- For a change of name of an existing entity- 60 days from approval date.
Steps for Pvt. Ltd. Company Registration
1. Acquire Digital Signature Certificate
The PLC registration procedure requires a digital signature certificate (DSC). As the process is online, the subscribers or directors must have a legitimate DSC of Class II or Class III standards.
2. Apply for Director Identification Number
All directors must have DINs or Director Identification Number. If they don’t possess DIN, then they must apply for their respective DIN on MCA. Without DIN directors are not allowed to work in any company.
3. Apply for Company Name Approval
The company’s name has to be submitted for approval alongside SPICe (INC-32) at the time of its incorporation. If the name is not approved, then it has to be resubmitted for consideration.
4. e-MoA (INC-33) and e-AoA (INC-34)
Earlier, during the registration process, the MoA & AoA documents were required to be filed physically by the company promoters. But now these documents are filed online on the MCA’s website. The promoters must digitally sign these documents.
5. Apply for PAN and TAN
The applicant/promoter must apply for PAN and TAN to make the filing process complete.
6. Certificate of Incorporation
MCA and RoC will verify all the submitted documents, and if satisfied, they’re going to issue a Certificate of company Incorporation to the promoters. The Certificate of Incorporation will act as a legal instrument and provides the status of the private limited firm to the company.
7. Opening of a Checking Account
After obtaining the CoI from MCA, the firm should open a checking account for all the transactions concerning the company’s name.
Documents Needed for Company Registration
Following are the documents required for company registration as a Private Firm:
For DSC (Digital Signature Certificate)
With the DSC application form, an applicant needs:
- Photo of Promoter or the one seeking registration (signed across by a blue pen) of the applicant
- Address proof of the company director(s)
- Aadhar card
- Driving license
- Voter ID card
- Pan Card of the applicant
- Email ID and personal contact number (for each director)
For DIN registration
- Make an application in e-form DIR-3 which is available on MCA’s Website.
- Attach the subsequent documents alongside Form DIR-3:
- Photo of the applicant/s
- ID proof (attested)
- Address proof (attested)
- Make the prescribed payment for DIN in online mode.
- Post payment a provisional DIN is generated.
- Upon successful verification by MCA, the provisional DIN is approved to full-time DIN.
Documents for Incorporation of Company
- Name of the corporate (uniqueness verified)
- The capital structure of the corporate
- List of shareholders of the company
- The objective of the corporate
- ID proofs of the directors
- Driving license
- Voter Id card
- Residential address proof of director(s)
- Bank statement
- Telephone bill
- Electricity bill
- Mobile bill (not older than 2 months)
- Consent of director(s) in (form DIR-2)
- INC-9 (Affidavit)
- Address proof of company’s registered office
- Gas bill / Telephone bill / Electricity bill of the new office
- If the office is on a lease, then the copy of the lease agreement and a NOC from the property owner
- Declaration from DIN holders
Procedure for Company Name Approval
Getting a unique name for a Pvt. Ltd. firm could be a tedious task in itself. It is a time-consuming procedure and it takes considerable work hours to follow all RoC rules and determine whether the suggested name is already taken/registered or not. This process is generally made simpler by making use of a tool for checking the available company names. The database is updated regularly to ensure that the uniqueness of the name always exists. The database lists businesses that have an equivalent or similar name with their Company Identification Numbers (CINs) in its search results. The tool informs whether any specific name is unique or not and thus gives a brief head start within the name selection procedure.
Earlier, the INC29 allowed the submission of six names of preference for a new company. Following the amendments brought in May 2015, INC29 now admits only one name for an entity. But this has increased the danger of repeating names by manifolds. An applicant must understand all the principles before specifying a name for the company within the application or it could bring rejection. One ideal way to ensure the selection of the name is to turn up with a singular name followed by the company’s business type (descriptive type). It works within the following manner: within the recent Amendment of 2018, the now Private Ltd. can only apply for one name and there’s no resubmission process if the form is rejected Hence if the name is rejected again. An applicant must pay an additional fee during INC-1. The name of the proposed Pvt. Ltd. Company must be as per the norms of the Companies Act 2013 and should be up to date with the guidelines issued by MCA.
How to Choose a Unique Name?
Choosing a unique name for the company could be difficult for a company. For example, the web shopping portal ‘Snapdeal’ has registered itself as Jasper Infotech Private Limited. One may notice that the unique part of its name ‘Jasper’ is quite common, but it got registered anyway. The trick to make the name unique is to add the word ‘Infotech’ in its name. Similarly, there are many companies with the same name ‘Jasper’, but only one different word related to their field of work could make all the difference.
One cannot use Abbreviations, adjectives, or generic words for the unique component. So, options like ABC, or XYZ won’t work for a unique part. Similarly, names with generic quotes like ‘Good Quality Biscuits’ and ‘Excellent Chocolate’ won’t be registered. Unless approved by RBI or SEBI, words like ‘Bank,’ or ‘Exchange’ cannot be used. One can opt for trademark registration if they want to make their unique name a legal entity that no one else can copy.
The nature of the business should be the standard to pick the unique name component. For a firm like Wipro, one has got to choose Technology Services as the core work which will give nine options: Info-systems, Tech Solutions, Infotech, Tech, Technology Solutions, Computers, Innovations, Informatics or Processors.
If the chosen name clashes with the trademark of a well-known company, the RoC may raise objections in such cases. The applicant can use the proposed name if a ‘NOC’ is furnished by the owner of the Trademark. One must remember that the actual company name won’t matter as long as the company has a catchy trademark.
Characteristics of a Registered PLC
Minimum Members Required and Liability
As per the norms of the Companies Act, 2013 a PLC requires at least two members for incorporation. However, the maximum number can go up to 200. In a PLC, the financial liability of each member and shareholder is restricted to owned shares. It means that if the corporate goes into loss in any circumstances, the shareholders won’t face the risk of losing their personal assets. However, committing fraud related to the PLC would negate a shareholder’s indebtedness protection.
Continued Succession of Administration
One of the advantages of a Private Limited Company Registration is the perpetual succession of administrative control even when its owner dies or leaves the business suddenly. The corporation keeps existing within the eyes of the law until it’s legally dissolved or liquidated.
Number of Directors and Capital Requirements
As per norms of the Companies Act, 2013, a PLC must appoint at least two directors. No minimum paid-up capital is required to set up a PLC.
Separate Legal Entity Status
A PLC gets recognition as a separate legal entity with a continuous existence. The corporate can have its PAN number, bank accounts no., licenses, assets, liabilities, and approvals under its unique name.
Availability of Credit
A PLC can easily gather funds from debentures through its stockholders. A registered Pvt. Ltd. Company attracts funds from angel investors and venture capitalists, which allows the corporation to expand its business.
Prerequisites for PLC Registration
Before starting a Private Limited Company there are certain requirements that must be fulfilled. Given below is the list of requirements for registering a PLC in India:
- The name of the proposed firm should be unique and should not resemble any other registered trademark or firm.
- It must have at least two directors with two shareholders. The HIGHEST number of members could be up to 200. The maximum number of directors that a PLC can have is 15.
- To incorporate a PLC, it is compulsory for all its directors to get a Digital Signature Certificate (DSC) to sign the e-forms digitally.
Most of the businesses incorporated in India are registered as PLC or Private Limited Companies. The various benefits offered by this type of company makes it one of the most preferred ways of starting a business in India. If you’re willing to start out a business then even the most experienced financial experts will suggest registering as a PLC. The method of registration from MCA has been made simpler by introducing integrated and versatile forms with simplified guidelines. One can just contact a financial consultancy firm for assistance and let them take care of the registration procedure.