A private limited company, as the name implies, is a privately held business entity. It is owned by private investors. The company’s liability formation is parallel to that of a limited partnership, with a shareholder’s responsibility limited to the number of shares held. The stockholders cannot be liable for more than the face value of their shares. The Ministry of Corporate Affairs (MCA) is in charge of such a company.
The establishment of a firm is a vital period for every business owner since it requires fulfillment of all legal requirements and the start of the trade market. Entrepreneurs who want to center on launching and setting up an industry looking for a way to get started without having to be anxious about the legal course of action of incorporating a company. Whereas reaching specialists in the local region is a great option to begin your business.
Characteristics of a Private Limited Company
Now that you know what a private limited corporation is, the next pace is to understand its characteristics:
- Membership: A minimum of two shareholders is required to structure such a corporation, as with any other company. However, because it is still a small organization, there is a maximum limit on the number of members set at 200. The business must also have two directors to purpose.
- A private limited corporation has a limited-liability organization, which limits the liability of each member or shareholder. As a result, even in the event of a loss under any circumstances, it compels the shareholders to sell their assets to make up the difference. The stockholders’ personal and private assets are not jeopardized.
- Distinct legal entity: This is a separate legal entity that exists at a time without end. This implies that even if the entire members die or the business becomes bankrupt, the corporation is still permissible. Unless concluded by resolution, the company’s life will be undying, unchanged by the beings of its shareholders or members.
- Minimum paid-up capital: A private limited corporation is necessary to have and keep a minimum paid-up capital of Rs. 1 lakh. It could go high as MCA prescribes sometimes.
- Start-up Requirements for a Pvt Ltd Company
- Each type of business has its set of necessities before it may be incorporated. The following are the requirements for registering this:
- Members and directors: a private limited corporation has to have a minimum of 2 and a maximum of 200 members to be legally registered. This is a legal compulsion compulsory by the Companies Act of 2013.
The directors must convince the following requirements:
Each director must have a DIN, or director identification number, issued by the Ministry of Corporate Affairs.
One director should be an occupant of India, which means he must have spent at least 182 days in India in the previous calendar year.
The firm is called: Choosing a company name is often a technological matter. It is essential to form a private limited business.
- Main name
- Action to be performed
- Mention of ‘Private Limited Company at the conclusion
Pro tip: It is not always necessary for the name sought by the business owner to be available, as no two organizations can have the same title. As a result, every business must submit 5-6 names for endorsement to the Registrar of Companies at the time of registration (ROC). Also, the proposed titles should have no resemblance to the names of any other companies.
Once registered the business has to report the permanent address of its registered office to the business’s registrar. The registered office of the company is where the mass of the firm’s business is conducted and all documents are kept.
Getting additional papers: To present papers by electronic means, each firm must get a digital signature certificate, which is requisite to validate the validity of the documents. In a firm that employs experts (secretaries, chartered accountants, cost accountants, and so on) for an assortment of operations, certification by these specialists is required.
How to Form a Private Limited Company?
After you’ve determined a name for the firm, continue:
- Put forward an application for DSC (Digital Signature Certificate)
- Apply for a DIN (Director Identification Number)
- Request the accessibility of a name.
- File the EMOA and EAOA to index the private limited corporation
- Apply for the business’s PAN and TAN
- RoC will give a certificate of incorporation with the PAN and TAN
- Open a current bank account in the company’s name
With this, you will be well on your way to forming your own private limited business. You speak with suitable persons and make the best decision for smooth development.
Reasons to Form a Limited Liability Company
- Legal Entity That Exists independently
- Survival without Interruptions
- Transferability is easy.
- Property Owners have Limited Liability