Private limited company registration
A private limited company is a separate legal entity registered with the Registrar of Companies under the Companies Act, 2013. Company Suggestion files that registration, from the name to the certificate of incorporation.
What is a private limited company?
Shareholders own a private limited company. A board of directors manages it.
The company needs at least two shareholders and two directors. At least one director must stay in India for 182 days or more in the financial year.
The Companies Act, 2013 limits membership to 200 people. The Act does not count members who are employees, or who were employees and received shares while employed.
The Act sets no minimum paid-up capital. A shareholder’s liability stops at the amount unpaid on that shareholder’s shares.
The name ends with “Private Limited”. The company cannot invite the public to subscribe for its shares.
A private limited company can issue shares. An LLP cannot. The comparison of a private limited company and an LLP sets out tax, audit and funding.
Who should register a private limited company?
Four plans fit a private limited company:
- Founders who will raise money from angel investors or venture funds.
- A team that will offer shares to early employees.
- A business that needs a company name on bank, client or tender documents.
- Owners who want the business to continue when the shareholding changes.
Partners who will fund the business themselves, and who do not need shares, can register an LLP instead.
Which documents does registration need?
Registration uses two sets of documents.
For each director and shareholder
- PAN
- Aadhaar, or a passport for a foreign national
- A passport-size photograph
- A bank statement or utility bill, not older than two months
For the registered office
- The rent agreement, or proof that the company owns the premises
- An electricity or water bill, not older than two months
- A no-objection certificate from the property owner
What are the registration steps?
Company Suggestion files the registration in five steps.
- Each director and shareholder gets a digital signature.
- SPICe+ Part A reserves the company name with the Ministry of Corporate Affairs.
- SPICe+ Part B files the memorandum, the articles and the registered-office proof.
- The Registrar issues the certificate of incorporation, with PAN and TAN.
- The company opens a bank account in its own name.
Frequently asked questions
4 questions cover the rules that decide this registration.
How many people does a private limited company need?
A private limited company needs at least two shareholders and two directors. The same person can be both. Membership is limited to 200 people.
Is there a minimum capital for a private limited company?
No. The Companies Act, 2013 sets no minimum paid-up capital.
Can a private limited company offer shares to the public?
No. A private company cannot invite the public to subscribe for its shares. It can issue shares to identified investors.
Does a private limited company have its own legal identity?
Yes. The company signs contracts, holds assets and takes on debt in its own name. A shareholder’s liability stops at the unpaid amount on that shareholder’s shares.