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ABOUT PRIVATE LIMITED COMPANY
Private limited company governed in India by Companies Act 2013, under section 2(68). A private limited company is an individual legal entity which is separate from that of its officers. A limited company has its own assets and liabilities, profits and losses. The liabilities are limited to the Company. In other words, the officers are protected from financial liability.
The private Limited company is one of the most common types of a company in India, requires a minimum of two directors, two members, and two shareholders to register itself legally. The director of a private limited company plays an important role in the working of the company. A maximum of fifteen directors is allowed in a company as per the Companies Act, 2013 laid out by Ministry Of Corporate Affairs (MCA).
One advantage of owning a private limited company is that the financial liability of shareholders is limited to their shares. Therefore, if a private limited company was in financial trouble and had to close, shareholders would not risk losing their personal assets. Although, perpetrating a fraud related to the private limited company would negate an owner’s limited liability protection.
EASY TRANSFERABLE OWNERSHIP
The shares and other interest of any member in the Company shall tend to be a movable property and can be transferable in the manner so provided by the Articles of such company. Therefore, it is easier to subscribe or leave the membership of the Company. Also it is easier to transfer the ownership.
A Company as a legal entity is capable of owning its funds and other properties. The Company is the real person in whose hands all the property is vested and such company has the sole right to control, manage and dispose off the property so vested in the hands of the company. The property of Company is not the property of its shareholders.
SELLING THE BUSINESS
It is easy to sell business for a company than any other business form. As business Corporation value will be based on the business, not the owner, therefore making it easy to sell the Company.
Companies are governed by The Companies Act, 2013 and have to follow various other regulatory procedures during the course of its governance, moreover they have to comply with the stringent disclosure norms so imposed by the authority, which let to better governed organizations and creation of value for owners.
CAPACITY TO SUE
As a juristic legal person, a Company can sue in its name and be sued by others.
- Minimum 2 Shareholders.
- Minimum 2 Directors.
- One of the Directors must be Indian Resident
- No Minimum Authorised Share Capital
DOCUMENTS REQUIRED FOR REGISTRATION
IDENTITY AND ADDRESS PROOF
Aadhar Card, Aadhar number is now a necessity for applying for any registration in India. Also, income tax return can only be filed if the person has linked his PAN card with Aadhar number.
Address proof will be required for all directors and shareholders of the company to be incorporated. For Indian nationals, PAN is mandatory. For foreign nationals, apostilled or notarised copy of passport must be mandatorily submitted. Residence proof documents like bank statement or electricity bill should not be more than 2 months old.
All documents submitted must be valid
REGISTERED OFFICE PROOF
- Register office of all companies must be in India .If it is a Rented Property, Rent agreement and NOC from a landlord. If it is a Self-owned Property, Electricity bill or any other address proof.
- Documents submitted must be valid and not more than 2 month old.
It provides creditability to business in the eyes of financial institutions, suppliers and potential clients. As it makes easier for companies to get loans at favorable terms from banks or convincing potential clients while entering into deals .
Any individual can become a shareholder in a private limited company. For becoming a director in a company, no professional or educational qualification is required.
The director has been entrusted with the responsibility of managing the company in the best efficient manner. The responsibility of a director depends upon the kind of directorship he holds in the company. For instance, an executive director or a managing director has greater responsibility than a non-executive director who might hold the directorship as an expert or consultant. A director is liable for misconduct or fraud or if found guilty of default.
Yes, A company can change its registered office any time after following specified procedure. The changed address can be situated within the same state or in a different state from the state in which it was originally registered.
Any person intending to become director in a company must apply for director identification number, issued by the Ministry of Corporate Affairs. Proof of identity and address is required to be submitted along with requisite fee while submitting the application for DIN. If the documents are in order, the DIN is approved within 3-4 days. The approved DIN is valid for life and the same DIN can be used by the director, even if he/she has directorship in more than one company.
No, it must be situated in India Only.
Any individual of any nationality may register a limited company subject to a few conditions:
- They are not an undischarged bankrupt
- They have not been restrained by court order
- They are not subject to UK government restrictions
No. Company law is different from trademark law. You cannot stop someone using a trademark which is the same or similar to yours merely by registering your name with Companies House.
The directors are responsible for the day to day running of the company and ensuring it meets its responsibilities and deadlines. The shareholders own the company and have the right to vote on many issues. The extent of ownership and level of voting rights are based on the percentage of issued shares they own. An individual can be both a director and shareholder of a company.
Yes, you must provide a number of documents following your ‘Accounting Reference Date’ (ARD). This date is usually the last day of the month your company was incorporated and occurs each year; it is the date that your financial year ends where the accounts are to be made up to. You have 10 months from your ARD to return the following documentation to Companies House:
- A profit and loss account (or income and expenditure account if the company is not trading for profit)
- A balance sheet signed by a director
- An auditors report signed by the auditor (if appropriate)
- A directors report signed by a director or the secretary of the company
- Notes to the accounts
- Group accounts (When necessary)
Yes, a Foreign National or an NRI can be a Director of a Private Limited Company in India after obtaining Director Identification Number. However, at least one Director on the Board of Directors must be a Resident Indian.
Yes, a Foreign National or an NRI Foreign Companies can hold shares of a Private Limited Company subject to Foreign Direct Investment (FDI) Guidelines.
GST Registration is optional till the 20 lakh rupees turnover and for north east state 10 lakh rupees turnover. it’s a completely separate registration apart from private limited company registration.