A private limited company is a legal entity. It is a company which is held by a relatively small group of people known as the shareholders of the company. A minimum of 2 people are required to start a private limited company but the total number of shareholders shall not exceed 200 during the life of the company. The company cannot raise fund through the general public by issuing shares i.e. general public cannot take part in private limited companies. A private limited company have mandatory compliance that has to be done every year like auditor appointment, ITR filing, KYC, ROC filing, etc. Private Limited Company Registration is the best option for small enterprises and startups.
Advantages Of Private Limited Company
- The maximum limit of the shareholder is 200 and there is no interference of general public
- Liabilities of members is limited to the extent of their shareholding
- Separate Legal entity: the private limited company has a distinct identity from its member and directors.
- Control on the ownership of the company: Usually, the directors are the shareholders of the company, therefore, control and ownership remain in their hand and no outsider interfere in the management of the company
- Easy to get borrowings and financial assistance from banks and financial institutions by issuing securities like debentures, deposits etc.
- Death and inability to continue as a member do not affect the legal status of the company. As the company will remain in existence even if the members or directors die.
Steps To Register Private Limited Company
Step 1: Apply For DSC
Step 2: Apply RUN Application
A RUN application needs to be filed for the name reservation of the company.
Step 3: Documents Preparation
Preparation of documents which are required for registration of the company
Step 4: Filing Of Forms
Filing of forms like SPICE+ along with all the relevant documents to the ROC along with the application fees and Stamp Duty to the ROC.
Step 5: Issuance Of Incorporation Certificate
ROC will check and verify the documents and will issue the Certificate of Incorporation
Documents Required For Private Limited Company Registration
For Director and shareholders
- PAN card
- Identity proof (voter id card/passport/driving license), anyone
- Address proof (bank statement/electricity bill/mobile bill/telephone bill), any one and it should not be older than 2 months
For Registered Office Address
- Rent agreement or sale deed of the office address
- Electricity bill/mobile bill/telephone bill/gas bill, anyone as a utility bill and this should not be older than 2 months.
- NOC from the person whose name is mentioned in the bill
ROC Filing For Private Limited Company
Certain information is required to file with ROC. All companies are required to file certain documents every year. Failure in filing this information and documents can attract penal provisions on the company, directors and other officers of the company. Hence the management of the company should take proper care of all necessary compliances. There are two types of ROC Filing one is mandatory filing and another one is event-based filing.
Mandatory Filing For Private Limited Company
- Within 30 days of incorporation of a company shall file information for the appointment of Auditor in Form ADT-1;
- Annual Return in Form AOC-4 and MGT-7 at the end of every financial year; and
If any company fails to file an Annual Return to the ROC then the company will be punishable by a fine of Rs. 50,000/- which may extend to Rs. 5,00,000/-.
Event Based Filings For Private Limited Company
Check List For Annual Compliance
- Annual General Meeting of the shareholders must be held by the company within 6 months at the end of every financial year but the gap between two AGM shall not be more than 15 months
- Balance Sheet & Profit and Loss A/c of the company must be audited by the Chartered Accountant
- Audit Report from Chartered Accountant
- A copy of the notice for AGM
- Director’s Report
- List of shareholders along with their shareholding
These are some of the important compliances a Private Limited Company has to take care of. If any company fails to do so there are many consequences which a company has to face like penalties or the directors may penalize too, the bad impression in the market, fails to get financial support or may become unfaithful for the investors. So it is always better to do the annual compliance on time.
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