Incorporation of Private Limited Company

Benefits of a private company

  • No Minimum Capital- No minimum capital is required to form a Private Limited Company. A Private Limited Company can be registered with a mere sum of Rs. 10,000 as total Authorized Share capital.
  • Separate Legal Entity- A Private Limited Company is a separate legal identity in the court of the law, meaning assets and liabilities of the business are not the same as the assets and liabilities of the Directors. Both are counted as different. A Private Limited Company separates Management and Ownership and thus, managers are responsible for the company’s success and are also answerable for the company’s loss.
  • Limited Liability- If the company undergoes financial distress because of whatsoever reasons, the personal assets of members will not be used to pay the debts of the Company as the liability of the person is limited.
  • Fund Raising- A Private Limited Company in India is the only form of business except Public Limited Companies that can raise funds from the Venture Capitalists or Angel investors.
  • Free & Easy transfer of shares- Shares of a company limited by shares are transferable by a shareholder at any other person. The transfer is easy as compared to the transfer of an interest in a business run as a proprietary concern or a partnership. Filing and signing a share transfer form and handing over the buyer of the shares along with a share certificate can easily transfer shares.
  • Uninterrupted existence- A Private Limited Company has ‘Perpetual Succession’, that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership. ‘Perpetual Succession’ is one of the most important characteristics of a company.
  • FDI Allowed- In a Private Limited Company, 100% Foreign Direct Investment is allowed that means any foreign entity or foreign person can directly invest in a Private Limited Company.
  • Builds Credibility- The particulars of the company are available on a public database. Which improves the credibility of the company as it makes it easy to authenticate the details
Documents required:

Following are the mandatory documents to be submitted by the company’s Directors and shareholders (NRIs):

Scanned copies of:

  • Passport
  • Voter’s ID/ driver’s license/passport
  • Latest bank statement
  • Latest utility bills like telephone, mobile or electricity
  • Passport size photograph
  • Specimen signature (blank document with the signature [directors only])

Note: All the documents should be notarized (if NRI is currently in India or in a Commonwealth country). All the documents should be notarized and apostilled or attested by the Indian embassy (if in a Non-Commonwealth Country).

Proofs for office address

Scanned copies of:

  • Latest water bill or electricity bill
  • Notarized rental agreement in English
  • Receipt of the latest rent
  • In case of owned property - Sale deed or property deed
  • NoC from the property owner

Note: All the documents should be notarized (if the NRI is currently in India or in a Commonwealth country). All the documents should be notarized and apostille or attested by an Indian embassy (if in a Non-Commonwealth Country).

Mandatory compliances for a private company

  • Company Name Board: Every Company shall paint or affix the name and address of a registered office and keep the same painted/affixed, outside every office or place in which its business is carried on, in legible letters.
  • Letterhead of Company: Every Company shall get its name, address of registered office, CIN, telephone and email printed on all business letters, billheads, letter papers.
  • First Board Meeting: First Meeting of Board of Directors is required to be held within 30 days of Incorporation of Company. Notice of BM must be sent to every director at least 7 days before the meeting.