What Is Private Limited Company: its Advantages And Registration Process

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What Is Private Limited Company: its Advantages And Registration Process

A private limited company must have two members to be formed, and it must have the word "private" in its name. Under the Companies Act, a private company is given unique benefits and exclusions. It usually involves family members.

A Private limited company is one that meets the following requirements:

Minimum paid-up capital of one lakh rupees; maximum paid-up as may be prescribed and which by its Articles of Association
Restricts its members' ability to transfer shares, if any, and,
Except in the case of one-person companies, it limits the number of its members to 200, excluding members who are or were employed by the company.
Restricts any invitation to the public to subscribe to any securities of the company
It also forbids accepting deposits from the general public other than the company's directors or relatives.

Please read the full blog to learn more about the private Limited company, its registration process, and its benefits.

Define Private Limited Company

A business owned privately is known as a private limited company. Even though a Private Limited Company (PLC) may have shareholders and issue stock, their shares are not offered through an IPO or traded on public exchanges (IPO).

The onerous filing procedures established by the Securities and Exchange Commission (SEC) for public companies are, therefore, not applicable to private companies.

Since the shares of these companies are frequently less liquid, estimating their valuations is more complicated.

Merits of Private Limited Company

The Private limited company enjoys the following benefits:

Secrecy:

Families typically run private businesses. It is not necessary to publicly announce its actions and judgments. It is not compelled to disclose its financial reports or to make them available for public review. It is, therefore, better equipped to keep the details of its commercial operations a secret.

Quick decisions:

Private companies can make policy decisions more quickly because fewer people are consulted. There is continuity of management policy.

Greater adaptability:

A private company's management is more adaptable because it is not subject to certain regulatory requirements. It receives exemptions from several Companies Act rules. Government meddling in how it operates and conducts its business is minimal.

Personal touch:

A private company's members are close friends who actively participate in running the business. It promotes independent thought. When there is no divide between ownership and management, motivation is higher.

Advantages of Registering Private Limited Company

The Companies Act of 2013 and the MCA both control private company registration. Private limited company registration is important for the business's proper operation, just like any other type of company. It is necessary to use the phrase PVT LTD. The benefits of company registration for any Private Limited Company include the following:

Tax Savings:

There are numerous methods to receive additional financial rewards by creating a Private Limited Company, including tax savings. Every Private Limited Company considers a few tax preparation strategies to swell its coffers. An allowable expense for the Private Limited Company is the director's salary. All initial costs, such as those associated with drafting MOA and AOA, paying for stamp duty on documents, etc

Limited liability:

Each private business member's liability is limited to the face value of the shares he owns. Members are not personally liable. Members are only accountable for unpaid shares; the company is held accountable for any flaws.

Easy Transferable:

One advantage of setting up a private limited company is the simplicity and hassle-free ease with which shares may be transferred to another individual.

Obtain Quick Funding:

Banks and other financial institutions favor lending to significant private businesses. A Private Limited company has more favorable options for borrowing money. It can borrow funds by issuing both secured and unsecured debentures.

Forms Of Private limited company

Following are the primary types of ownership in the private sector:

(i) Sole Proprietorship

(ii) Joint Hindu Family Firms

(iii) Partnership

(iv) Joint Stock Company

(v) Cooperative Society

Private limited company Registration Process In India

A private limited company must complete all requirements to register a company, which is laborious. The steps for a private limited company registration in India are shown below:

Obtain a certificate of digital signature (DSC):

The DSC is necessary for all subscribers and witnesses in the Memorandum of Association (MOA) & Articles of Association to register a private limited company (AOA). The forms for online company registration demand a digital signature.

Request a DIN (Director Identification Number):

Anyone who wishes to register as a director of a private limited business may do so by obtaining the DIN.

Name approval:

For Pvt ltd company registration in India, your company's name must be distinctive.

SPICe+ Form (INC-32):

The MCA has made SPICe+ available for Pvt ltd company formation in India as of February 23, 2020. With the help of a single application, the SPICe+ form offers web-based incorporation and provides the following functions:

e-MoA and e-AoA (INC-33) (INC-34)

While the articles of association contain the company's internal rules and regulations, the memorandum represents the company's charter. Pvt ltd company registration in India is now easier because of the online process replacing the physical filing of this form that was previously required.

PAN & TAN Application:

Forms are automatically generated following successful SPICe+ form submission. After the SPICe+ Form has been approved, the PLC's Certificate of Incorporation is given out. It is the Income Tax Department which will issue the PAN card.

After receiving the completed form, MCA will approve the registration and assign a CIN (Corporate Identity Number).

Documents Needed for Online Company Registration in India

Without valid identification and evidence of address, it is impossible to register a private limited business or Pvt ltd in India. The list of paperwork needed by the MCA for the online company registration process is as follows:

Identity and address proof

A copy of a PAN card or passport is needed for international nationals and NRIs.
Voter ID, a passport, or a driver's license.
The most recent telephone, mobile, electric, or gas bill.
Passport-sized photograph and signature in Evidence that the office is registered