Procedures to Incorporate Private Limited Company — Companies Act 2013
A Private Limited Company is the most well-liked business structure by entrepreneurs in India. Members can enjoy this type of business entity as they will have limited liability, can maintain business easily, have a better opportunity of growing, quickly get loans from the banks, have private equity, etc. In this blog, we will state the procedure needed for incorporation of Pvt Ltd company in India, but before that, you need to consider some factors before starting it.
Essential Factors to Consider Before Starting a Private Limited Company
- The proposed name must not be among the names in Rule 8 of the 2014 Companies (Incorporation) 2014.
- The must be a minimum of 2 subscribers and a maximum of 200 members for the memorandum.
- Minimum 2 directors and maximum 15 directors should be there. However, if a special resolution is approved at a public meeting, a business may have more than 15 directors.
- As per Section 149(3) in the Companies Act of 2013, each business must have at least one director who spent a minimum of 180 days in India during the preceding calendar year.
What Are the Procedures for Incorporating a Private Limited Company?
1. Obtain Director Identification Number
The Directors Identification Number is the eight-digit number given to a proposed director. Each candidate chosen to serve as a director of the organisation must submit an application in e-form DIR 3 with the recommended charges, as per Section 153 of the Companies Act of 2013. However, the SPICe form will be used to submit applications for the designation of DINs to the proposed directors of new organisations.
An applicant must submit a passport-size photograph, copy of PAN card, and self-attested copy of his or her address proof to obtain DIN.
2. Obtain Digital Signature Certificate
Digital Signature Certificates serve as a secure digital key that verifies the certificate holder’s identity. A digital certificate can be used to sign papers electronically, access data or services online, and validates one’s identity. The MCA has made it simple to register a company online; thus, each subscriber’s DSC is necessary. The e-MoA and e-AoA must both carry the digital signatures of the subscribers and witnesses.
3. Name Reservation
Verify if the organisation’s chosen name is present on the MCA website. The RUN web service also allows the planned name of the organisations to be reserved. It’s easy to use the RUN (Reserve Unique Name) web administration to reserve a name for a new business or to rename an existing one. The applicant must also submit the RUN application to reserve the desired organisation’s name and pay any applicable fees. The Central Registration Center will then handle the application (CRC).
4. Draft MoA & AoA of the Company
A Memorandum of Association (MoA) refers to the company’s charter. A corporation’s association with shareholders is outlined in this formally approved document, which was created during company registration procedure. It also outlines the purposes why the company was established.
The internal management of a firm is outlined in the Articles of Association (AoA). It specifies the responsibilities, privileges, and authority of the company’s management. Similarly, it is a legally recognised document created as part of an organisation’s formation and registration process to characterise its relationship with investors and specify the goals for which the firm has been established.
5. SPICe Form — INC 32
The SPICe Form (INC-32) is used for single applications for name reservations, new company incorporations, allocation of DIN applications, PAN applications, and TAN applications. Additionally, this e-Form is accompanied by supporting documents like an MoA and AoA, a list of the Directors and Subscribers, etc.
The firm will be registered and its CIN assigned once the e-Form has been verified and deemed complete. Additionally, three directors are permitted to submitted to submit applications for the allocation of DIN using this integrated form when incorporating a company. Also, the company would get a PAN and TAN.
The following documents need to be submitted while filing SPICe with the Registrar of Companies are:
- Form DIR-2 — statement from first directors
- Statement by Directors- regarding credits
- DIN affirmation by proposed directors
- INC-9 assertion by first subscribers and directors
- Directors’ interest
- Memorandum of Association
- Articles of Association
- Statement by the director if any agreement of sector regulator is needed
- Address proof of Registered office
- Address proof and identity proof of all the subscribers
6. File form AGILE with RoC for GST, ESIC, and EPFO registration
Application for a GST number, ESI, EPF registration, and Employees Provident Fund (EPF) registration is made through Form AGILE. Similarly, startups can apply for a GSTIN, an Establishment Code supplied by EPFO, or an Employer Code provided by ESIC through an e-form if they want to register their businesses with SPICe (INS-35).
Procedures After Incorporation of a Private Limited Company
The procedures for incorporation of Pvt Ltd company have been easier over the years, which encourages full compliance by businesses. However, to avoid any fines or penalties, the management should be informed entirely of post-incorporation compliance.
The following are essential steps that must be completed when a company is incorporated:
1. Meetings of Board of Directors
As per following Section 173(1) of the Companies Act 2013, the company must conduct a board meeting in less than 30 days after the incorporation of Pvt Ltd company. Directories are allowed to attend the meeting either personally or through video conferencing.
2. Bank Account
A firm must open a bank account before applying to the authorities for incorporation of Pvt Ltd Company. Transactions cannot be made in the name of any natural person because the firm is an artificial entity.
3. Having a Registered Office
A company must have a registered office within 30 days of its incorporation date in accordance with Section 12(1). All official communication from the various authorities should be sent to this address. Within 30 days of its incorporation, the company must notify the registrar of this information.
4. Affix the Company’s Name
Every location where a company conducts commercial operations must have its name displayed. The company’s name must be displayed in the language that is most often spoken in that area. A seal with the company’s name engraved on it, letterheads with the proper information, and printed negotiable instruments are further requirements.
5. Appointment of Auditor
Except for a government company, Section 139(1) states that the Board of Directors must appoint the first auditor within 30 days of the incorporation of Pvt Ltd company. If that doesn’t happen, the members must appoint the auditor in a special general meeting within 90 days. The initial auditor will serve in that capacity until the first annual general meeting is over.
6. Interest Disclosure
According to section 184(1) of the 2013 Companies Act, each director must disclose his ownership stake in any firm, body corporate, or group of people at the first board meeting. The must be informed of any modifications to the disclosures at its first meeting conducted each financial year. During his first board meeting as a director, any independent directors, if any, must declare that they meet the requirements for independence.
7. Maintaining Statutory Registers
The firm must keep statutory registers updated at its registered office. The same must be kept in the specified form; otherwise, the company will have to face penalties.
8. Share Certificate
Within 60 days after the incorporation, a shareholder must get the share certificate. The time period is taken to be 60 days from the date of allocation in the event that more shares are allocated.
9. Maintaining Books of Accounts
According to Section 128, every company must maintain books of accounts that accurately and fairly reflect the company’s financial condition. The accounting is performed on an accrual basis, and the double entry system must be used.
10. Certificate of Commencement
A company must obtain a certificate of commencement of the business within 180 days. The directors of the company are required to file a disclosure certifying that each subscriber has paid the full amount owed on their shares.
Conclusion
The above mentioned procedures for incorporation of pvt ltd company can be quite stressful and complicated for you. Therefore, you can contact the legal experts of Online Legal India to complete the process efficiently for a reasonable fee. Professionals will prepare your documents and forms and file them on your behalf.
