How to incorporate a Private Company in India?

Private Limited Company registration is the most popular form of a ‘legal structure’ for all businesses in India. This type of company offers limited liability for its shareholders with certain restrictions placed on the ownership. An LLP has partners, who own and manage the business. Whereas in private limited company registration, directors may be different from shareholders. The Ministry of Corporate Affairs (MCA), introduced the SPICe form (Simplified Proforma for Incorporating a Company Electronically) or Form INC-32 that helps incorporate a company with a single application for reservation of name, incorporation of a new company, and application for allotment of DIN.

1. Meaning of Private Company:

“Private Company” means a [company having a minimum paid-up share capital (Omitted)] as may be prescribed, and which by its articles: – (i) restricts the right to transfer its shares; (ii) except in case of One Person Company, limits the number of its members to two hundred: Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member.

2. Law governing the process of Incorporation of the Company

In general, sections 4, 7, 12, 152, and 153 of the Companies Act, 2013 read with rules are applicable in the incorporation process of the company.

3. Point to be kept in mind before incorporation of Private Limited Company

• The proposed name should not fall in the ambit of undesirable names specified in Rule 8 of Companies (Incorporation) Rules, 2014.
• c. Minimum number of Directors required is 2 Directors with a maximum limit of up to 15 Directors. But a company may appoint more than 15 directors after passing a special resolution in a general meeting.
• There must be at least 2 subscribers to the memorandum and the maximum number of members allowed is 200 members.
• Every company shall have at least one director who has stayed in India for a total period of not less than 180 days in the previous calendar year as per section 149(3) of the Companies Act, 2013.

4.Private Company Incorporation Process

A. Obtaining Director Identification Number (DIN) and Digital Signature

The first step for the registration of a Private Limited Company is to obtain Director Identification Number (DIN) for the proposed Directors in the Private Limited Company. (Note: Maximum three Directors are allowed for using this integrated form for filing application of allotment of DIN while incorporating a company other than a Producer company. In the case of a Producer Company, a maximum of five directors are allowed to apply for allotment of DIN). And Digital Signature of the Directors and all subscribers to the memorandum of Private Limited Company is necessary.

B. Name reservation of Company

For all kinds of information and process regarding the name reservation of the company, you can get through our earlier written article

C. SPICe Form- Company Registration Procedure

This form is segregated into two parts:

Part -A: Name Application:

The user has the flexibility to apply for Part A & Part B together. He should do that only when he is sure of the name availability for which he has applied. If he is unsure, he must apply for Part A separately as mentioned above, and get the name approval. Thereafter, go ahead with the process of incorporation.

Part B: Procedure for incorporation:

Once the name applied in Part A gets approved, the details automatically get prefilled in Part B in all the linked forms. Then, fill in all necessary details in all linked forms such as AGILE-PRO, SPICe+ MOA, SPICe+ AOA, URC-1 (applicable in the case of conversion) INC-9 (as per applicability). Companies have to apply for a bank account also through this form only and You also have to take mandatory registrations like EPFO, ESIC, and Professional tax through this form only. Additionally, you can get GST registration through the same form, but it is not necessary.

D.Mandatory Attachments:

• Directors’ and subscribers’ KYC documents such as Aadhar Card, Pan Card, Proof of address (not older than 2 months), photos, passports, etc.
• Director Consent through form DIR-2
• Registered Address proof such as Rent Agreement, Property Tax Receipt, NOC, and Bill (Not older than 2 months). Company Incorporation Process of the Private Company

E.Pr-scrutiny and Submission of the Incorporation Forms:

In the end, after everything is done, pre scrutinize the form. Once it is successful, submit the form. After that, download the Spice+ Form and all other forms linked to Spice, affix the DSC, and upload the same over the MCA portal.

f. Re submission/ Approval:

On approval of SPICe forms, the Certificate of Incorporation is issued with PAN as allotted by the Income Tax Department. An electronic mail with Certificate of Incorporation as an attachment along with PAN and TAN is also sent to the user. Further PAN card shall be issued by the Income Tax Department.

On the other hand, the authority can raise queries and send forms for resubmission. Then, you have to provide all asked information, clarification, and documents. Then again, download the updated Spice+ Form and other linked forms, affix the DSC, and re-upload the same over the MCA portal.