With businesses flourishing across India, an increasing number of people seek to put up businesses of their own. If you’re part of the growing number of these aspiring business owners, you must be well-acquainted with the different types of business structures.
Local and foreign companies interested in starting a business can set up a private limited company in India. As of 2016, the country has more than 10 million operating private limited entities. Now, you may wonder, how to make a private limited company in India?
Read the guide below to answer this question.
How To Make A Private Limited Company?
The Companies Act of India governs the laws regulating limited private corporations. At least two shareholders having the least share capital of Rs 100,000 is needed to create a private limited company. In contrast to public limited partnerships, private limited companies are mostly smaller and don’t receive public funds. Rather, they work and use their financial means, which leaves them with less regulatory standards.
In registering a private limited company, a set of requirements and company registration process should be met. The conditions for registering are as specified below:
Steps to register a private limited company in india.
Apply For Business Name Approval
Deciding the business name is often a crucial factor to consider. A private limited company has to support three aspects when settling on a name on its own:
- Primary name
- The operation to be done
- Attachment of’ ‘Private Limited Company.’
However, it isn’t always guaranteed that the business name that you desire is available, as there are no two companies that can share a common name. Consequently, it is a prerequisite that every organization must submit 5 – 6 name suggestions for confirmation to the Registrar of Company (ROC) at the registration process. Also, the names submitted should have no striking similarities to the name of any other business.
The new online platform Reserve Unique Name (RUN) allows for two recommendations for company names. Another component of the site allows users to search currently existing business names. Approval of name may also be required while submitting the SPICe (INC-32) form.
Obtain A DSC
The next step after getting your company approved is to obtain a DSC. A DSC (digital signature certificate) is an online representation of the identity of a director. Obtaining a DSC online takes about three to six business days.
All the company’s directors should get a DSC, valid for two years. Foreigners and NRIs are obliged to disclose validated records of their passports, which the Indian embassy in their country of residence has notarized.
Any organization will acquire a digital signature certificate for electronic document submission. This is used to validate the documents’ authenticity. Also, practitioners’ certifications are required in a company that employs professionals (lawyers, financial consultants, tax professionals, etc.).
Apply For Director Identification Number (DIN)
Aside from a DSC, every company director must also have a DIN. Requests for DIN should be signed electronically through a DSC. Self-tested IDs, proof of address, and photos of the director must be submitted. When obtained, a DIN never expires and needs no re-application.
Additionally, a private limited company must have a baseline of two and a maximum limit of 200 members to be officially registered. It is a mandatory requirement as laid down in the 2013 Companies Act.
More importantly, the directors must be a citizen of India. This implies he/she must have lived in India during the previous calendar year for at least 182 days.
Submit SPICe Form (INC-32, INC-33, And INC-34)
The final phase of registering a private limited company in India is to submit the SPICe Form. There are three forms included in the SPICe Form and they’re as follows.
First is the INC-32, an intricate online form that includes DIN specifications, company name reservations, and business incorporation. There are documents to be attached along with Form INC-32 upon filing. The attachments are as follows:
- Articles of Association;
- Memorandum of Association;
- Proof of office address
- Proof of utility bills
- Proof of identification and address of the directors
- Permanent Account Number (PAN card).
Next is Form No. INC-33 which includes the electronic version of the Memorandum of Association that describes a company’s charter.
And the last one is Form No. INC-34 which provides applicants with the electronic platform to submit their Articles of Association (the company’s internal regulations).
When all these necessary requirements are submitted and your application gets approved, the Registrar of Companies (RoC) grants a corporation with a 21-digit Corporate Identity Number (CIN).
A secured copy of the CIN and Certificate of incorporations makes you an official and legal private limited company in India.
A Business-Friendly Tip
As a startup business, every process you take in setting up your business must be as efficient as possible. Save yourself some time and resources by seeking 3E Accounting India help to process your India Company Incorporation registration. The company has a reputable name in the industry helping business owners overcome the setbacks of starting up. Contact us and let us do the hard work for you.
Making a private limited company in India can be backbreaking. Whether you’re starting to test the waters or seasoned in the field, you need help from those who know how to get across. The best-laid plans can sometimes be ineffective when you don’t know how to do it right. Do yourself a favor, adapt the guide mentioned above, and connect with the experts.