Basic Requirements to Register a Private Limited Company in India

How to register a Private Ltd Company in India When starting a business can be an exciting venture, one of the most popular and proven ways to establish a legal entity is to register a company. This structure offers limited liability to its shareholders, easy access to funding and is aimed at people keen on growing and scaling their business long-term. Here we will discuss what are the basic requirements for registering a Pvt Ltd Company in India, procedure of registration and the benefits of registering a Pvt Ltd Company.

What is Private Limited Company?

Instead, a Private Limited Company in India is a legal status that limits the liability of some or all of its owner-members, would-be shareholders to the amount of unpaid shares they hold in the company. Due to having legal recognition, limited liability partnership benefits, the ease of transferability of shares; it is one of the most frequently adopted business structure in India. An A Ltd Company in India or Private Ltd Companies in India is a legal entity separate from its owners; it can own property, enter into contracts and sue or be sued in its own name.

Benefits of Private Limited Company in India

Before we move onto the requirements for Pvt Ltd Company registration in India, it is important to know the benefits of Pvt Ltd Company:

 Limited Liability: Liabilities of shareholders are limited to amounts unpaid on their respective shareholdings. If they liquidate, their personal assets are not at risk.

Credibility: Clients, suppliers and investors are to have more credibility to register a private Ltd company. It facilitates easy funding from the banks and financial institutions.

Ease of Ownership: The number of shareholders can be unlimited and it can issue shares, which facilitates raising funds.

Perpetual Succession: The existence of a Private Limited Company continues to remain in case of new shareholders.

Tax Advantages: Pvt Ltd companies have several tax benefits like deductions, exemptions and carry forward business losses, et cetera.

Minimum Requirements to Register a Private Limited Company in India

The registering of a Private Limited Company in India ( Governed by Ministry of Corporate Affairs (MCA) Companies Act, 2013. Following are the key requirements and documents you should posses to fulfill the Pvt Ltd Company registration in India:

Minimum Number of Directors and Shareholders

In India, at least two directors and two shareholders are required in a Private Limited Company.

Directors : A company needs at least 2 directors who must be natural persons. At least one of them has to be a resident of India, that is, he/she has to have spent 182 or more days in India in the previous calendar year. A director may or may not be a shareholder.

Shareholders: It requires a minimum of two shareholders. These directors could be the same as the shareholders. A private limited company restricts its shareholders to a maximum of 200.

Director Identification Number (DIN)

In India, a Director Identification Number (DIN) is a prerequisite for any individual seeking to be appointed as a director of Private Ltd Company. For each individual who is a director of the company, the company must obtain a DIN by submitting an application, as prescribed by the government, with the MCA along with proof of identity and address, as well as any other documents. DIN is a unique identification number that the director carries throughout his life.

Digital Signature Certificate (DSC)

Directors require a Digital Signature Certificate (DSC) to sign documents and submit them to the MCA electronically. A DSC is a prerequisite for the online submission of documents through the Ministry of Corporate Affairs website, it verifies the authenticity of the documents submitted online and also required for the process of best Private Ltd Company registration in India.

Company Name Approval

Choosing a unique name for your Ltd Company in India is the first step in the registration process. The name should comply with the MCA naming guidelines. It cannot be the same or similar to other names which are already registered for trademarks or companies. The name must correlate with the type of business and must have words like “Private Limited” or “Pvt Ltd”.

The proposed company name can be checked using the MCA's RUN (Reserve Unique Name) service, and you can apply for name approval through the RUN service.

Registered Office Address

Every Pvt Ltd Company is required to have a registered office address in India. This address will be used for official correspondence, legal packages and government notices. It should be in India, and you must submit your ownership proof or rental agreement where your business is located.

Documents that may be required as proof of registered office include:

Utility bills (power, water, gas) issued within the last 2 months.

If rented property: rent agreement

NOC (No Objection Certificate) from landlord if the property is rented

Memorandum of Association (MOA) and Articles of Association (AOA)

When you want to register a Private Ltd Company in India, two mandatory documents are Memorandum of Association (MOA) and Articles of Association (AOA).

The Memorandum of Association (MOA) lays down the objectives of the company, its scope, and the powers of its directors. It shapes the company’s interaction with the outside world.

At the same time, Articles of Association (AOA) controls the internal management of the company. It explains the duties and powers of directors and shareholders.

Subscribers to the memorandum must sign both documents. Like other documents, the MOA and AOA need to be filed to the MCA.

Capital Requirements

There is no minimum capital requirement for registration of Private Limited Company in India. But a company must file its issued capital—the maximum amount of shares it can issue. Most companies opt for an authorized capital of ₹1 lakh or ₹2 lakh simply to make registration easy. This may have to be raised in the future if needed.

Tax Registration

After getting your Pvt Ltd Company registered in India, you are required to apply for a Permanent Account Number (PAN) and Tax Deduction Account Number (TAN). PAN is mandatory to file taxes and carry out financial transactions, and TAN is required to deduct and pay TDS (Tax Deducted at Source) on payments made by the company.

Bank Account

Once the company is registered, you will have to open a bank account in the company’s name. To place this, you want the company’s Certificate of Incorporation and other paperwork like the PAN and proof of the registered workplace.

How to register a private limited company in India: Step by step guide

Having discussed the fundamental needs for Private Ltd Companies in India, let us now walk you through the process of registering your company:

Collect DSC and DIN: The initial stage is to acquire a Digital Signature Certificate of the owners and Director Identification Numbers (DIN).

Step 1: Get the Name Approved Apply for the company name using the RUN service and get it approved by the MCA

Draft MOA and AOA: The Memorandum of Association (MOA) and Articles of Association (AOA) must be drafted in accordance with the provisions of the Companies Act, 2013.

Online Submission of Required Documents: The relevant documents and forms must be submitted online on the MCA portal for Pvt Ltd Company registration in India (like SPICe-32 Form, SPICe MOA Form, SPICe AOA Form etc.)

Incorporation Certificate: After the application is processed and approved, the MCA will provide a Certificate of Incorporation, confirming your company has been legally formed.

File for PAN and TAN: After incorporation, apply for PAN and TAN for the company in order to finish the tax registration process.

Conclusion

Benefits of Starting Pvt Ltd Company in India Along with these basic requirements of two directors and shareholders etc., obtaining a DSC and DIN, bearing a suitable name along with requisite documents needed for legal works allow you to carry out a hassle-free registration process of your Private Ltd Company in India.

What is the best way to incorporate in India? Registering a Pvt Ltd company is always a boon for long term growth and success, be it for starting a small business or planning to scale.