What is a Private Limited Company?
In accordance with section 2(68) of the Companies Act, 2013 private company means a company having a minimum paid-up share capital as may be prescribed, and which by its articles:-
(a) put restriction to the right to transfer its shares;
(b) except in the case of OPC, which limits the number of its members to 200.
However, where 2 or more persons hold one or more shares in a private limited company jointly, they shall be treated as a single member of that private limited company.
The following persons shall not be included in the number of members of the private limited company:-
(i) persons who are in the employment by the company; and
(ii) persons who, having been formerly in the employment by the company, were members of the company while in that employment and have continued to be members after the employment ceased.
(c) prohibits any invitation to the public to subscribe to any securities of the pvt company.
It is only the number of members is limited to 200. A privately held company may issue debentures to any number of persons, subject to the condition that an invitation to the public to subscribe for debentures is prohibited.
In accordance with the proviso to Section 14 (1) of the Act, if a company is a private company alters its articles in such a manner that they no longer include the restrictions and limitations which are required to be included in the articles of a private company, that Pvt company shall, as from the date of such alteration, cease to be a Pvt.
It is to be noted that the words ‘Private Limited’ must be added at the end of its name by a private limited company.
In accordance with section 3(1), a Pvt company may be formed for any lawful purpose by two or more persons, by subscribing their names to a memorandum and should comply with the requirements of the Companies Act in respect of the Pvt limited registration.
In accordance with section 149(1), a privately held company shall have a minimum number of two directors. The only two members of the private limited company may also be the two directors of the privately held company.
Characteristics of a Private Limited Company
CharacteristicsDescriptionMembersTo start a company, a minimum number of 2 members is required and a maximum number of 200 members as per the provisions of the Companies Act, 2013.Limited LiabilityThe liability of each member or shareholder is limited. So, if a company faces loss under any circumstances then its shareholder's liability will not be unlimited and are not liable to sell their own individual assets for payment and shareholders will not be at risk.
The exception to limited liability:- In accordance with section 3A of the Companies Act, 2013, if the number of members of a privately held company is reduced below two, and the business is carried on for more than 6 months, while the number of members is so reduced, every person who is a member of the company during this period and is cognisant of this fact, shall be severally liable for the payment of the whole debts of the company contracted during the time, company runs below 2 members and may be severally sued therefor.Perpetual successionThe company will keep its existence in the eyes of law even in the case of death, insolvency, the bankruptcy of any of its members. So we can say that company has perpetual succession. Perpetual succession means the existence of the company will be forever.Index of membersThe maintenance of the index of members is not necessary in case the number of members of the company is less than 50. Which is a privilege for a pvt limited company wherein the number of members is less than 50.Number of directorsA pvt limited company needs to have a minimum of two directors. A private limited company can be registered with help of 2 directors and can start with its operations.Paid up capitalStatutorily, there is no minimum paid-up capital requirement for a private limited company. However, if a paid-up capital requirement arises out of business needs, then it can be as per the business requirement. ProspectusThere is no requirement to issue a prospectus by the private limited company because, in this type of company, the public is not invited to subscribe for the shares the company.Commencement of BusinessAfter the commencement of the Companies (Amendment) Act, 2019 (w.e.f. 02/11/2018), a company incorporated and having a share capital cannot commence any business or exercise any borrowing powers unless –
(a) A declaration is filed by a director within a period of 180 days of the date of private company registration with the Registrar. The content of the declaration will be that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making such declaration; and
(b) The company has filed a verification of its registered office with the Registrar.NameUsing the word “private limited” after their name is mandatory for all private companies.
Pvt Limited Company Registration
SPICe+ Form & AGILE-PRO-S Form
A new web form SPICe+ for incorporation of the Companies replacing the old e-form SPICe is introduced through the Companies (Incorporation) Amendment Rules, 2020 w.e.f 23rd February 2020.
SPICe+ is an integrated Web form. It offers 11 services by 3 Central Government Ministries & Departments (namely the Ministry of Corporate Affairs, the Ministry of Labour & Department of Revenue in the Ministry of Finance) and three State Governments (namely Maharashtra, Karnataka & West Bengal). It saves a lot of procedures, time and cost for registering a company in India. Spice+ is an initiative of the Government of India towards the Ease of Doing Business (EODB).
In accordance with Rule 38 of the Companies (Incorporation) Rules, 2014, the application for private company registration shall be made in SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32) accompanied by Form No. INC-33 and Form no. INC-34 .
An application for private company registration under rule 38A of the Companies (Incorporation) Rules, 2014 shall be accompanied by form AGILE-PRO-S (INC-35) containing an application for registration of the following numbers, namely:-
(i) GSTIN (w.e.f. 31st March 2019)
(ii) EPFO (w.e.f. 8th April 2019)
(iii) ESIC (w.e.f. 15th April 2019)
(iv) Profession Tax Registration with effect from the 23rd February 2020
(v) Opening of Bank Account with effect from 23rd February 2020.
(vi) Shops and Establishment Registration.
If the Pvt ltd registration of a company involved more than 7 subscribers or where any of the subscribers to the MOA/AOA is signing at a place outside India, MOA/AOA shall be filed with SPICe+ (INC-32) in the respective formats as specified in Table A to J in Schedule I without filing form INC-33 and INC-34.
Following are the services offered through SPICe+ forms are:-
- Name Reservation,
- Incorporation,
- DIN allotment,
- PAN issue (mandatory),
- TAN issue (mandatory),
- EPFO registration (mandatory),
- ESIC registration (mandatory),
- Profession Tax registration (mandatory) for (Maharashtra, Karnataka & West Bengal),
- Mandatory opening of a Bank Account for the Company,
- Allotment of GSTIN (if so applied for),
- Shops and Establishment Registration.
After deployment of the SPICe+ web form, RUN is applicable only for the change of name of existing companies.
Establishment of the Central Scrutiny Centre (CSC)
(Vide Notification No: S.O.1257 (E), Dated March 18, 2021)
- The Central Government has established a Central Scrutiny Centre (CSC) to carry out scrutiny of Straight Through Processes (STP) e-forms under the Companies Act, 2013 w.e.f. from March 23, 2021.
- The CSC shall function under the e-governance Cell of the Ministry of Corporate Affairs (MCA).
- CSC shall carry out scrutiny of the STP forms and forward findings thereon, wherever required, to the concerned jurisdictional Registrar of Companies (ROC) for further necessary action under the Companies Act, 2013.
- Central Scrutiny Centre (CSC) is located at the Indian Institute of Corporate Affairs (IICA), at Plot No. 6, 7, 8 of Sector 5 at IMT Manesar, at District Gurgaon (Haryana), Pin Code- 122050.
Features of SPICE+ Form
The particulars of the maximum of 3 directors shall be allowed to be filled in SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32), and allotment of Director Identification Number (DIN) of the maximum of 3 proposed directors shall be permitted in case of proposed directors not having approved Director Identification Number.
SPICe+ is an integrated Web Form divided into two parts viz.
PartDescriptionPart AName reservations for new companies andPart BOffering a bouquet of services viz.
(1) Incorporation
(2) DIN allotment
(3) PAN issue (mandatory)
(4) TAN issue (mandatory)
(5) EPFO registration (mandatory)
(6) ESIC registration (mandatory)
(7) Profession Tax registration (mandatory) (only for companies to be registered in Maharashtra, Karnataka and West Bengal)
(9) Opening of a Bank Account for the Company (mandatory)
(10) GSTIN allotment (if applied)
(11) Allotment of Shops and Establishment Registration Numbers (Only for the Delhi Location)Spice + Form Features
For the Incorporation of the company, the user may either choose to submit Part-A for reserving a name first and thereafter submit Part B for incorporation & other services or file Part A and B together at one go for incorporating a new company and availing the bouquet of services as above. Incorporation applications (Part B) after name reservation (In Part A) can be submitted as a seamless process in continuation of Part A of SPICe+. In the form, Spice+ Stakeholders will not be required to even enter the SRN of the approved name as the approved Name will be prominently displayed on the Dashboard and a click on the same will take the user for the continuation of the application through a hyperlink that will be available on the SRN/ application number in the new dashboard.
It may be noted that from 23rd February 2020 onwards, RUN service is applicable only for the ‘change of name’ of an existing company and the new web form facilitate On-screen filing and real-time data validation for seamless incorporation of companies. The approved name and related incorporation details as submitted in Part A would be automatically Pre-filled in all linked forms also viz., AGILE-PRO-S, eMoA, eAoA, URC1, INC-9 (as applicable).
All Check forms and Pre-scrutiny validations (except DSC validation) happen on the web form itself. Once the SPICe+ is filled completely with all relevant details, the same would then have to be converted into pdf format, with just a click of the mouse button, for affixing DSCs. All digitally signed applications can then be uploaded along with the linked forms as per the existing process. Changes/modifications to SPICe+ (even after generating pdf and affixing DSCs), can also be done by editing the same web form application which has been saved, generating the updated pdf affixing DSCs and uploading the same.
Registration for EPFO and ESIC shall be mandatory for all new companies incorporated w.e.f. 23rd February 2020 and no EPFO & ESIC registration nos. shall be separately issued by the respective agencies. However, the Registration for Profession Tax shall be mandatory for companies to be registered in Maharashtra, Karnataka and West Bengal.
All new companies incorporated through SPICe+ (w.e.f 23rd February 2020) also be mandatorily required to apply for opening the company’s bank account through the AGILE-PRO-S linked web form.
Declaration by all Subscribers and first Directors in INC-9 is auto-generated in pdf format and would have to be submitted only in Electronic form in all cases, except where:
(i) Total number of subscribers and/or directors is greater than 20 and/or
(ii) Any such subscribers and/or directors have neither DIN nor PAN
Shops and Establishment registration is optional. It is available only for new companies incorporated in the State of Delhi only. But, it is recommended to OPT for registration as no first-time registration will be provided by the Labour department portal.
Pvt Ltd company Registration Process
Step 1: Apply for Name Approval of Pvt ltd registration
(A) Log in on MCA Website
The person who wants to apply for name approval has to login into their account on MCA Website. The person who does not have an existing account has to create an account first and then log in.
(B) Go to MCA Services>Company Services>Spice+ and Click Spice+
After you click the Spice+, two options came before you, New Application & Existing Application. Click the New Application
Fill in the online information given in Spice+ Part A. If the applicant wants to attach any file, can be uploaded at Choose File option. Then Submit the Spice+ Part A.
Note: This is not a downloadable form.
Validity of Reserved Name:
After successful submission of the Spice+ Part A, Registrar may approve or reject the name. Resubmission of Spice+ Part A form is allowed within 15 days for rectification of defects in the form. The Reserved name shall be valid for 20 days from the date of approval.
Rule 9A of the Companies (Incorporation) Rules, 2014:- Extension of Reservation of name
(Vide Companies (Incorporation) Third Amendment Rules, 2020 with effect from January 26, 2021)
After payment of fees at www.mca.gov.in, the Registrar shall extend the validity time of a name reservation by using web service SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32), up to:
(1) 40 days from the date of approval under rule 9 on payment of fees of Rs. 1,000/- made before the expiry of 20 days from the date of approval under rule 9;
(2) 60 days from the date of approval under rule 9 on payment of fees of Rs. 2,000 made before the expiry of 40 days referred to in clause (1) above;
(3) 60 days from the date of approval under rule 9 on payment of fees of Rs. 3,000/- made before the expiry of 20 days from the date of approval under rule 9:
However, the Registrar can cancel the reserved name in accordance with sub-section (5) of section 4 of the Companies Act. 2013.
FAQ to Name Approval for Pvt ltd registration
What is RUN?RUN service is an easy-to-use web service for reserving a name for a change of name for any existing company. The said service has removed the requirement to use a DSC during name reservations. What is Part A of web form SPICe+ and can the same be filed separately?SPICe+ Part A represents the section wherein all details with respect to name reservation for a new company have to be entered. SPICe+ Part A can either be submitted individually for name reservation only or can be submitted together with SPICe+ Part B for both name reservation as well as incorporation and for availing other integrated services.How do I apply for a name if the proposed name includes the name of a Trade Mark?In case the proposed name includes a reference to a registered Trade mark name, the user must ensure that he has attached the consent of the owner or applicant for registration of the trade mark along with KYC details (bearing signatures) of the Trademark owner. In case the TM owner is a body corporate, the NOC should be provided in the form of a Board Resolution along with KYC documents.What are the words on which approval of regulatory authority would be required?A name shall generally be reserved if it includes the words like ‘Bank’, ‘Insurance’, and ‘Banking’, ‘Venture Capital’ or ‘Mutual Fund’ or if the business activity includes the words like ‘Bank’, Insurance’, and ‘Banking’, ‘Venture Capital’ or ‘mutual funds’ or such similar words with the approval of the regulatory authority.
Provided that the approval of regulatory authority may be obtained at the time of application for incorporation or change of name, as the case may be.Whether it is necessary to attach Board Resolution/ NOC with the name reservation application?In case of a change of name of a company, a certified copy of the Board Resolution should be attached.
In case of incorporation of a subsidiary of a Foreign Company certified copy of the Board resolution with NOC duly signed by the Authorised Representative should be attached.
Board Resolution is also to be attached while providing NOC for using a resembling name / Trademark.How many names would be permitted in Part A of SPICe+?In case an applicant opts for reserving the proposed name first and files Part B of the SPICe+ form later, then a maximum of two names can be applied through SPICe+ Part A, out of which a single name, as made available by Central Registration Centre (CRC), will be approved and reserved for 20 days from the date of approval. In case the entire incorporation application i.e. both SPICe+ Part A and B is being filed together then only one name can be entered in SPICe+ Part A.In case the subscriber to the memorandum is a foreign national, his signatures and address need to be notarized as per Rule 13 of the Companies (Incorporation) Rules, 2014. In such cases, how can the signature of subscribers be attested? In such cases, SPICe+ (INC-32) shall be filed along with the manually signed Memorandum of Association (MOA) and Articles of Association (AOA). The Signature and address of the subscriber shall be duly notarized/apostilled / consulraised, as applicable.Whether it is mandatory for every subscriber and/or director to obtain DSC at the time of incorporation?Yes, it shall be mandatory for each one of them to obtain a DSC, if the number of subscribers and/or directors to eMoA and eAoA is up to 20 and all such subscribers and/or directors have DIN/PAN.
Step II: Documents Preparation for Pvt ltd registration
The following documents are required to be enclosed: For SPICe+:
1) Memorandum of Association;
2) Articles of Association;
3) Declaration by the first director(s) and subscriber(s)(Affidavit not required);
4) Proof of office address (Conveyance/Lease
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