Procedure for Incorporation of a Private Limited Company

A private limited company is a company that’s registered under the Companies Act, 2013 or any other previous company laws. It is evident from the word ‘limited’ that in private limited companies, the owners have limited liabilities. This, along with the other fundraising opportunities, collectively form the reason behind why people are opting for pvt ltd company registration online. This article focuses on the procedure for incorporation of company in detail.

Choosing a Private Limited Company

Before we explore the registration procedure, it’s crucial to comprehend the reasons behind the preference of numerous entrepreneurs for a private limited company framework. Opting for a private limited company provides shareholders with the benefits of limited liability, ensuring a clear distinction between personal assets and business liabilities. Additionally, it opens up opportunities for equity funding, ensures perpetual succession, and enhances credibility within the business ecosystem.

Procedure for incorporation of company

As per the company laws of India, the Ministry of Corporate Affairs (MCA) governs all corporate affairs, including governing the companies and private limited company registration process. To create an ease of doing business in India, the MCA provides for an online procedure for incorporation of company. Persons wanting to go for private limited company registration process in India need to submit the documents and other information in the prescribed format on the MCA portal. Below are the steps and procedure for incorporation of company. 

Steps and Procedure for incorporation of a company

Step 1: Obtain Digital Signature Certificate (DSC)

The first step in the private limited company registration process, is getting a DSC. The online forms included in the procedure for incorporation of a company need to be verified by the proposed directors before submission to the MCA. Hence, having a DSC of at least one director is mandatory to move ahead with the pvt ltd company registration process. 

Step 2: Name Reservation

Once you have the DSC, you can start with the actual procedure of incorporation of company. You can start the procedure for the incorporation of a company. Firstly, you need to reserve a unique name company. You can reserve company name through the Spice+ Part A by submitting the RUN form. You get one shot of re-submission in case the registrar declines your request.

It’s important to note however that to access the SPICe+ form, you need to first register of the MCA portal. To do that:

• Go to the MCA portal.
• Click on the ‘Sign In/Sign Up’ option located at the top right-hand side of the homepage.
• Click on the register button.
• Choose the User Category as Business User*.
• Select the User Role, fill in the required login details, and click the ‘Create My Account’ button.

Step 3: Acquire DIN for all Directors

After that you need to get a director’s Identification Number (DIN). DIN is a unique identification number. It is mandatory for all persons desirous of being a director in any company in India. A person can only have one DIN associated to their profile, no matter the number of companies they are a Director for. Besides, you can easily acquire DIN by using the SPICe+ Form’s PART B.

Via the PART B of the SPICe+ form, with form for incoporation of company, you can also apply for the following:

• Compulsory issuance of Permanent Account Number (PAN)
• Compulsory issuance of Tax Collection Account Number (TAN)
• Compulsory issuance of registration with the Employees’ Provident Fund Organisation
• Compulsory issuance of registration with the Employee’s State Insurance Corporation (Not applicable in non-implemented areas)
• Compulsory issuance of Profession Tax Registration (where applicable)
• Compulsory establishment of a bank account for the company
• Allocation of Goods and Services Tax Identification Number (if applied for)
• Registration under Shops and Establishment Act (where applicable)

Step 4: Incorporation Related Documents

Here, you need to prepare the documents required for company registration such as the MOA and AOA of the company, address proof, etc.

Step 5: Filling out the incorporation form

The registration form is also a part of part B of SPICe+ form for incorporation of company. In this step, you need to fill out all the details of the proposed company in this form. You need to submit this and the documents to the Registrar of company of the state of your registered office. 

Step 6: Pay the fees

After submitting the incorporation documents and form along with the MOA and AOA, you need to pay the applicable fees for company registration. This fee is on the basis of the authorised share capital of the company. Apart from the government fees, you also need to pay the stamp duty charges. These stamp duty charges are on the basis of the state of company incorporation. LegalWiz.in quotes are inclusive of all charges, and are as follows:

Step 7: Issue of COI

The COI or the certificate of incorporation means the end of the procedure for company incorporation. After submission of the fees, the registrar and officials assigned, go through the documents and information you provided. Upon clearance of information, they issue the Certificate of Incorporation, which contains the unique CIN  (Corporate Identification Number) of the company. This certificate is the legal proof of the incorporation of a company as per the laws of India. 

Also Read: Is it allowed to run multiple brands under one company?

Step 8: Open Current Account for company

The final step in the Pvt Ltd company registration process is to open bank accounts for legal entities such as companies that are ‘current accounts’. Having a separate bank account for a company post the procedure for incorporation of a company is important. The reason being, that it makes it easier to keep track of the financial transactions of the company. 

Post-Incorporation Compliances

There are some additional compliances that you need to keep in mind after completeing the pvt ltd company registration process:

Annual Filing Forms: 

• The submission of Annual Filing Forms is a fundamental compliance requirement for private limited companies. You must file MGT-7 Form, focused on the Annual Return, within 60 days of the Annual General Meeting (AGM). This form provides comprehensive information about the company’s shareholders, directors, and its financial summary.
• In addition, private limited companies must file their financial statements using Form AOC-4, encompassing the balance sheet, profit and loss account, and the director’s report. This filing should be completed within 30 days of the AGM.

Event-Based Forms:

• Companies must file ADT-1 form within 15 days of the AGM in which the auditor is appointed for events such as the Appointment of Auditor. Changes in directorship, whether through appointment, resignation, or change in designation, should be reported via Form DIR-12 within 30 days of occurrence. Furthermore, alterations in the registered office necessitate the submission of Form INC-22 within 15 days of the change.
• For the Allotment of Securities (Form PAS-3), private limited companies issuing new shares must file within 30 days of allotment. This includes shares issued for cash, conversion of debentures, and bonus shares.

Compliance Certificates:

• In the realm of compliance certificates, private limited companies receiving deposits must file Form DPT-3, providing deposit details within 90 days from the closure of the financial year. Companies with outstanding payments to Micro or Small Enterprises suppliers must file Form MSME-1 semi-annually by October 31 for April to September and by April 30 for October to March.

Other Compliances:

• Form CHG-1 is mandatory when a company creates, modifies, or satisfies a charge. Comapnies must file it within 30 days of such an action. In cases where the appointment of an auditor is not ratified by the members, company must submit Form ADT-2. They must submit it within 90 days from the AGM. Additionally, certain resolutions and agreements require filing Form MGT-14 form with the Registrar of Companies within 30 days from their passing date.

Conclusion

As soon as you complete the steps and procedure for incorporation of a company and get the certificate of incorporation, the company can commence its business activity. However, there might also be certain compliances post the private limited company registration process that a company needs to follow such as obtaining appropriate licenses. The procedure for incorporation of a company takes 2 to 4 weeks to complete. Further, choosing the appropriate business activities might also get difficult. Hence, it is always advisable to get in touch with certified professionals who can help you through the pvt ltd company registration process.