A Private Limited Company Registration in India is a popular choice for startup founders due to its numerous advantages, including easy access to funding, government support, and simplified compliance procedures. Incorporating a company through Simplified Proforma for Incorporating Company electronically (SPICe -INC-32), with eMoA (INC-33), and eAOA (INC-34) is the default option, and most companies are required to be incorporated through SPICe only.
You can avail of five different services (Name Reservation, Allotment of Director Identification Number (DIN), Incorporation of New Company, Allotment of PAN, and Allotment of TAN) in one form by applying for the Incorporation of a new company through SPICe form (INC-32) - Simplified Proforma for Incorporating Company electronically (SPICe) - with eMoA (INC-33) and eAOA (INC-34). In case eMoA and eAoA are not applicable, users are required to attach the PDF attachments of MoA and AoA.
There is no need for reserving a name separately before filing SPICe. One name for the proposed company can be applied through SPICe (INC-32), learn step here-
Company Eligibility and Basics:
o A Private Limited Company must have a minimum of 2 members and can have up to 200 members.
o There is no minimum share capital requirement at the time of incorporation, allowing flexibility for promoters.
o Companies incorporating with an authorized capital up to INR 15,00,000 through SPICe+ enjoy zero filing fee concession, though stamp duty fees apply as per state regulations.
Benefits of Private Limited Company Registration:
o Enhanced legitimacy and separate legal entity status, providing protection from personal liabilities.
o Favorable tax rates compared to sole proprietorships.
o Flexibility in management and ownership structure.
o Exemption from legal fees for forms up to INR 15 lakh (stamp duty on MOA & AOA applies).
o Easier access to bank loans and investor funding.
o Liability insurance, safeguarding company assets in case of defaults.
o Simplified process for amendments in MOA & AOA subject to MCA approval.
Step-by-Step Procedure for Online Private Company Registration:
Step 1: Preparing Documentation
o Decide on a unique company name and check its availability on the MCA website.
o Gather necessary details of directors, members, and the registered office address.
o Collect KYC documents of promoters, including PAN, Aadhar, and address proofs.
Step 2: Name Reservation
o Create a login ID on the MCA website and fill Part A of SPICe for name reservation.
o No digital signatures or documents are required at this stage.
For name reservation, the RUN service should be utilized to check name availability.
Once the name is approved, the incorporation of the OPC (One Person Company) should be initiated by filing form SPICe within 20 days from the date of approval of RUN.
Step 3: Incorporation Process
o Once the name is approved, reserve it for 20 days for filing SPICe+ PART B and other incorporation forms.
o Obtain digital signatures of directors and subscribers to MOA.
o Draft necessary documents like DIR-2, DIR-8, and others, along with self-attested KYC of promoters.
o Fill Part B of SPICe form and other forms (Agile Pro, E-MOA, E-AOA) online.
o Certify and upload the forms on the MCA portal and pay applicable government fees.
Step 4: Application Processing
o Wait for the MCA to process the application, review all details and documents.
o Upon verification, MCA may issue the Certificate of Incorporation (COI), mentioning the company's date of incorporation, CIN, and PAN.
o Proceed with opening a current bank account for the company.
Step 5: Post-Incorporation Formalities
o Deposit subscription money into the bank as per MOA subscribers' sheet.
o File Form INC-20A for commencement of business activity after obtaining professional certification.
o Subsequently, within 30 days of SPICe registration, the company must file form INC-22 if the correspondence address and registered office address are not the same.
By following these steps diligently, your Private Limited Company can be successfully registered in India, paving the way to obtain Startup Recognition and avail various government grants and benefits.
In India, various types of business establishments exist, each governed by specific regulations and offering different structures for operation, include
- Private Companies,
- Public Companies,
- One Person Company (OPC), and
- Limited Liability Partnerships (LLP).
Private Companies require a minimum of 2 members and can have a maximum of 200 members. They must have a minimum of 2 directors, with at least one being a resident of India. Ownership can be transferred, and there are no restrictions on managerial remuneration. Private Companies are governed by the Companies Act, 2013 and must file annual statutory filings, including statements of accounts and annual returns with the Registrar of Companies (ROC). They are subject to mandatory audit if their turnover exceeds a specified limit.
Public Companies, on the other hand, require a minimum of 7 members, with no maximum limit on members. They must have a minimum of 3 directors, including at least one resident director. Public subscription is allowed for shares, and issuing a prospectus is mandatory. Shareholder approval is required for managerial remuneration above certain limits. Like Private Companies, Public Companies are governed by the Companies Act, 2013 and must file annual statutory filings and undergo mandatory audit.
OPCs are a relatively new concept in India and cater to single entrepreneurs. They allow for a single-member structure and require a nominee in the event of the owner's death. OPCs are also governed by the Companies Act, 2013, and follow similar filing and audit requirements as Private and Public Companies.
LLPs provide a hybrid structure combining the features of a partnership and a corporation. They require a minimum of 2 partners, with no maximum limit. At least one designated partner must be resident in India. LLPs offer flexibility in ownership transfer and remuneration structure, as governed by the LLP Act, 2008. Annual filings include a statement of solvency and annual return with the ROC, and audit is mandatory if turnover or contribution exceeds specified thresholds.
Therefore, each business structure in India offers its unique set of advantages and compliances, catering to diverse needs and preferences of entrepreneurs and businesses.
Why Private Limited Company is Important for Funding ?
Investors play an important role in startups (Private Limited Company) by providing capital in exchange for equity, which represents ownership in the company and a share of its potential future profits, partnership between investors and startups involves a risk-reward relationship: if the startup succeeds, investors stand to make returns proportional to their equity stake; however, if the startup fails, investors may lose the capital they've invested.
To realize their return on investment, investors typically pursue various exit strategies. It's advisable for both the venture capital (VC) firm and the entrepreneur to discuss potential exit options early in the investment negotiation process. Startups with strong performance, rapid growth, and robust management structures are more likely to become exit-ready sooner than others. It's important to note that Venture Capital and Private Equity funds are usually required to exit their investments before the fund's life cycle ends.
More, The SIDBI Fund of Funds Scheme, established by the Indian government with an initial corpus of INR 10,000 crore, aims to enhance capital availability and stimulate private investments to foster the growth of the Indian startup ecosystem. Managed by SIDBI, this Fund of Funds for Startups (FFS) operates by investing in SEBI-registered Alternate Investment Funds (AIFs), termed daughter funds, which subsequently channel funds into promising Indian startups. This indirect investment model allows for broad support across various startup stages. As of January 31, 2024, SIDBI has committed INR 10,229 crores to 129 AIFs, with INR 4,552 crores disbursed to 92 AIFs, resulting in a total injection of INR 17,452 crores benefiting 939 startups.
Compliance Calendar LLP is a legal, tax and compliance platform serving startups, SMEs and Industries since 2016 with company registration, trademark registration, business compliance, virtual CFO and all other regulatory licensing and compliance for private limited companies in India including India Entry Services
