Decoding the Registration Process of a Private Limited Company in Chennai
Everyone faces the same decision when starting a business: should it be a private limited company (PLC) or one of the other different business structures, such as a sole proprietorship, general partnership, limited liability partnership (LLP), corporation, non-profit corporation, trust, joint venture, association, etc.
Also, granting your company a legal identity is crucial. Furthermore, registering your company as a private limited is by far the most practical course of action. Many different company models can be registered under a PLC. In addition, the responsibility of each member of a PLC is restricted to the number of shares that they each own.
This blog will help you fully understand the legal registration process for a private limited company (PLC) in Chennai.
Explanation of a PLC
A privately held, legally recognized company entity that is owned by private stakeholders is referred to as a PLC. According to Section 2(68) of the 2013 Companies Act, the legal terms of this type of business are defined. In addition, it guarantees minimal shareholder liability and financial transparency (in relation to the number of shares held by them).
You should also know that:
- PLCs are further divided into a variety of categories, including unlimited, limited by shares, and limited by guarantee businesses.
- There can be a maximum of 200 members.
- A PLC can be founded with as few as two directors.
- Registering your company as a private limited is by far the most practical course of action.
- This blog will help you fully understand the legal registration process for a private limited company (PLC) in Chennai.
- Using the official GST website, business owners can apply for a GST registration certificate.
- Without fulfilling the conditions of the PLC registration process, it is evident that successful PLC registration is unlikely.
- So, to successfully register a PLC, one needs to closely adhere to the legal requirements.
Importance of a Pvt Ltd Company Registration in Chennai
As evidence of the value of a pvt ltd company registration in Chennai, consider the following details:
- Limited liability – The business’s directors and shareholders are granted restricted liability as the primary benefit of the company registration.
- Status or the recognition of the company – Following registration, the business has its own legal identity, standing, and market recognition. In the eyes of the law, it is distinct from its director or shareholder.
- Perpetual succession – There is a saying that goes, “People come and go,” or, in our case, “the director may come and go,” but the firm has its existence and everlasting succession, which means it will always exist. The corporation would continue to operate regardless of a person’s death, disability, or retirement.
- Easy transferability – When it’s time to sell the company as a going concern, one of the benefits is how simple it is to transfer all of the shares to the buyer, which makes it simple to change the management and ownership.
- Borrowing a loan from a bank or Institution – After a company is established, it is simple to obtain a loan from a bank or other financial institution because that shows a level of confidence.
- Raising money from the public – By issuing shares and accepting public deposits, the registered company can raise a sizable sum of capital from the general public.
Key Requirements for Registering a Pvt Ltd Company in Chennai
1) Requirement of minimum share capital
There aren’t any prerequisites in this area.
2) Number of directors and shareholders
- There must be a minimum of two directors in a company.
- Likewise, there ought to be a minimum of two stockholders.
3) Registered office address
Once your business has been registered, you must additionally provide the ROC with the registered office’s permanent address.
There are two ways to record the registered office address at the time a new company is registered:
- Temporary address
The company must have a permanent location within 15 days of registration, and the ROC must be notified of it within 30 days of company registration. Any address of the promoters or directors may be used as a temporary registered office for registration.
- Permanent address
Use a permanent location for the company at the time of registration; in this scenario, no filing is necessary after the company has been registered.
4) Director identification number (DIN) and digital signature certificate (DSC)
Any individual recommended to serve as the first director of a new company who does not already have a DIN must submit an application using eForm SPICe. The application must be submitted with the applicant’s identity and address proofs attached. A DIN would only be assigned to the user after the form was approved.
The idea of a DIN was established with the addition of Sections 266A to 266G of the Companies (Amendment) Act, 2006. All present and future directors must, therefore, obtain DIN within the allotted time limit.
- Directors are required to inform DIN of all the firms they are directors of.
- The company must notify the ROC. A fine of between INR 25,000 and INR 1,000,000 may be assessed for failure to provide a DIN.
- Each DIN may only be taken once.
- The DIN must be included in any return, information, or particulars that mention a director.
Ways to Obtain DIN
You can receive the DIN in one of two ways:
- If someone wants to start a new business, they can apply for a DIN and a SPICe+ incorporation form.
Condition: The incorporation form can only be used to apply for three DINs.
- If the individual is offered a position in an existing company.
Condition: For such a person’s DIN application, the company must approve a board resolution, which must be attached to the e-form DIR-3.
How do I Get a DIN?
- SPICe+ Form: Only the SPICe+ Form, an integrated Web form for company incorporation, may be used to submit requests for the allocation of DINs to proposed initial directors of new businesses.
- DIR-3 Form: Only the SPICe+ Form, an integrated Web form for company incorporation, may be used to submit requests for the allocation of DINs to proposed initial directors of new businesses.
- DIR-6 Form: Form DIR-6 must be used to report any changes to the directors’ personal information.
To apply for a DIN, the aforementioned documents must be delivered electronically. A digital signature is required before it can be uploaded to the MCA portal.
5) Digital Signature Certificate
DSC is stamped on any documents that the authorized individual submits electronically. It guarantees the confidentiality and validity of electronically supplied documents. All documents submitted through the MCA portal have a DSC attached. DSC is used to validate online transactions like LLPs or business incorporations and income tax e-filing.
Steps to Apply for a DSC
Step 1: Sign up and choose your entity type.
Visit the website of a CA with an Indian license to issue digital certificates. You will be sent to the area for Digital Certification Services once you have viewed the page. Click on the category of entity for which you want to receive the DSC, such as “person or organization,” under the “Digital Certification Services” section.
If you are requesting a DSC for an individual, select “individual.” The DSC registration form will be available in a new tab. On your computer, download the DSC registration form.
Step 2: Fill in the necessary data.
After downloading the form, fill it out with the necessary details as listed there:
- Class of the DSC
- Type: Only sign or sign and encrypt
- The name and contact information of the applicant
- Residential address
- GST number and identity details of proof documents
- Identification documentation
- Address proof documentation
- Attestation officer
- Payment details
You must attach your most recent photos and sign the declaration after filling out all the required information. Make sure the application is filled out. The filled-out form should be printed out and saved.
Step 3: Identity and address verification
An attesting officer must certify the supporting documentation that is submitted as identification and address evidence. Ensure the accompanying proof documents bear the attesting officer’s signature and seal legibly.
Step 4: DSC payment
You must get a demand draft or cheque in the name of the local registration authority where you intend to submit your application for verification as payment for the DSC application. By conducting an online search for a CA authorized to issue digital certificates, you can discover the specifics of the local registration authority for your city of residence.
Step 5: Upload the necessary paperwork.
After completing the stages above, which include filling out the DSC form, supplying the required paperwork, and making the required payments, you have successfully submitted your DSC application.
6) Memorandum of Association
The charter of the firm is represented by an MOA. It is a legal document created during the process of forming and registering a private company in Chennai. It outlines the company’s connection with shareholders and the goals for which it was established.
Contents of MOA
The MOA’s contents are divided up into many clauses. Each of the following clauses is essential to the organization:
- Name clause: All PLC names must end in “private limited,” according to the name condition of the MOA. On the other hand, “limited” should end all government companies’ names.
- Registered office clause: This sentence specifies the precise location of the organization’s registered office. It is crucial to identify the registered office branch where the organization was registered.
- Object clause: This sentence describes the organization’s mission and goals. If activities and operations change after a few months, the institution’s head must alter the name of such an organization within six months. Otherwise, it will be viewed as a crime.
- Capital clause: The capital in which two or more shareholders of one company have invested is the main focus of this clause. We must include details on the distribution of shares among the shareholders, how they came up with their policies, etc., in the MOA.
- Liability clause: This is yet another crucial MOA class. Here, we must describe the restricted or unlimited liability of the firm’s members.
If the business is restricted by shares, it must state how much each shareholder owns and whether or not they have been paid. All of these details must be spelled out in the MOA.
If the corporation is restricted by guarantees, the MOA states that all contributors with incentives have the same rights. Even when a business is being wound up, assets and liabilities, which include all expenses related to dismantling the corporation, must be distributed equally.
- Association clause: This is the MOA’s sixth class and the last one, yet it’s not the least. One needs to specifically state the owner of the company’s idea and objective here.
7) Articles of Association
The company’s “rule book” is appropriately referred to as the AOA, or Articles of Association. The AOA outlines all of the company’s policies and goals, which must be followed. Consider the business like a machine. The AOA can then be thought of as the machine’s user manual. It specifies the tasks that the machine must complete as well as the best way to carry them out consistently.
The following regulations and bylaws are found in the AOA:
1) Share capital
Structure of various shareholders, share certificates, payment of a commission, etc.
- Lien of shares
- Calls on shares
- The method for transferring shares
- Transmission of shares
- Forfeiture of shares
- Surrender of shares
- Process for conversion of shares to stocks
- Share warrants
- Alteration of capital: Increase, decrease, or rearrangement of capital
- General meetings and proceedings
- Voting rights of members
- The appointment, remuneration, qualifications, powers of directors, etc.
- The boards of directors’ meetings’ proceedings
- Dividends and reserves
- Accounts and audits
- Corporate borrowing authority
- Requirements for the company’s dissolution
2) PAN and TAN registration
You can apply for the company’s PAN and TAN using the single form INC-32 by using forms 49A for PAN and 49B for TAN. Following the submission of the INC-32 form, the system will automatically produce these forms. Simply download it, add digital signatures, and upload both forms to the MCA portal; that is all that is required.
The MCA will approve the registration and assign a CIN if all the needed information is correctly provided in the form, together with the necessary supporting documentation. Via the MCA site, you may also track this CIN online.
3) GST registration
Certificates for the goods and services tax (GST) are valid legal documents provided by the Indian government. They serve as evidence of GST Act registration.
A GST registration certificate is required and advantageous to taxpayers for the following reasons:
- For enterprises in India, the certificate is a legally binding document. Businesses must obtain a GST registration certificate and display it on their premises if their annual revenue exceeds the threshold limit of Rs. 40 lakhs. In accordance with the GST regulations, the company will be penalized if this is not done.
- Using the official GST website, business owners can apply for a GST registration certificate. The certificate may only be downloaded from the website because the Indian government does not print a physical copy of it.
- A registration certificate is sent to taxpayers who register using the GST REG-06 Form. The taxpayers listed on this form must acquire a distinctive identification pursuant to Section 25(9) of the Central GST (CGST) Act. The taxpayers listed here are either GST TCS or GST TDS applicants.
Steps for Registering a Private Limited Company in Chennai
1) Name approval application
The company name can be authorized in one of two ways:
Option 1: Using INC-32 (incorporating corporation), you can request the proposed name; however, only one name may be requested. To avoid rejection, you must be certain of the proposed name and adhere to the rules of name availability and existing trademarks.
Option 2: Form INC-1, in which up to six names may be proposed, may be filed before INC-32, and the SRN of the INC-1 that has been approved may subsequently be entered into INC-32.
The INC-32 filing process is substantially quicker than the INC-1 filing process. It takes about 2–3 days to complete the entire procedure, including name approval and incorporation.
You should file Form INC-1 rather than INC-32 if the name you desire is a little tricky to get because there are other corporations with similar names.
2) Filing of incorporation forms with the ROC
The incorporation form must be filed to obtain MCA registration, which is the most crucial stage. Every document, including MOA, AOA, PAN, and TAN, is made and sent along with the SPICE form.
3) Payment of registration fees
The application for the registration of a PLC must be submitted with all necessary documentation and any appropriate government fees and stamp duties in accordance with the laws of that particular state. The same registration process is also used to process the PAN and TAN allocations for the proposed PLC.
After the registrar has reviewed and verified the application for the certificate of incorporation submitted in SPICe forms, the CoI will be provided in electronic form with his seal and signature. The CoI issued will include the proposed PLC’s PAN and the date of incorporation.
The Government fee for a Pvt Ltd Company Registration in Chennai
A PLC’s registration costs vary from one business to the next depending on several variables, including share capital, the number of shareholders, the number of directors, and more.
Private limited company registration in Chennai Costs INR 9,400 and takes between 7 and 10 working days, including government and professional fees.
|Sr. No||Particulars||Calculation||The amount is Rs.|
|1||DIN for 2 Directors||Rs. 500 per DIN||1000.00|
|2||DSC considering 2 directors||Rs. 1500 per DSC||3000.00|
|3||Company name approval||Rs. 1000 per application||1,000.00|
|4||Stamp Papers and notary charges||depends on the number of affidavits, certifications, and declarations||500 (approx if the requirement is for 2 directors)|
|I||Filling out form INC 7||300.00|
|IV||Form INC 22||300.00|
|V||Form DIR 12||300.00|
|6||Stamp Duty Charges for MOA, AOA, and Form INC 7 (cost varies from state to state)||700 Avg.|
|Total Government Cost of Company Registration||9,400.00|
Once you have decided on a company name for your venture, proceed with the following steps to form a PLC:
- Request a DSC.
- Request a DIN.
- Verify and request the use of your company name.
- Submit e-AOA and e-MOA forms to register your business.
- Get the TAN and PAN for your business.
- Open a current account for your company.
Importance of meeting requirements for successful registration
Without fulfilling the conditions of the company registration process, it is evident that successful private limited company registration is unlikely.
So, to successfully register a PLC, one needs to closely adhere to the legal requirements.
Based on everything we’ve discussed so far, we do not doubt that this blog post will be helpful to any curious readers who want to learn the fundamentals of how a private limited company is legally registered in Chennai.
FAQs On Private Limited Company Registration
A private limited company is a group of persons who manage a tiny business. Members of a Private Limited Company are only responsible for the quantity of shares that they actually own. Private Limited Company shares cannot be exchanged on a public market.
Yes, a small business can apply to become a private limited company with the Indian government. They gain credibility and a good impression of their business in the eyes of vendors, potential clients, and financial institutions. It enables the firm to enter into contracts with potential clients or banks and acquire financing with little compliance.
Private limited company is the simplest and most widely used kind of business registration in India. It can be registered with at least two individuals. It is the most suggested type of business entity for the vast majority of small and medium-sized businesses, whether they are family-owned or managed by professionals, due to the limited liability protection provided to shareholders, the ability to raise equity funds, and the separate legal entity status.
Limited Liability Partnerships are defined as those in which the partners have limited liability at that time (LLP). LLP essentially combines the terms "company" and "partnership." Professionals, medium-sized firms, and small businesses typically prefer it as an alternative method of business registration in India. Limited The LLP Act of 2008 and the LLP agreement signed at the time of incorporation serve as its legal framework.
After receiving the DSCs and DINs, the next step is to file the Form INC-1 to ensure the availability of the proposed name of the private limited business. The company's Memorandum of Association (MOA) and Articles of Association (AOA) will then be drafted if necessary. Finally, Form INC-29 together with all necessary documents will be submitted to the relevant ROC for incorporation of the proposed business.
There is no longer a specific form needed to obtain the DIN if a person wants to become a director of the company. Instead, they must apply for the Director Identification Number. The SPICe form can be used to apply for a DIN. There is no unique form needed.
It is necessary to submit the needed fee together with documentation of the applicant's identity and residence. Approval of the DIN typically takes 3–4 days. Once you receive your DIN, you can use it forever.
In the perspective of financial institutions, suppliers, and potential customers, it gives business credibility. It makes it simpler for businesses to persuade potential customers to enter into arrangements or to obtain loans from banks at advantageous rates.
Yes, after following the Companies Act, 2013, procedures, a sole proprietorship can become a private business registered.
The following documents must be submitted when a private limited company is registered in India:
Picture of each Director taken by PAN ID card for each Director All Directors' Identification (Driver's License, Passport, or Voter ID)
Electric bills, such as an electricity bill, can serve as evidence of a registered office's address.
For a private limited company to be incorporated, there must be a minimum of two directors. One Person Company (OPC) private limited, which allows a single person to establish a private limited company, was created by the Companies Act of 2013. Consequently, if you want to incorporate OPC, you can do it with just one director.
Yes, registration for a private limited company is required because a firm cannot exist without registration.
Following are the ROC requirements that a Private Limited Company must meet:
- Form ADT 1: Within 30 days of incorporation, the BOD shall appoint the company's first auditor, who shall serve in that capacity until the end of the first annual general meeting
2. Form MGT 7: Every year, Form MGT-7 must be submitted by all Indian enterprises. The Ministry of Affairs provides all corporations with an electronic form to complete in order to submit their annual return information. Within 60 days of the date of the annual general meeting, MGT-7 must be filed.
3. Form AOC 4: Within 30 days of the annual general meeting, every private limited company must file its balance sheet, a statement of profit and loss, and a director report in this form.
The above forms must be CA/CS/CWA certified.
The Ministry of Corporate Affairs must receive an application from anyone wishing to register a new company in India (MCA). You can submit your application remotely through the MCA site online. A Digital Signature Certificate (DSC) and a Director Identity Number (DIN), among other things, are required for registration.
- Apply for DSC (Digital Signature Certificate)
- Request a DIN (Director Identification Number)
- Request the availability of the name.To register the private limited corporation, file the EMOA and EAOA.
If a One Person Company's paid up capital surpasses Rs. 50 lakhs or its annual sales turnover exceeds Rs. 2.00 crores, it must be legally transformed into a Private Limited Company.
(Aadhar card, driver's license, ration card, voter ID) evidence of residence (Electricity bill or bank statement) Rental agreement notarized. The property owner's NOC, or No Objection Certificate, is required.