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Decoding the Registration Process of a Private Limited Company in Chennai

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Last Updated on June 24, 2024 by Kanakkupillai

Everyone faces the same decision when starting a business: should it be a private limited company 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 the most practical action. Many different company models can be registered under a private limited company. In addition, the responsibility of each member of a private limited company is restricted to the number of shares they each own. This blog will help you understand the legal registration process of Pvt Ltd company in Chennai.

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 legal identity, standing, and market recognition. In the eyes of the law, it is distinct from its director or shareholder.
  • Perpetual succession – A saying 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, obtaining a loan from a bank or other financial institution is simple because that shows 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 provide the ROC with the registered office’s address.

There are two ways to record the registered office address at the time a new company is registered:

  1. Temporary address

The company must have a permanent location within 15 days of registration, and the ROC must be notified within 30 days of company registration. Any address of the promoters or directors may be used as a temporary registered office for registration.

  1. 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)

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. After the form was approved, a DIN would only be assigned to the user.

The idea of a DIN was established by adding Sections 266A to 266G of the Companies (Amendment) Act, 2006. Therefore, all present and future directors must 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 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:

  1. 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.

  1. 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 to allocate 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.

The documents mentioned above must be delivered electronically to apply for a DIN. 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 validates 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
  • Validity
  • 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
  • Declaration
  • Identification documentation
  • Address proof documentation
  • Attestation officer
  • Payment details

You must attach your most recent photos and sign the declaration after completing 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 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

An MOA represents the charter of the firm. It is a legal document created while 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 private limited company 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. Identifying the registered office branch where the organization was registered is crucial.
  • 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 shares restrict the business, 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 guarantees restrict the corporation, 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 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 the machine must complete and 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, commission payment, 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, using forms 49A for PAN and 49B for TAN. After submitting 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 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. The GST regulations will penalize the company if this is not done.
  • Business owners can apply for a GST registration certificate using the official GST website. The certificate may only be downloaded from the website because the Indian government does not print a physical copy.
  • A registration certificate is sent to taxpayers using the GST REG-06 Form. The taxpayers listed on this form must acquire a distinctive identification under 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 approved may subsequently be entered into INC-32.

The INC-32 filing process is substantially quicker than the INC-1 filing process. It takes 2–3 days to complete the procedure, including name approval and incorporation.

You should file Form INC-1 rather than INC-32 if the name you desire is tricky because other corporations have similar names.

2) Filing of incorporation forms with the ROC

The most crucial stage is the incorporation form, which must be filed to obtain MCA registration. 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 private company must be submitted with all necessary documentation and any appropriate government fees and stamp duties under the laws of that particular state. The same registration process is also used to process the PAN and TAN allocations for the proposed private limited company.

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 will include the proposed PLC’s PAN and the incorporation date.

Private Limited Company registration in Chennai by Kanakkupillai

The Government fee for a Pvt Ltd Company Registration in Chennai

A private limited company registration costs vary from one business to the next depending on several variables, including share capital, the number of shareholders and 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)
5 Company Registration
I Filling out form INC 7 300.00
II MOA 2000.00
III AOA 300.00
IV Form INC 22 300.00
V Form DIR 12 300.00
Total  3,200.00
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

Conclusion

Once you have decided on a company name for your venture, proceed with the following steps to form a pvt ltd company:

  • 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 pvt ltd, 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.

Kanakkupillai

Kanakkupillai is your reliable partner for every step of your business journey in India. We offer reasonable and expert assistance to ensure legal compliance, covering business registration, tax compliance, accounting and bookkeeping, and intellectual property protection. Let us help you navigate the complex legal and regulatory requirements so you can focus on growing your business. Contact us today to learn more.