New ventures are one of the most interesting and significant activities in the process of economic development of any country, but especially in India; and while registering the business, a Private Limited Company (Pvt Ltd) is one of the preferred business entities. They come with the following main benefits: The shareholders are not legally responsible for the firm’s debts, it is a legal entity of its own, and it’s easy to secure finances. In this article, you will learn about registering a Private Limited Company in India, the KYC process, along with charges and government fees. The present guide also offers general and specific information on what the implementation process looks like and the costs incurred in the various states of India.
What is a ‘Private Limited Company’?
A Private Limited Company is a type of company that is formed under the Companies Act of 2013 in India. It is an independent business entity unlike its owners, the shareholders, it provides limited liability. Such companies prove to be most suitable for start-ups and SMEs of legal form and structure. Another advantage of Private Limited Companies is perpetual succession, which implies the company life is not a part of the proprietors or directors.
Condition for Registering a Private Limited Company
- Minimum Shareholders and Directors: The companies have to have a minimum of two individuals; a maximum of fifteen directors are allowed. It should be noted that shareholders and directors can occupy the same position.
- Director Identification Number (DIN): Every director will require a Director Identification Number duly obtained from the Ministry of Corporate Affairs (MCA).
- Digital Signature Certificate (DSC): A DSC is required when registering directors to sign digital documents while being appointed as directors.
- Indian Resident Director: One director must be an Indian resident citizen.
- Paid-Up Capital: Despite the fact the Companies Amendment Act, 2015 extinguished the provisions on minimum paid-up capital, there must be adequate capital for running the business.
Documents Required for Registration
To register a Private Limited Company, the following documents must be submitted:
- Identity Proof: PAN Card, Aadhar Card or Passport in case of non–resident Indians / Foreign Nationals only.
- Address Proof: Driving License, Voter ID, or any recent bank statement.
- Photographs: Photographs which are passport sized and which depict all directors.
- Proof of Registered Office: Utility bill of the last three months (electricity, water or gas) and valid rent agreement if the office is rented.
- No Objection Certificate (NOC)
These documents can only be soft copies, and the applicant is supposed to upload them to the MCA portal when registering.
Government Fees for Registering a Private Limited Company
The government fees for registering a Private Limited Company vary depending on the state and authorized capital. Here is a detailed fee structure across states in India:
State Name | Registration Fees (INR) |
Andhra Pradesh | 7,599 |
Arunachal Pradesh | 5,599 |
Assam | 5,599 |
Bihar | 7,599 |
Chhattisgarh | 7,599 |
Dadra & Nagar Haveli | 5,599 |
Daman & Diu | 7,599 |
Delhi | 5,599 |
Goa | 5,599 |
Gujarat | 12,099 |
Haryana | 5,599 |
Himachal Pradesh | 5,599 |
Jammu & Kashmir | 5,599 |
Jharkhand | 5,599 |
Karnataka | 5,599 |
Kerala | 11,099 |
Ladakh | 5,599 |
Madhya Pradesh | 12,099 |
Maharashtra | 7,599 |
Manipur | 5,599 |
Meghalaya | 5,599 |
Mizoram | 5,599 |
Nagaland | 5,599 |
Odisha | 5,599 |
Puducherry | 5,599 |
Punjab | 21,099 |
Rajasthan | 5,599 |
Sikkim | 5,599 |
Tamil Nadu | 5,599 |
Telangana | 7,599 |
Tripura | 5,599 |
Uttarakhand | 5,599 |
Uttar Pradesh | 5,599 |
West Bengal | 5,599 |
Additional Fees for Delayed Filing
Delays in filing certain forms may attract additional fees. From July 1, 2022, the following penalty structure applies:
Period of Delay | Additional Fees (Multiplier) | Higher Additional Fees |
Upto 15 days (Sections 139 & 157) | 1 | – |
16-30 days | 2 | 3 |
31-60 days | 4 | 6 |
61-90 days | 6 | 9 |
91-180 days | 10 | 15 |
Beyond 180 days | 12 | 18 |
Advantages of a Private Limited Company
Despite the associated fees, Private Limited Companies offer several benefits:
- Limited Liability: It means that shareholders of the business are not legally responsible for repaying business debts equal to or more than their investment.
- Separate Legal Entity: This legal entity has the rights to own an asset, incur liabilities and sign legal contracts on its own in the name of the company.
- Transferable Shares: It is easy for shareholders to transfer or even sell their shares.
- Perpetual Succession: As stated, the company carries on regardless of membership, which exists as separate legal entities that may have different members.
- Ease of Fundraising: Pvt Ltd companies can get funds from the public and offer shares with a view to selling them.
Process for Registration of Pvt Ltd Company
- Name Approval:
File an application to the Ministry of Corporate Affairs (MCA) to reserve a name for the company. Ideally, you submit one or two names together with the business goals and objectives. Commonly, the MCA takes five working days to approve the name. If you are rejected on the grounds of similarity or any other reason, you can submit your application with a new name.
- Obtain Digital Signatures:
It is mandatory to get a digital signature certificate because even if signatures stamped on physical papers are not accepted. The applicant has to go through a video KYC, and present ID proof and the Digital Signature Certificate (DSC) is issued by a certified authority in India. Foreign nationals have to get their documents for instance passports, apostilled at the local embassy.
- Submit the Incorporation Application:
After obtaining the Digital Signature Certificate (DSC) file SPICe form on the MCA portal, apply for the incorporation and attach documents such as a Memorandum of Association and Articles of Association, if an approval period takes approximately five working days, the MCA will issue the Certificate of Incorporation (COI) and a Permanent Account Number (PAN) for the company.
It also creates a legal personality as a company since it helps it to operate and obtain various business advantages.
Conclusion
Private Limited Company Registration process in India is pivotal to setting up a trustworthy business organization with a sound business structure. Government fees and state charges are important to understand so that the registration process can be less problematic. The initial fees differ from the later fees because the limited liability, legal recognition, and growth potential of LLCs considerably make it a valuable investment, even if the initial cost is high. This therefore means that through research and seeking assistance from experts where necessary the process will be a lot easier for the entrepreneurs while they concentrate on the accomplishment of their business objectives.