A business which wants to proceed in a corporate environment and seeks higher growth aspects usually prefers incorporating a Private Limited Company.  

Major advantages of a Private Limited Company are:

1. Number of members: There must be minimum 2 shareholders to incorporate a Private Limited Company but the maximum number of members cannot exceed 200. 
2. Directors: There must be a minimum of 2 directors to regulate the day to day affairs of the company. Shareholders may also become Directors of the Company. 
3. Restricted/Limited Liability:  As discussed above, in case of any event in which the company is liable to pay losses, then shareholders are only liable to pay to the extent of shares held by them.
4. Capital Requirement: It is also a basic condition of a Private Limited Company that it can be started with minimum capital of Rs. 1. In other words, there is no limit prescribed for minimum capital of the Company. It can be commenced with any amount of capital. This minimum capital is introduced by shareholders of the Company. 
5. Perpetual Succession: Perpetual succession means that members may come, members may go but the company never dies until it is legally closed through the Registrar of Companies. 
6. Easy Funding: Shares of Private Limited Companies are freely transferable. So it becomes easier to raise funds from transferring shares. 
7. Tax Benefits: Recently, tax rates for the corporate sector have been lowered by the Government as compared to other business statutes. 
8. Name Suffix: Name of Private Limited Company must be followed by PRIVATE LIMITED. For Example, It cannot be only XYZ. It has to be XYZ Private Limited. 
9. Distinct unit: A Private Limited Company is treated as a separate lawful person from its directors and shareholders. It means the company can file legal charges against any person in its own name and anyone else and file legal charges in the name of the company. 
    

DOCUMENTS REQUIRED FOR INCORPORATION OF A PRIVATE LIMITED COMPANY:

1. The following documents are required in relation to persons who are to be appointed as directors of the Company

• Passport size photo of all directors.
• PAN card copy of all directors.
• Current period bank statement/electricity bill/telephone bill/gas bill/mobile bill.
• Copy of aadhar/voter ID card.
• Email ID and phone number of each director.

IT IS TO BE NOTED THAT ALL ABOVE DOCUMENTS MUST BE SELF ATTACHED. 

2. Address Proof for registered office must be one of the following:

• If premises is owned then,  A) Copy of Rent Agreement (B) Latest Electricity Bill C) No objection Certificate from the landlord. 

3. If the Property is owned then any latest electricity bill along with NOC in favour of the Proposed Company. 

FREQUENTLY ASKED QUESTIONS 

1. What is a Private Limited Company ?

A private Limited Company is a company which is owned by only a few persons/members. While its name indicates it is Private Limited, It is managed privately by its members who are also called shareholders. It is incorporated for certain defined objectives which are decided before starting incorporation of a company.

2. What is the minimum and maximum requirement of shareholders to incorporate a private limited company?

There must be atleast 2 shareholders which cannot exceed the number 200.

3. What is the minimum and maximum requirement of shareholders to incorporate a private limited company?

There must be at least 2 directors who cannot exceed the number 15.

4. Who is eligible to become director of a private limited company?

The following are conditions which a person must possess to become director of a private limited company:

• A person must be of sound mind. It means he should be mentally fit.
• He must have attained the age of 18 years. i.e. he must not be a minor 

5. Is it mandatory for a director to hold a Director Identification Number?

Yes, It is mandatory that a person should apply for Director Identification Number to become director of any company. DIN is allotted only once and a single DIN can be used by all companies in which that person holds the position of director. Certain Government fees are paid while applying for DIN. 

6. What is the minimum capital required to start a company?

 There is no limit prescribed for minimum capital of the Company. It can be commenced with any amount of capital 

7. Is it possible that a Proprietorship firm can convert its constitution to Private Limited Company?

Proprietorship firms can be changed to Private Limited Companies but certain procedures laid down by the Companies Act 2013 are to be followed.

8. Can a Non Resident become Director of a Company?

Yes, it is possible.

9. Can a Government employee hold the office of the Director of a Private Limited Company?

Absolutely NOT. A person who is employed by the Government can not become director of a private limited company. 

10. Why should I choose to incorporate a Private Limited Company?

Due to following reasons you can opt to incorporate a Private Limited Company:

• Limited Liability: In case of any event in which a company is liable to pay losses, then shareholders are only able to pay to the extent of shares held by them.
• Corporate Structure: Due to its corporate tag, it shows you are keen towards your business and carrying your work in a professional and organized manner.
• Funding: Banks usually prefer to give credits to companies due to their highly grown and organized business structure.
• Easy to quit: Less cost or documentation involved to transfer ownership of a company than any other form of business. 

11. Does any document need to be submitted in a physical form to the Registrar of the Company?

No. There is absolutely no need to submit any document in hard copy to any office of the Government. The process of Company incorporation and any other post compliance is totally faceless and paperless. All forms and documents are submitted through the website of MCA.