Private Limited Company is the most popular option to start a business in India by startups and businesses with higher growth aspirations. Private Limited Company is incorporated under the Companies Act of 2013, and governed by the Ministry of Corporate Affairs (MCA). It is a registered corporate structure, that provides business a separate legal identity from its owners. Hence, providing key advantages like the ability to contract in its own name, and safeguard personal assets of the owners from business liabilities.
This form of business structure is more equipped to apply for funding from Institutions as compared to a Sole Proprietorship or a Partnership firm.
A Private Limited Company is a business entity held by small group of people. It is registered for pre-defined objects and owned by a group of members called shareholders. Startups and businesses with higher growth aspiration popularly choose Private Company as suitable business structure.
Corporate form of structure is governed by the provisions of the Companies Act, 2013 and regulated by the MCA (Ministry of Corporate Affairs)
The Company form of structure is internally governed by it 2 basic documents. The Memorandum of Association and Articles of Association. These two documents lay down character and identity of the Company.
Memorandum of Association (MoA): This document creates the persona of the Company viz. its name and state of incorporation, Objects to be pursued, type of liability, the Capital with which it will operate and the First Subscribers and promoters of the Company.
Articles of Association (AoA): This document lays down how the Company will function vix. Issue of shares, appointment of directors, holding of board and
shareholder meetings, remuneration, communication, secrecy, winding up etc.
Also, as per the Companies Act, 2013 a Private Company will have to make the following
points a part of the AoA: It has to :
(i) restrict the right to transfer its shares;
(ii) limit the number of its members to two hundred;
(iii) prohibit any invitation to the public to subscribe for any securities of the company
Authorised Capital and paid Up Capital: Authorised Capital is the maximum, capital that can be issued by the Company. This can be increased anytime by the Company during its entire life. Paid up capital on the other hand is amount of Capital issued by the Company. Remember Paid up Capital <= Authorised Capital.
Can NRIs/ Foreign Nationals / Foreign Entities set business in India: All of this are eligible to set up Business in India. Under certain conditions, special permission from the RBI may be required. Feel free to mail us at sumeet.singhania@seedup.in for more details on this.
Compliances post company formation : After formation of a Company, there are scores of Compliances that needs to be implemented (One Time / Continuous), Once you form the Company through SeedUp, our team of experts shall guide you through the entire life cycle.
I have only one Director : If you have only one Director, you can form a One Person Company, It’s a simpler process and shall also require less Compliances. One Person Company can later on be converted into a Private Limited Company, as per the rules set by the Companies Act. Please reach out to our expert at XXXXXX for more details on that.
Why registered office : Government has made it mandatory for all Companies to have registered office. This is the address, where all the communications shall be sent to, from all the government departments. You can also have different registered office and a different corporate / working office.
As a Director of the Company, can I also work for it : Yes, you can. A working Director is thus designated as an Executive Director of the Company or the Managing Director, as the case maybe.