The growth of trade and business led to many problems that traditional forms of business did not solve. For example, the unlimited liability feature of a sole proprietorship form of business resulted in people forming partnerships, but even that proved to be too inadequate and risky. This is when the concept of companies emerged, and private companies form of business is the oldest example of it.
Section 2(68) of Companies Act, 2013 defines private companies. According to that, private companies are those companies whose articles of association restrict the transferability of shares and prevent the public at large from subscribing to them. This is the basic criterion that differentiates private companies from public companies.
The Section further says private companies can have a maximum of 200 members (except for One Person Companies). This number does not include present and former employees who are also members. Moreover, more than two persons who own shares jointly are treated as a single member.
This definition had previously prescribed a minimum paid-up share capital of Rs. 1 lakh for private companies, but an amendment in 2005 removed this requirement. Private companies can now have a minimum paid-up capital of any amount.
There was a minimum paid-up share capital requirement of Rs. 1 lakh previously, but that is omitted now.
A private company can have a minimum of just two members (but just one is enough if it a One Person Company), and maximum of up to 200 members.
Private companies cannot freely transfer their shares to the public like public companies. This is why stock exchanges never list private companies.
All private companies must include the words “Private Limited” or “Pvt. Ltd.” in their names.
An application for police check is recorded in Form - I by the candidate, and on the off chance that the candidate is a firm, organization or some other relationship of individual, separate confirmation structure will be petitioned for each, accomplice or chiefs
The first and foremost step is to procure the DSCs of the Personnel involved in Private Company Incorporation in India. The requirement of DSCs arises for filling of e-forms on online portal of MCA as the Ministry has prescribed provided for online registration procedure for company incorporation and other applications. Digital Signature Certificate, commonly known as DSC are issued by the Certifying Authority in token form and is valid for 1 or 2 years.The personnel involved in company formation in India are Subscribers and Directors for proposed company. The Subscriber is a person who is the promoter of the company and proposed shareholders. The said shareholders are required to file e-MOA and e-AOA by affixing DSCs whereas proposed directors shall obtain DIN by making an online application in next step.
Director Identification Number (DIN) is a unique number assigned by Ministry of Corporate Affairs to the individual making an application for allotment of DIN. The number is allotted for lifetime by the Ministry unless it is surrendered or withdrawn.The directors of the company shall obtain and intimate the DIN while Private Ltd company incorporation. Hence, obtaining DIN is mandatory to be appointed as Director in any Company. The Director Identification Number obtained can also be used for appointment for any other company and appointment as Designated Partner in the LLP.
Before making an application to incorporate and register Pvt Ltd Company in India, the name for the proposed company shall be reserved. An Application for Reservation of Name of Private Limited Company shall be made in e-Form INC – 1 by making payment of requisite fees. In one application you may provide maximum 6 names in preferential order along with the significance for application for proposed name(s). The appointed professional shall make a search for availability of name before filling the application so that the applicant can make application of the names accordingly. The Registrar enjoys 100% discretion for approval of name application. The person shall make an application for name approval considering the provisions laid down by the Act.
After reservation of the name for proposed company by submitting form INC – 1, the application for issuance of Certificate of Incorporation shall be made. The application for online registration for company is also required to be made by online submission of Simplified Proforma for Incorporating Company Electronically i.e. SPIC-e forms.Drafting MoA & AoA Both, MoA and AoA are charter document for a Private Limited Company. MoA stands for Memorandum of Association of company and AoA is abbreviated form of Articles of Association. Memorandum of Association of Company prescribes the scope of operations of company by enumerating the main object and activities of the company. Whereas the Articles of Association provides in what manner the operations and administration shall be carried on. Both documents having vital importance shall be drafted very carefully after consultation of Professional.The memorandum and Articles of the company shall also be filed in SPIC-e forms along with application for company formation and registration in India. The subscription to MoA and AoA shall be made by affixing DSCs of subscribers in electronic form.Documents to accompany the Application
No reviews found.