The incorporation of a private company is governed by the Companies Act, 2013, Ministry of Corporate Affairs, and the Companies Incorporation Rules, 2014. A private limited form of Business incorporation is the best-suited form of doing business for start-ups and growing business.
A Private Limited Company is a corporate legal entity, wherein the business is run privately and is considered to be one of the most popular and easy to establish the business for startups.
In a private limited company, the owner liability is restricted to their shares. With the effect of the Companies Act 2013 the number of shareholders has been enhanced from 50 to maximum of 200 members. A Private limited company cannot invite the general Public to purchase its Shares. The Liability of the Shareholders and Directors is Limited in a private limited company.
Minimum of two shareholders and two directors are required and yes the two can be the same persons. Even a corporate legal entity can be the shareholder and the foreign nationals or corporate entities or NRIs can become the Directors and/or Shareholders.
A private limited company in India have a limited liability, perpetual succession, corporate legal entity, capital funding and raising, easy transferability, privately held management etc.
To initiate the incorporation of a private limited company registration one should apply for obtaining the DSC, DIN and thereafter apply for name approval of the company. The name approval is applied through the RUN (Reserve Unique Name) application at the MCA (Ministry of Corporate Affairs) portal. The name should not contain any word as opposed to public policy or prohibited.
Once the name has approved the Memorandum of association (MoA) and Articles of association (AoA) is required to be drafted and prepared. Along with the MOA, AOA and subscription statement the incorporation e-form SPICe-INC- 32 should be filed. On the filing of the form SPICE-32 along with the requisite documents, it shall be scrutinized by the Registrar and once the documents are duly verified and approved by the government, the certificate of incorporation is emailed to the applicant by the Registrar under his seal and signature. The general documents required for company incorporation includes Passport size photograph of the applicant; Address proof of applicant, PAN card of the applicant, Copy of ownership deed or sale deed (if you own the premises), Copy of latest utility bills, such as electricity bill or telephone bill as proof of registered office. (Not older than 2 months), Copy of rent agreement with No Objection Certificate (NOC) from the property owner (if office premise is rented), Subscriber Sheets of MoA and the AoA, Proof of Nationality which is needed if the subscriber is a foreign national.
The greatest advantage of the new incorporation e-form SPICE 32 is once the application is approved along with the Certificate of Incorporation (COI) issued, one can also apply for PAN and TAN and along with certificate of incorporation it will include the date of incorporation as well as the Permanent Account Number (PAN) and TAN (Tax deduction Account Number) of the entity. Once a Private company is incorporated, the after incorporation compliances are also very important such as Filing of Annual Returns, Income Tax Filings, Meetings, Records of Meetings, Invitation for the Meetings, Shareholders Meetings, Separate Directors Meetings, GST return filling etc. The compulsory audit is required to be done annually.
Yeah, now you are ready to start your business.
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