What is Private Limited Company and Incorporation Steps.

Updated: Jun 9, 2020

A private limited company is a type of privately held company recognised under Companies Act 2013. It is preferably incorporated for micro and small scale businesses. The company must have a minimum of 2 and a maximum of 200 members.

A private limited company has a limited liability towards its creditors & financers. The shareholders are liable only to the extent of their shareholdings. This means, in case of a default, the company’s creditors and financiers like banks or NBFCs can only sell the company’s assets to recover their debts. They do not have the rights to sell personal assets of directors/members. A private company’s shares cannot be publically traded.

It is crucial to understand that to enjoy the benefits of being a private company; it should be first registered and incorporated as a Private Limited company under the Companies Act 2013.

Process of Incorporating a Private Limited Company:

Step 1: Obtain a Digital Signature Certificate (DSC)

The process of incorporating and running a Pvt Ltd company involves the submission of documents in electronic form at different stages. As per the provisions of the Information Technology Act, 2000, every document submitted or filed electronically, must be attested with a DSC. A DSC is simply a secure digital key that certifies the authority & identity of the person signing or submitting a document electronically.

How You Can Obtain DSC?

You can easily obtain a DSC, either online or by approaching a Certifying Authorities (CAs) or agencies that are into DSC making business in 1 to 3 working days. You have to provide them with self-attested copies of relevant documents & original supporting documents. Make sure to obtain either class 2 or class 3 category of DSC.

Step 2: Obtain a DPIN

DPIN or Director’s PIN is a unique number obtained by anyone who wants to be a director in a company. You can obtain DPIN either by filing Form DIN 3 or by filing SPICe (INC 32). This number then applies to every company in which the person becomes a director.

Step 3: Name Approval

You have to check the availability of the desired name for your company. You can either apply for the name by filing RUN (Reserve Unique Name) form or by filing SPICe (INC 32). You have to provide 3 different names in the form, of which only 1 will get selected. In case of unavailability, all the 3 may get rejected as well. Make sure choose to ideally unique name which clarifies the company’s business.

Step 4: Filing of MOA & AOA, SPICe INC-32

For obtaining the company’s incorporation certificate you can either apply through the RUN procedure or another simplified proforma. In the latter option, you have to electronically file SPICe (INC-32) along with eMoA (INC-33) and eAOA (INC-34) to get your MOA (Memorandum of Association) & AOA (Articles of Associations) registered. This procedure may take about 7 to 9 working days.

Step 5: Issue the Incorporation Certificate:

Once the MOA and AOA get approved, you will get the incorporation certificate of your company. The certificate specifies the Company’s PAN number along with the date of Incorporation. This is the date when your company legally comes into existence. This procedure may take 1 – 5 working days after MOA-AOA approval.

Step 6: GET PAN & TAN Applications

After obtaining the certificate of incorporation, you can apply for obtaining your PAN & TAN numbers by submitting applications in forms 49A and 49B respectively. The process may take 1 to 3 working days. As soon as you get the company’s PAN & TAN numbers, your company is now officially registered and you are good to go.

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