Private Limited Company Formation In India: The Ultimate Guide

What Is A Private Limited Company?

A private limited company is a privately owned business that requires a minimum of two and a maximum of two hundred members. In this type of company, the liability of the shareholders is limited only up to the extent of shares held by them. Furthermore, the company cannot raise funds from the public by issuing shares.

Before learning about the processes involved in private limited company formation in India, it is important to know the legal atmosphere of the country. Besides, there is a separate process of company formation for Indian and non-Indian individuals.

The Ministry of Corporate Affairs governs the process of private limited company formation in India under the Companies Act, 2013 and Companies Incorporation  Rules, 2014. Furthermore, increasing digitization of India has made the process of company formation quicker and convenient.

How Is A Private Company Formed In India?

A minimum of two directors can apply for a private limited company formation in India. Both Indian and foreign nationals can apply for the formation process. However, they must present proof of identity, proof of address, and proof of residence. Furthermore, there is a limitation on the liability of the shareholders. The shareholders are liable only up to the amount of the shares they own and their personal assets are not at risk. There must be a paid-up capital of INR 1-lakhs (nearly 1400 US Dollars).  The name of the company must be followed by a ‘Private Limited’ at the end. Moreover, the name must not conflict with other existing trademarks. In addition to it, the company is not required to disclose their financial reports.

Advantages Of A Private Company

(i) You can form a private company with a very low number of members. This makes decision making quick and convenient.

(ii) Unlike public companies, you can keep your inside information confidential.

(iii) You have less pressure from the stock market and hence there is higher flexibility in making short term and long term decisions.

(iv) You can form a private company with a low paid-up capital.

(v) A private company has perpetual succession. This means that the company continues to exist in case of death or departure of any members.

(vi) The shares of a private company are easily transferable.

How We Can Help?

In this article, we have learned the process of private limited company formation in India.

3E Accounting India can help with your company registration process and make your job convenient and hassle-free. Our financial advisory, audit and assurance, corporate law, domestic tax, and business process outsourcing services are top-notch and guarantees satisfaction. Furthermore, we can promise you the best financial services in the most cost-effective manner. Moreover, thousands of satisfied customers worldwide are proof of our incredible professionalism.

India company incorporation is one of our most essential services and you do not need to look any further now. We also offer a free consultation for those interested in setting up a company in India.