PLC
Private Limited Company
A Pvt. Ltd. Company is a privately-owned legal entity which is registered under the Companies Act, 2013 with the Ministry of Corporate Affairs (MCA). This type of company is separate from the individual running it. A minimum of two shareholders and two directors are required for the registration of a PLC wherein the maximum number of Directors can be 15 and the maximum number of shareholders can be 200. However, there is one limitation in a Pvt. Ltd. company, shareholders cannot trade shares publicly.
For instance, Mr. Sharma is establishing a Private Limited Company, XYZ Pvt. Ltd., wherein he will be one of the Directors and his friend, Mr. Gupta will be the second Director. They ask a common friend, Mr. Singh to be one of the shareholders and he convinces a friend of his, Mrs. Malhotra to join as a shareholder as well. Here, Mr. Sharma and Mr. Gupta are the sole decision-makers of the company. No action can be taken, in regards to the company, without their consent. The Directors issue stocks in the form of shares to the shareholders with one limitation, Mr. Singh and Mrs. Malhotra, as shareholders, cannot trade these shares on a public platform. If they want to sell the shares to any family member or friend or third person, they will not be able to do so.
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Registration of a PLC benefits its shareholders, directors and consumers in many ways:
- The shareholders have limited liability in a Pvt. Ltd. Company. If Mr. Singh has made any contribution in the company then he will have to pay the liability owed in reference to his contribution to the company. If the company, XYZ Pvt. Ltd. suffers loss for any reason, Mr. Singh and Mrs. Malhotra are legally responsible to make up for it by selling their own assets. However, this will not affect any of their personal or individual assets. If Mr. Singh has shares worth Rs. 1,00,000 in the company and it suffers a loss of Rs.20,000, then, Mr. Singh will have to put it any profits he made from the company to cover the losses incurred.
- A PLC functions as a distinct entity which is responsible for the management of its assets and liabilities. Mr. Sharma’s & Mr. Gupta’s company, XYZ Pvt. Ltd. falls under different laws than themselves. Any decision taken in regards to the company may benefit them monetarily but the functioning of the company does not affect them on a personal level.
- All companies in India are registered with the Registrar of Companies under the Companies Act,2013. If the consumers and/or clients of XYZ Pvt. Ltd. Company wish to check the details of any member of the company or how they function, they can do so. All particulars of the Directors and Shareholders of the company are available for public viewing on the Ministry of Corporate Affairs web portal after paying a prescribed fee.
- A Pvt. Ltd. Company has an uninterrupted existence until it is legally dissolved with the consent of the Directors. It is unaffected by the demise of any member of the company. If, for instance, Mr. Gupta, for medical reasons, is unable to fulfil his duties as Director, the company can replace him and continue to exist till it is dissolved. This applies in case of the death of any member of the company as well.
Who can buy our plan for registration of a Private Limited Company?
- Businesses planning to expand and incorporate
- Start-ups that are planning to expand their business
- Businesses who want to convert to a PLC
Procedure to Register your Private Ltd Company
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Obtain DSC: A DSC or Digital Signature Certificate is an online signature essential for the registration of any company. An individual can obtain a DSC from government recognized certifying agencies. An individual can get more than one DSC, where one can be used for official purposes and the other for personal use. All digitally signed documents are accepted in every legal court as evidence/proof. A Digital Signature Certificate is issued by the Controller of Certifying Agencies in India under three classes:
Class 1 Issued to individuals or private subscribers wherein it confirms the user’s name and email address. Class 2 Issued to the Director or Signatory authorities of companies that use it for the purpose of E-filing with the Registrar of Companies. This kind of DSC is mandatory for individuals who have to manually sign documents when filing for return with the ROC. Class 3 Issued to anyone who participates in E-auction bidding and online tenders anywhere in India. Any DSC, regardless of the class, is issued for a validity of 1-2 years only after which it needs to be renewed.
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Obtain DIN: Director’s Identification Number or DIN is an identification number provided to a Director of every company. It is an 8-digit number, specific to the individual, which has a lifetime validity and can be used in multiple companies. This means that if an individual is serving as a Director of more than one company, there is no need to get a separate DIN for the different companies. Let’s talk about the different forms related to DIN:
SPICe or INC-32 This form is filed by first time Directors only to get DIN to run a private limited company DIR-3 Any individual who intends to be the Director in an existing company needs to file this form to obtain DIN DIR-3 E-KYC If any Director wants to change any details about himself i.e. personal details like email address or contact number, he needs to file this form. When you buy our plan, we file the form for registration on your behalf with the documents provided by you and give you the DIN on successful approval of the form.
- Name Selection & Approval: Naming a company can be tricky sometimes. The most important step in selecting the name of the company is reserving it with the Ministry of Corporate Affairs before anyone else selects it. MCA provides a web portal known as RUN (Reserve Unique Name). Registration of the name is a part of our Register Private Limited Company Plan wherein from the reservation of the name to intimating about the approval of the proposed name is done by us. The application of the proposed name is processed by the Central Registration Centre. The CRC, after submitting the application, may reserve the name for up to 20 days from the date of approval in case of new companies and 60 days from date of approval if an existing company has applied for a name change. The approval of the name, however, depends on the processing time of the MCA.
- E-MoA and E-AoA: Now that the name of the company is finalized, it’s time to set down the ground rules for the company. That is covered in the Articles of Association (AoA) and Memorandum of Association (MoA). Both AoA and MoA are drafted online nowadays. Articles of Association focuses on norms and regulation for the management of internal affairs of a company. This covers the duty of the Directors, liabilities of the members, Directors’ meetings, voting and veto, appointment and removal of Directors and record of all decisions taken by the Directors. Whereas, the Memorandum of Association is also known as the charter of the company which is the most important legal document of the company. Under the Right to Information Act, the MoA of any company is available for public viewing after paying a prescribed fee. The company’s name, address of the registered office, names of shareholders and distribution of shares. More importantly, it states the powers of the company within which it can act and also the company’s relationship with its shareholders. Our experts, at All India ITR, will draft both the MoA and AoA for your company, keeping in mind, the guidelines provided by you.
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PAN and TAN Application: We’re almost done with the registration of your company. One of the last steps is to get a Permanent Account Number (PAN) and Tax Deducted and Collection Account Number (TAN) for the company. PAN is a unique number assigned to all citizens of the country, and in special cases, to foreign nationals and/or NRIs if they are required to pay tax on any income earned in India.
TAN, on the other hand, is a 10-digit alpha-numeric number acquired by people or companies who are responsible for deducting tax at the source or collecting tax at the source. Any company or individual only requires one TAN. It is illegal to have more than one TAN number. Don’t worry it’s being taken care of by our tax experts as part of the plan you buy.
- Certificate of Incorporation: The last and final step in the procedure to register a Private Limited Company is to procure a Certificate of Incorporation (COI). This is a legal document that serves as license to form a company. It is issued by the state government of the state in which the company’s registered office is located. It includes the name of the company along with the abbreviation, statement of business purpose, company’s registered office address, number of shares that are authorized to be issued, details of different kinds of stock that can be issued by the company and most importantly, the DSC of the Director. Congratulations! Your company registration is now complete. We will provide you with the COI to close the deal.
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What are the documents are required to register a PLC?
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Directors are required to submit any one of the following documents as Identity proof:
Indian National – PAN Card of the Director
Foreign National – Passport of Director
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Submit one of the documents mentioned underneath as proof of residency:
Indian National – Passport/Driver License/ Election ID/ Ration Card/Aadhaar Card
Foreign National – Passport/ Driver License/ Bank Statement/ Residence Card
*Documents to be submitted as address proof for the office premises – Up to date Electricity Bill/ Phone Bill.
- In case an Indian Company or a Foreign Company is a shareholder, submit the documents mentioned below:
- Board Resolution authorizing investment in the company
- Incorporation Certificate of the Company
- Address proof of the Company
Frequently Asked Questions
- Passport
- Driver’s License/Bank Statement/Electricity Bill/Receipt of Property Tax Payment
A Pvt. Ltd. Company has constant succession which means it cannot just die if it is functioning smoothly.
A company becomes dormant when the annual compliances are not met. In this case, your company can get struck off the MCA database after a period of time. But, you can revive your company, if it is struck off, for a duration of up to 20 years.
With the many advantages that one can benefit from, like every other type of company, establishing a Private Limited Company comes with its own share of disadvantages too.
- A PLC is more expensive to set up. A Pvt. Ltd. Company doesn’t just appoint 1 Director and 1 Shareholder, in most cases, it appoints a Company Secretary and other professionals like Accountants as well. The greater number of people in a company, the more is the outflow of money in terms of paying the employees.
- A Pvt. Ltd. Company is restricted to buy and/or sell shares on a public platform. Due to this, it becomes difficult for private companies to get outside investors to invest in their business. The Shareholders of a PLC must seek permission from the Directors in order to transfer any shares to a new Shareholder.
- Since a PLC is a separate entity from the individuals that run it, it is obligated to follow more compliance requirements than any person working in the company, be it the Director or any employee. All Pvt. Ltd. Companies are required to submit an annual report of the profit and/or loss incurred by the company.The appointment and removal of the Directors, Shareholders and the employees need to be recorded regularly.
- Unlike One Person Companies, A Pvt. Ltd. Company does not allow one head individual (Director/Shareholder) to make any decisions without getting the consent from the other members of the Head Authority of the company.
