Incorporation of a Private Limited Company-Advantages & Disadvantages

Last Updated On: Nov. 7, 2021, midnight



Are you planning to start a business? Confused of which Business Constitution to choose? Each and Every Constitution will have its own advantages and disadvantages. Every Entrepreneur hasfew questions and doubts about which one to choose.In this article, let us discuss about the incorporation of Private Limited Company.


What is a Private Limited Company?

Private Limited Company is a company which is owned by the Non-Government organisation, having small number of shareholders. A Private Limited Company does not trade its shares to the general public on the stock exchange.The Companies Act, 2013 allows the incorporation for shareholders and members of various types of companies with varying levels of liability. 


Requirements to Incorporate a Private Limited:

  • Minimum of 2 persons are required to incorporate a private limited company.
  • A minimum number of two Directors.
  • One of the Directors of a private limited company has to be an Indian Citizen and Indian Resident.
  • The other director(s) can be a Foreign National.
  • It is also required to have two shareholders of a company.
  • The shareholders can be natural persons or an artificial legal entity.


What are the documents required to Incorporate a Private Limited Company?

  • Name approval from MCA
  • Requires KYC Documents of Directors and Shareholders (PAN Card, Aadhar Card, Voter Id, Passport, Bank Statement)
  • Digital Signature of Director and Shareholders
  • Rent Agreement/ Lease deed/ Electricity bill of the business premises of Proposed company
  • Photo of Director and Shareholders.


Types of compliances:

There are many compliances which a private limited company has to do, out of which some are as follows:

  • Conduct of Board Meeting at regular interval
  • Conduct of AGM/EGM
  • Preparation of Minutes
  • Maintenance of Books of accounts as per accounting and auditing standards
  • Filing of annual reports with MCA (AOC-4, MGT-7/7A Etc)
  • Director KYC
  • Income Tax Return Filing
  • GST Return Filing
  • Audit

Above mentioned are the few compliances. There are many other compliances a private limited has to do. Recent time, many compliances has changes from old to new


Private Limited Company Registration Process:

Registration of a Pvt Ltd company in India is complete an online process. Recently the MCA has replaced the earlier SPICe form with a new web form called SPICe+ (SPICe Plus). Hence, Incorporating a Private Limited Company is even easier now.

Now you can Incorporate a Private Limited Company, with a Single application for Name reservation, Incorporation, DIN allotment, Mandatory issue of PAN, TAN, EPFO, ESIC, Profession Tax (Maharashtra), and Opening of Bank Account.

SPICe+ is divided in two parts as follows:

1. Part A: Apply for the name reservation of the company in Part A of the form Spice+. it can be used for taking the name approval of the proposed Company and also for filing Company registration in one go.

2. Part B: In Part B of the Form Spice+, apply for the following services:

  • Incorporation
  1. DIN (Director’s Identification Number) allotment
  2. Mandatory issue of PAN
  3. Mandatory issue of TAN
  4. Mandatory issue of EPFO registration
  5. Mandatory issue of ESIC registration
  6. Mandatory issue of Profession Tax registration(Maharashtra)
  7. Mandatory Opening of Bank Account for the Company and
  8. Allotment of GSTIN (if so applied for)



  • Private Limited Company is seperate Legal entity
  • Shares of a company limited by shares are transferable by a shareholder to any other person. The transfer is easy as compared to the transfer of interest in business run as a proprietary concern or a partnership.
  • No Complusion in bringing minimum capital into the business.
  • By transfering shares it is easy to fetch funds in a private limited company




  • The Private Limited Company has a restriction that the number of members in the company cannot exceed 200.
  • Shares cannot be quoted in Stock Exchange
  • Private Limited Company cannot issue prospectus to public.

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