Benefits Of Registering a Private Limited Company

Last Updated On: July 3, 2020, 6:10 p.m.
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BENEFITS OF PRIVATE LIMITED COMPANY REGISTRATION

INTRODUCTION:

A Private limited company is formed lawfully with limited liability or legal protection for its shareholders which restricts its ownership.

Private Limited Company registration is the easiest form of Business registration in India. Private Limited Company can be registered with a minimum of two members and It provides protection against the liability of shareholders and also helps to raise equity funds.

 

PRIVATE LIMITED REGISTRATION PROCESS:

In India, Private Limited Company registration is done completely on the online process. In recent times, MCA has replaced SPICe forms with SPICe+ which has made the registration process much easier.

SPICe+ is divided into 2 parts :

PART A: SPICe+ form used to take the approval of name reservation of the company and also filing company registration in one go.

PART B: SPICe+ form is applied for the following services

  • Incorporation
  • DIN (Director's Identification Number) allotment
  • Mandatory issue of PAN, TAN, EPFO, ESIC
  • Mandatory issue of Profession Tax.
  • Mandatory opening of Bank Account.
  • Allotment of GST (if applicable).

 

Benefits of Registering a Private Limited Company:

  • Minimum capital: No minimum capital is required to start a Private Limited Company. Earlier, the minimum number of the share capital was 1,00,000 but now there no such compulsion of minimum capital requirements.
  • Business fundraising: By transferring shares it's easy to fetch funds in a Private Limited Company.
  • Perpetual Succession: Private Limited Company is a company that has perpetual succession which is continued or uninterrupted existence until it is dissolved.
  • Risk Factor: In Private Limited Company there is Limited Risk to personal assets.
  • Legal status: The Private company has its separate legal entity that distinct its shareholders and company.
  • Independent Legal entity: Just as one person can bring a legal action in his/her own name against another in that person’s name, a company being an independent legal entity can sue and be sued in its own name.
  • Expansion of business: The company can expand business by inviting shareholders up to 200 and raised funds by inviting various venture capital or People by issuing equity shares.
  • Invite FDI (foreign direct investment): The company is the best form to invite FDI from abroad and it’s a very good vehicle to invite foreign national (foreign capital) to become shareholders of the company by issuing equity share capital

                        

MINIMUM REQUIREMENTS FOR PRIVATE LIMITED COMPANY:

  • A minimum number of two Directors who are adults.
  • 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.

                                                                                           

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