As your business starts to flourish, you may want to take advantage of its growth by incorporating it into a private limited company. Under the Indian Companies Act of 2013, a business that wants to be a private limited company shall complete all of the requirements as provided by the Ministry of Corporate Affairs. If you’re confused or unaware of what these steps are, here is our guide on how to incorporate private limited company. 

  • Private Limited Company: What is it?

A private limited company is a business or an organization owned by a small group of individuals. This group of individuals are referred to as shareholders. For a business to be recognized as a private limited company, it must undergo registration and fulfill all of the requirements as prescribed by the Companies Act of 2013. 

Section 2 (68) of the Companies Act of 2013 defines a private limited company as, “a company having a minimum paid-up share capital as may be prescribed, and which by its articles, – I. Restricts the right to transfer its shares, II. Except in any case of one person company limits the number of its members to two hundred, III. Prohibits any invitation to the public to subscribe for any securities of the company. 

The governing agency/ministry for the regulation of private limited companies is the Ministry of Corporate Affairs (MCA). 

  • Steps to Incorporate Private Limited Company

Now that you have an understanding of what a private limited company is let’s now discuss the steps to get you started. For the most part, it is essential to know that it will only take 15 to 18 days to register a private limited company. 

  • Obtain DSC of Directors and Subscribers

The first step in incorporating private limited company is to obtain a Digital Signature Certificate (DSC) of the directors and subscribers to the memorandum of association (MOA).  You should keep in mind that registrations with the Ministry of Corporate Affairs are usually done by filling up e-forms that affixes the DSC of the authorized signatories for incorporation. 

The DSC is also needed for the application of Director Identification Number (DIN) of the directors for the next step. At the same time, the DSC is required for the filing of MOA and articles of association (AOA). 

  • Acquire Director Identification Number 

This number is unique and is only given by the Ministry of Corporate Affairs to the acting director of the company. 

  • Name Reservation and Application

Through the accomplishment of Form INC-1, an organization can write for up to six names in order of preference to be approved and reserved. The company has only up to 60 days to apply for the incorporation of the business before the Ministry withdraws its approval and reservation. 

  • Application for Certificate of Incorporation

Once there is an approved name, the company shall apply for a certificate of incorporation and submit the SPICe forms (MOA and AOA) included. The MOA consists of the company’s scope of operations. For the articles of association, three general clauses must be present. 

These three are: 

  1. Limitation on the number of members up to 200. 
  2. Restriction on transfer of shares.
  3. Prohibition on accepting securities from the public.

Aside from the MOA and the AOA, these documents must be submitted as well. 

  1. Rental agreement (if space is rented)
  2. Utility bill and NOC from owner of the registered office address of the company
  3. Consent to act as director of the company (DIR-2)
  4. INC-9 (Duly franked and notarized)
  5. Certified true copy of the identity proof of the first subscribers and directors

Payment of stamp duty is also required on the state portal. After verification and assessment, the Certificate of Incorporation is granted. At this time, the business can operate as usual. 

How 3E Accounting Can Help

3E Accounting India is more than an accounting firm in India. It is an organization that provides exemplary consultancy services like helping organizations for company formation in India and more. If you need help on how to incorporate private limited company, give us a message.