Registration for Private Limited Company

What is the Private Limited Company?

The Companies Act, 2013 defines a private limited company as a company whose article of association restricts the transferability of shares and prevents the public from subscribing to them. This is a distinct feature that differentiates private limited companies from other types of public companies. This article discusses what a private limited company is, explores the various types of private limited companies and learns how to start one. Section 2 (68) of The Companies Act, 2013 defines a private limited company as a separate entity that is held privately and provides limited liability. In a private limited company, all business profits and liabilities belong to the company itself and stakeholders may not be responsible for debts incurred by the company.

Type of Private Limited Company

Private limited companies are types of companies that have a clear description of each person's role to help understand and identify differences between them.

There are three type of private limited company:

1.    Private company Limited by shares

2.    Private Company Limited by Guarantee

3.    Unlimited Company


Private company Limited by shares


Private company limited by shares is a type of company where the capital is divided into small parts known as shares, which are introduced to Shareholders. Unlike public limited companies, A Pvt Ltd company shares can't be given to the public. "Limited by shares" means that the liability of the members of limited by share company (Shareholders) to creditors of the private limited company is restricted to the capital amount initially contributed. In the case of the company's insolvency or loss, any money contributed to the company will be lost.

Private Company Limited By Guarantee


Private Company Limited by guarantee is a type of limited company that does not include shareholders, but instead has members who are guarantors of the company's liability. In the event of a company's debts or winding up, each member is allotted a certain amount in the articles.

Unlimited Company


Limited by share companies have unlimited liability for their members, meaning their personal assets can be used to pay the company's liabilities and debts. This type of company is more beneficial for business purposes, as it provides a maximum safeguard and is widely accepted. ROC has given incorporation certificates to Limited by share companies, making them more beneficial for business purposes. 

What are the documents required for the private limited company?

Private limited company required the following documents to set them into private limited company:

·         Memorandum of association

·         Article of association

·         Certificate of incorporation

·         Other documents

Memorandum of association: A corporate document is a charter of the company that defines the company's relationships with shareholders and its goals. It outlines the purpose of setting up a business, the nature of the business, the objective of the company, and the capital clause.


Article of association: The document explains the internal operating system of the company, including the managing process, duties and responsibilities of each member, dividend policy, shareholder meetings and appointment of directors.

Certificate of incorporation: The ROC is the primary document of authentication of a company, issued by the Registrar of Companies (ROC) after submitting all required documents for registration.

Other documents: Other documents include ID proof, address proof, rental agreement, NOC from property owner, and copy of sale deed for all directors and shareholders of the company. 

How to get registration of private limited company?

Step 1: Digital Signature Certificate (DSC)

Digital signatures (DSC) are required for all proposed directors and subscribers of the Memorandum of Association (MOA) and Articles of Association (AOA). DSC can be obtained from government recognized certifying authorities and can be obtained online in two days. Class 3 DSC must be obtained by the directors and subscribers of MOA and AOA.

Step 2: Director Identification Number (DIN)

The Director Identification Number (DIN) is an identification number for a director and must be obtained by anyone who wants to be a director in a company. It can be obtained through the SPICe+ form, a web-based company registration form, for a maximum of three directors. If there are more directors in the company and they do not have a DIN, the company can be incorporated with three directors and appoint new directors later on. The appointed directors can obtain DIN by filing the DIR-3 form since only the proposed directors of an existing company can apply for DIN in the SPICe+ form.

Step 3: Registration on the MCA Portal

The SPICe+ form is to be filled out and submitted on the MCA portal. The director of the company must register on the MCA portal to obtain access to the MCA portal services. The company must reserve its name by submitting two proposed names in the Part-A of the SPICe+ form. If the SPICe+ form gets rejected due to non-approval of the company name, the applicant has to re-file another SPICe+ form. After the approval of the name filed in Part-A of the SPICe+ form, it will be reserved for a period of 20 days within which the company must fill Part-B of the SPICe+ form and submit it online. The applicant must provide details of the company and directors in the Part-B of the SPICe+ form, attach documents, attach DSC, check the form and submit it.

Step 4: Certification of Incorporation

The Registrar of Companies will examine the application and issue a Certificate of Incorporation with PAN and TAN as allotted by the Income Tax Department. An electronic mail with the Certificate of Incorporation as an attachment will be sent to the applicant. This covers the basics of how to register a company.

What is the advantage of Private Limited Company?

The mean advantage of private limited company is following:

·         Separate legal entity

·         Continuous existence

·         Limited liability

·         Easy to transferability of shares 

·         Owning property

·         Borrowing capacity


Separate legal entity: A company is a legal entity and a juristic person established under the Act. It has wide legal capacity and can own property and incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts, making it a separate legal entity from that of its members.

Continuous existence: A company has 'perpetual succession', which is continued or uninterrupted existence until it is legally dissolved. It is unaffected by the death or departure of any member, and is one of the most important characteristics of a company.

Limited liability: Limited Liability is the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, the liability of the members of a company is limited only to the extent of the face value of shares taken up by them. Therefore, the liability of the members on a winding-up is limited to the amount unpaid on their shares.

Easy to transferability of share: Shares of a company limited by shares are transferable by a shareholder to any other person. The transfer is easy compared to the transfer of interest in a proprietary concern or partnership. Filing and signing a share transfer form and handing over the buyer with a share certificate can easily transfer shares.

Owning property: A company is a juristic person that can acquire, own, enjoy and alienate property in its own name. No shareholder can make any claim upon the company's property, as the company itself is the true owner.

Borrowing capacity: A company has better avenues for borrowing funds, such as issuing debentures and accepting deposits from the public. Banking and financial institutions prefer to lend large financial assistance to companies, rather than partnership firms or proprietary concerns.

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