1. What is a Private Limited Company (Pvt Ltd)?
A Private Limited Company is a business entity registered under the Companies Act, 2013. It has:
- Separate Legal Identity: The company exists independently from its directors or shareholders.
- Limited Liability: Shareholders are liable only to the extent of their unpaid share capital.
- Not Publicly Traded: Cannot issue shares to the general public.
- Restricted Share Transfer: Shares can be transferred, but with certain restrictions in the Articles of Association (AOA).
Legal Reference: Section 2(68) of Companies Act, 2013.
2. Capital Requirements:
- Minimum Authorized Capital: ₹1,00,000 (no longer mandatory to have a minimum paid-up capital).
- Authorized Capital: The maximum capital a company is legally allowed to raise via share issue.
- Paid-Up Capital: Actual amount invested by shareholders. It is equal to or less than authorized capital.
📝 Note: Share capital can be increased later by filing Form SH-7 with ROC.
Example:
If 2 shareholders subscribe ₹50,000 each, the paid-up capital is ₹1 lakh.
3. Directors:
- Minimum: 2 directors.
- Maximum: 15 directors (more can be appointed via special resolution).
- Resident Director: At least 1 director must reside in India for at least 182 days in the previous financial year.
- Must obtain:
- DIN (Director Identification Number)
- DSC (Digital Signature Certificate)
📘 Legal Reference: Section 149 of the Companies Act, 2013.
👤 Types:
- Executive / Non-Executive
- Managing Director
- Independent Director (not mandatory for Pvt Ltd)
4. Shareholders:
- Minimum: 2 shareholders.
- Maximum: 200 shareholders.
- Shareholders can be:
- Individuals
- Corporates
- NRIs or Foreigners (subject to FDI norms)
✅ Shareholders and directors can be the same.
📝 Note: Shares can be issued with different rights (e.g., voting rights, dividends).
5. Registration Cost (Approximate)
Breakdown of Cost:
| Item | Cost (₹) |
| DSC for 2 directors | 1,000–1,500 |
| DIN application | Included in SPICe+ |
| Name Approval (RUN) | 1,000 |
| Govt. Filing Fees (SPICe+, MOA, AOA) | 1,000–5,000 |
| Professional Fees (CA/CS/Lawyer) | 5,000–10,000 |
| PAN & TAN | Free via SPICe+ |
💰 Total Estimated Cost: ₹15,000 to ₹20,000 (varies by state and capital).
6. Annual Compliance Cost:
Common Annual Compliances:
| Compliance | Form | Cost (₹) |
| Annual Return | MGT-7 | 2,000–5,000 |
| Financial Statements | AOC-4 | 2,000–5,000 |
| Income Tax Return | ITR-6 | 5,000–15,000 |
| Board Resolutions, Registers, ROC filings | – | 5,000–15,000 |
| Auditor Appointment (1st year) | ADT-1 | Included |
| DIN KYC | DIR-3 KYC | 500/Director |
| Statutory Audit | Audit Fees | 5,000–50,000+ |
💼 Estimated Annual Compliance Cost: ₹25,000 to ₹1,00,000+
(depends on revenue, complexity, and volume of transactions)
7. Post-Incorporation Requirements
Once registered, a Pvt Ltd must comply with:
- Opening Bank Account in company name.
- Certificate of Commencement (Form INC-20A) – mandatory within 180 days.
- Appoint First Auditor within 30 days (Form ADT-1).
- Issue Share Certificates within 60 days.
- Maintain Statutory Registers:
- Register of Members
- Register of Directors
- Register of Charges
- Board Meetings:
- First board meeting within 30 days of incorporation.
- Minimum 4 per year (1 per quarter).
- Filing of ROC returns
- Maintain Books of Accounts at registered office.
- GST Registration, if applicable.
- Other Licenses: PF, ESI, Shop Act, etc., based on nature of business.
8. Other Important Pointers
🔓 Legal Identity & Ownership
- Own PAN, bank account, property.
- Can sue or be sued.
- Directors and company are distinct.
💼 Credibility & Funding
- Higher trust among banks and clients.
- Eligible for Startup India benefits.
- Eligible for external funding (equity, VC, angel).
- Can issue ESOPs to employees.
🧾 Taxation
- Corporate Tax:
- Base Rate: 22% (if opting under Section 115BAA) + cess & surcharge.
- Alternative MAT not applicable under 115BAA.
- Tax audit if turnover > ₹1 crore (₹10 crore for digital receipts/payments).
🌐 Foreign Direct Investment (FDI)
- Allowed up to 100% under automatic route in most sectors.
- FDI reporting via Form FC-GPR and FIRC compliance.
❌ Restrictions
- Cannot raise capital from the public.
- Cannot issue securities listed on stock exchange.
- Restrictions on share transferability (as per AOA).
9. Documents Required for Private Limited Registration:
- PAN Card
- Adhar Card (Front & Back)
- Phone Number
- Mail ID
- Passport Size Photo
- Voter ID/ Driving License
- Bank Statement containing latest bank entries with name, address, A/c No, etc.
- Electricity Bill for proposed registered office.
- NOC if electicity bill is in the name of the third party.
Note: Provide above documents for all proposed directors & shareholder. RoC may ask for additional documents.
10. Time Required to Register Private Limited Company:
Approx 10-15 working days, depending upon documents submission and availability of RoC website and response from RoC team.
⚠️ Disclaimer
The above information is provided for general awareness and informational purposes only. While we strive to keep the content accurate and up to date, we do not guarantee the completeness, accuracy, or reliability of any information provided herein. The content should not be construed as legal, tax, or professional advice. We recommend consulting with our customer service team for the most recent and applicable guidance. We shall not be held responsible for any loss or liability arising from the use of this information.
