Private Limited Company Registration

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Private Limited Company Registration

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What is a Private Limited Company?

Private Limited Company registration in India offers ample stability and growth opportunities, making it the most popular business structure in India. It is a registered business organization with defined business objectives that are owned by a close group of members not exceeding 200 at a time. The shareholders of a private ltd. company are said to be the owners, whereas the personnel managing day-to-day operations are called as directors.

A private limited company registration in India makes way for its separate legal existence, securing the owners’ personal assets such that the company’s survival remains unaffected by any change in shareholders or management. And since the private companies registered in India have its separate, distinctive existence so, any change in shareholders or management does not affect the survival of the company.

Advantages of Private Limited Company Registration

Documents required to register a Private Limited Company

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Formulation of Company Name

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Register a Company in 3 Easy Steps

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Process to register a company online

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Compare different business structures to choose the right entity type

Private Limited CompanyOne Person CompanyLimited Liability PartnershipPartnership FirmProprietorship Firm
ActCompanies Act, 2013Companies Act, 2013Limited Liability Partnership Act, 2008Indian Partnership Act, 1932No specified Act
Registration RequirementMandatoryMandatoryMandatoryOptionalNo
Registration under the Act is mandatory to set up business as a Private Limited CompanyRegistration under the Act is mandatory to set up business as One Person CompanyRegistration under the Act is mandatory to set up business as a Limited Liability PartnershipBoth registered and unregistered partnerships are legal, but registered entity is preferredThere is no registration criteria prescribed. But, registration to establish a legal identity is recommended
Number of members2 – 200Only 12 – Unlimited2 – 50Only 1
Requires minimum 2 and not more than 200 shareholdersOnly an individual,and an Indian resident can be the shareholderNo bar on maximum number of partners, but minimum 2 Designated Partners are requiredIt is formed with minimum 2 partners, but not exceeding 50The proprietor is the only owner of the firm
Separate Legal EntityYesYesYesNoNo
Private Company is separate entity and can own assets in its nameOPC is separate entity and can own assets in its nameLLP is separate entity from partners and can own assets in its namePartnership firm does not have any separate identity from its partnersProprietor and business are the same and not different
Liability ProtectionLimitedLimitedLimitedUnlimitedUnlimited
Liability of members is limited to the extent of unpaid value of shares subscribedLiability of member is limited to the extent of unpaid value of shares subscribedLiability of partners is limited to the capital amount agreed to introducePartners are jointly and severally liable to pay the debts of the Partnership FirmProprietor’s liability is to pay-off all the debts and obligation of a firm
Statutory AuditMandatoryMandatoryDependentNot mandatoryNot mandatory
Auditor must be appointed within the 30 days of incorporationAuditor must be appointed within the 30 days of incorporationApplicable when turnover exceeds INR 40 Lakh or contribution exceeds INR 25 LakhStatutory audit not applicable. Tax audit may be applicable based on turnoverStatutory audit not applicable. Tax audit may be applicable based on turnover
Ownership TransferabilityRestrictedNoYesNoNo
Shares can be transferred with the consent of other ShareholdersShares are not transferable easilyOwnership can be changed with consent of other partnersOwnership is not transferable easily, clause of partnership deed should be referredFirm is no different from proprietor and so ownership is not transferable
Uninterrupted ExistenceYesYesYesNoNo
Change in members or director does not affect the existence of Private CompanyChange in members or director does not affect the existence of OPC.
The nominee will take place of member
Change in Partners or Designated Partners does not affect the existence of LLPChange in partner leads to dissolution or formation of another partnership firmDeath or insolvency of proprietor directly affects the firm
Foreign ParticipationAllowedNot AllowedAllowedNot AllowedNot Allowed
Foreign national are allowed to invest under the Automatic RouteMember, nominee and director must be an Indian residentForeign nationals are allowed, subject to FDI GuidelinesForeign nationals are not allowed to be a partnerForeign Nationals cannot commence proprietorship business
Tax RatesModerateModerateHighHighLow
Tax rate applicable for small companies is reduced to 25%Tax rate applicable for small companies is reduced to 25%With tax rate of 30% on business profit, tax benefits to partners is highWith tax rate of 30% on business profit, tax benefits to partners is highTax rates of individual applied to Proprietorship Firm
Statutory CompliancesHighModerateModerateLessLess
Apart from Annual filings, it has to comply with various provision laid down, but less compared to public companyApart from Annual filing, compliances are less compared to Private CompanyAnnual filing and few event based filings are necessarySeparate ITR of partnership is filed, else there is no filing requirementNo compliances and no requirement to file a separate ITR
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Frequently Asked Questions

For Private Company registration in India, following requirements must be fulfilled:
1. Minimum 2 directors shall be appointed, out of which one must be a resident of India.
2. Minimum 2 shareholders are required for this registration. Here, an individual may become shareholder and director at the same time.
3. A place of business in India must be provided as a registered office address.

During the registration, a minimum of INR 1 Lakh should be provided as an authorized capital. A minimum paid-up capital requirement is eliminated as a part of Government’s initiative to simplify the business registration in India. However, each shareholder must subscribe at least 1 share for the registration to introduce the sufficient amount for running the business.

The name of a company should be formulated as mentioned above. The applicants can provide the maximum of 2 names with their preference order under RUN form. The applicant should comply with the provisions of the Act or regulations. The registrar may ask to re-submit the application with a different name if names do not fall under the criteria of uniqueness, relevancy or do not fulfill other requirements.

Any natural person above the age of 18 years can become the director in the company after procuring Director Identification Number (DIN). And since there are no specific criteria provided in terms of citizenship or residency, a foreign national can also become a director. The application of DIN Allotment is now merged with the application for the formation of a company subject to a limit of maximum 3 DIN.

Director Identification Number is a unique number assigned by the Ministry of Corporate Affairs to Individuals on whose name the application is made, allowing an individual to be a Director in any Company or Designated Partner in an LLP.

Digital Signature Certificate is provided in the form of a token issued by Certified Authorities. Any form filed for online company registration in India shall be submitted after affixing the DSC of an Applicant. Also, the directors will require DSC for DIN application and the subscribers to MOA shall possess DSC for submitting e-forms for incorporation.

Authorised capital shows the maximum amount of capital that a company can raise by way of issue of shares at present or in the future. Whereas, the Paid-up Capital refers to the actual amount raised by a company i.e.; amount paid by the shareholders on the issuance of shares. One can register a company in India by any amount of paid-up capital which can be less or equal to the authorized capital but not exceeding the authorized capital.

Yes, a Private Company can carry multiple businesses if it is mentioned in the company’s MoA and approved by a registrar. The company can mention more than one business operating within the same field or of the same nature. Activities which are unrelated, such as fashion designing and event management or construction, those cannot be registered under the same company.

Yes, it is possible to register a Private Company at a commercial or residential place by providing the sufficient proof. A registered office is a place where the business receives communication, if any, from the MCA or any concerned authorities. This address is displayed at the portal of Ministry as well.

Yes, NRIs or foreigners can hold shares subject to FDI guidelines. However, a foreign participation above 50% will place the company under the category of Foreign Company.

No, none of the promoters are required to be present when opted to register a company online. All the forms are filed on the web portal and are digitally signed. Also, the required documents can be sent through e-mail or uploaded on our portal for filing.

Once, the company is registered, it should follow below-mentioned requirements on priority:

  • The opening of the company’s current account within 30 days after receiving the PAN card.
  • Appointment of a Statutory Auditor
  • Depositing paid-up capital as mentioned while registration
  • Issue and allotment of shares

During every financial year, the company must hold one Annual General Meeting (AGM) and at least 4 board meetings (one in each quarter). Further, the accounts and financial statements must be audited by an independent auditor. Subsequently, it shall file form AOC – 4 and MGT – 7 as part of Annual Compliance within given time.

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