Introduction
Setting up a private limited company in India is a smart move for entrepreneurs aiming to build a scalable, credible and legally structured business. It offers limited liability, better access to funding and a clear separation between personal and business assets. Here’s an up-to-date, easy-to-follow guide tailored specifically to the Indian context.
What Is a Private Limited Company?
A private limited company in India is governed by the Companies Act, 2013. It must have at least two and a maximum of 200 members and the liability of each member is limited to their shareholding. The company has a separate legal identity and cannot publicly trade its shares.
Why Choose a Private Limited Company in India?
- Limited Liability Protection: Personal assets of shareholders are protected.
- Legal Entity Status: The business can sue, be sued, and own property independently.
- Attract Investors Easily: Preferred by venture capitalists and angel investors.
- Continuity: It continues to exist despite changes in ownership.
- Brand Credibility: Signals professionalism to clients and partners.
Step-by-Step Private Limited Company Incorporation Process in India
Step 1: Obtain Digital Signature Certificates (DSC)
Every proposed director and shareholder must obtain a DSC, as the registration process is entirely online. DSCs can be obtained from government-recognized certifying authorities.
Documents needed for Digital Signature Certificates:
- PAN card
- Aadhaar card
- Passport-size photo
- Email Id and mobile number
Step 2: Apply for Director Identification Number (DIN)
DIN is a unique ID required for every director. You can apply for it through the SPICe+ form (explained later) or separately via the MCA portal.
Step 3: Name Reservation via RUN or SPICe+ Part A
Use the RUN (Reserve Unique Name) service or SPICe+ Part A form on the MCA portal to apply for name approval.
Tips:
- Ensure the name is unique and not too similar to existing company names or trademarks.
- End the name with “Private Limited”.
Step 4: Draft MoA and AoA
Prepare the Memorandum of Association (MoA) and Articles of Association (AoA). These documents outline the company’s objectives and internal rules, respectively. You can upload them as part of the SPICe+ Part B form.
Step 5: File SPICe+ Form (INC-32)
SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) is an integrated web form that streamlines company registration.
SPICe+ includes:
- Company incorporation
- DIN allotment
- PAN & TAN application
- GSTIN, EPFO and ESIC registration
- Bank account opening (via AGILE-PRO form)
Documents to attach:
- ID and address proof of directors and shareholders
- Utility bill and NOC for the registered office
Step 6: Get Certificate of Incorporation (COI)
If all documents are in order, the Registrar of Companies (RoC) will issue a Certificate of Incorporation. This document contains the company’s CIN (Corporate Identity Number) and serves as proof of legal existence.
Step 7: Apply for PAN and TAN
These are auto-generated as part of SPICe+ Part B processing. PAN and TAN are essential for tax compliance and business transactions.
Step 8: Open a Business Bank Account
With the COI, PAN and AoA/MoA, you can open a business bank account. This account is mandatory for financial transactions under the company name. For easy bank account opening the preferred bank can be selected in AGILE Pro E-Form.
Step 9: Register for GST (if applicable)
If your company’s annual turnover exceeds Rs. 40 lakh (Rs. 20 lakh for service providers), you must register for GST. The GST registration can be done while company incorporation in AGILE Pro E-Form or separately via the GST portal.
Post-Incorporation Compliance
After incorporation, you must:
- Appoint a statutory auditor within 30 days
- Issue share certificates within 60 days
- Hold the first board meeting within 30 days
- Maintain statutory registers
- File annual returns and financial statements (Forms AOC-4 and MGT-7)
Common Mistakes to Avoid
- Not checking trademark databases before name reservation
- Submitting incomplete documents
- Overlooking post-incorporation compliance
- Using incorrect formats for MoA and AoA
Conclusion
Incorporating a private limited company in India may seem complex at first glance, but the process has become much smoother thanks to digitalization through SPICe+ Part B. With careful planning and accurate documentation, you can complete the entire process efficiently.
If needed, consult a Company Secretary or legal professional to make sure every detail is covered. A well-formed company structure lays the foundation for long-term growth and compliance.
