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Private and Public Company Registration in India

According to the Business Act of 2013, a limited liability company registration that sells shares to the general public is a public limited company. Anyone can purchase its stock through trading on the stock market or a private (IPO) initial public offering.

A public limited company is subject to tight regulations and is obligated to disclose to its shareholders its genuine financial situation.

What are the Characteristics of a Public Limited Company?

 

Directors: According to the Companies Act of 2013, there is no limit on the maximum number of directors, and a minimum of 3 directors are necessary to form a public limited company.

Limited Liability: Each shareholder only has a little amount of obligation. Contrary to partnerships and sole proprietorships, where the partners and business owners are jointly and severally liable for the business’s debts, a public limited company shareholder is not personally liable for any debts or loss of the Company for any amount greater than the amount invested by them. 

However, this feature of a public limited corporation does not grant the stockholders protection. We will make the stockholders accountable for their unlawful conduct.

Paid-up Capital: To operate, a public limited company must have at least Rs 5 lakh in paid-up capital or the larger amount specified by the statute.

Prospectus: Public limited businesses are required by the Act to publish a prospectus, an extensive summary of the Company’s affairs that is distributed to the general public. However, private limited companies are not covered by such clauses. This is so private limited corporations can’t offer their shares for subscription to the general public.

Name: According to the Corporations Act of 2013, all public companies must end their names with the term “limited.”

What are the Advantages of Public Limited Companies?

  1. Increased revenue: Everyone can invest in a public limited corporation since shares are available to the general public. Enhances the Company’s capital as a result.
  2. Strong emphasis: Being listed on a stock exchange guarantees that hedge funds, mutual funds, and other traders will be aware of the Company’s operations. The Public Limited Company may benefit from increased commercial prospects due to this.
  3. Distributing risk: Since shares are offered to the general public, the market’s unsystematic risk is dispersed.
  4. Possibilities for success and development: There is a great chance for business growth and expansion by investing in new initiatives with the money acquired via share sales because there is less risk involved.

What are the Requirements for Registration of a Public Limited Company?

The Companies Act of 2013 stipulates several laws and regulations for creating a public limited company. What to consider while forming a public limited corporation is listed below:

  • A public limited corporation must have a minimum of 7 shareholders.
  • Forming a public limited corporation requires a minimum of three directors.
  • A share capital of at least Rs. 5 lakhs is necessary.
  • While submitting self-attested copies of identification and address verification, a digital signature certificate (DSC) of one of the directors is required.
  • A DIN is required for the prospective Company’s directors.
  • The choice of the company name must be done through an application.
  • It is necessary to submit an application that includes the Company’s principal object clause. What a firm will do after incorporation will be specified in this object clause.
  • It is necessary to apply for ROC with the necessary paperwork, including the MOA, AOA, properly filled-out Form DIR-12, Form INC-7, and Form INC-22.
  • It is necessary to pay the ROC the statutory registration costs.
  • The business should apply for the “certificate of the business beginning” after receiving ROC clearance.

What is the Process for Registration of a Public Limited Company

Step 1: Get the Digital Signature Certificate (DSC)

A digital signature will be needed to submit the forms on the MCA site because the business registration process is online. DSC is required of all potential directors and the signatories of the memorandum and articles of association.

Step 2: Get the Director Identification Number (DIN)

Anyone who wants to serve as a firm director must obtain this identification number, which identifies a director. The business registration form requires the prospective director’s DIN in addition to verification of identity and residence.

Step 3: MCA Portal Registration Process

To apply for business registration via the MCA site, a filled-out SPICe+ form must be uploaded. The Director of a Company must register on the MCA site to fill out the SPICe+ form and submit the necessary paperwork. After completing the registration procedure, the director will access the MCA portal services, which include reading and submitting electronic forms.

Step 4: Get Certified!!

The Registrar of Companies will examine the private limited company registration application when filed with the relevant documentation. He will issue the Public Company’s Certificate of Incorporation when the application has been confirmed.

What are the Significant Documents Required for Incorporating a Public Limited Company?

  • All directors and stockholders must provide identification proof.
  • Proof of residence for each shareholder and director.
  • All shareholders’ and directors’ PAN numbers.
  • The utility bill for the planned office would be the Company’s proposed registered office.
  • a NOC (No Objection Certificate) signed by the space’s landlord intended for the Company’s office.
  • Each director’s Director Identification Number (DIN).
  • Directors’ Digital Signature Certificate (DSC).
  • MOA
  • AOA

Why is Picking the Appropriate Business Structure Crucial?

Your income tax returns will rely on the business structure you pick, so be sure to do your research. When registering your business, remember that many degrees of compliance must be completed depending on the business structure. For instance, a sole owner must file an income tax return. However, a business must submit yearly reports to the Registrar of Companies and an income tax return.

The annual audit of a company’s books of accounts is required. Spending money on auditors, accountants, and tax filing professionals is necessary to comply with these legal requirements. Therefore, while considering company registration, choosing the appropriate corporate structure is crucial. Entrepreneurs must know exactly what type of legal compliances they are willing to handle.

Investors will always choose a recognized and lawful business structure, even though certain business models are more favorable to investors than others. An investor could be reluctant to offer money to a lone proprietor, for example. On the other side, investors will feel more at ease investing if a solid company concept is supported by a recognized legal structure (such as LLP, Company, etc.).

How to choose a business structure while applying for company registration in India?

Let’s look at some important questions every entrepreneur must ask before finally deciding upon a business structure.

  • How many owners or partners will there be in your Company?

A one-person company will be the best option if you are the sole owner of the startup (Dpiit startup registration) capital needed for the firm. On the other hand, a Limited Liability Partnership (LLP) or Private Limited Company would be suitable for you if your Company has two or more owners and is actively looking for investment from other parties.

  • Should your choice of the business structure be based on your initial investment?

A sole proprietorship, HUF, or partnership business might be a great choice if you wish to start with less money. However, you can select a One Person Company, LLP, or Private Limited Company if you are confident that you will be able to recoup the startup (Dpiit startup registration) and compliance fees.

  • Preparedness to assume all of the business’s obligations

Business entities with unlimited liability include sole proprietorships, HUFs, and partnership firms. This indicates that the whole amount will be recouped from the members or partners in case of any loan failure, according to the profit-sharing ratio. In these situations, there is a substantial risk to personal property.

Companies and LLPs, however, have a limited liability provision. This indicates that each member’s responsibility is limited to the amount of their contribution or the value of the shares they own.

  • Rates of Income Tax That Apply to Businesses

The standard slab rates for income tax apply to sole proprietorships and HUFs. The business’s revenue is combined with the owner’s other earnings in a sole proprietorship. However, a tax rate of 30% is applied to other entities, such as partnership businesses and corporations.

  • Plans to raise capital from investors

Regarding investments, organizations like LLPs and Private Limited Companies are trusted. As was previously indicated, it is challenging to attract investors when your business structure is unregistered. Make sure you select the appropriate structure and ask a professional for assistance so that you may register in the correct direction.

Read Also: How to convert LLP into Pvt Ltd Company registration

How Does MUDS Help to Simplify the Process of Registering a Company?

You may easily set up your business with MUDS in only ten days (subject to departmental approvals). Our package for registering a corporation includes:

  • Authorization of your business’s name
  • Getting two directors’ DIN
  • submitting a SPICe+ form
  • Except for the states of Punjab, Madhya Pradesh, and Kerala, payment of Stamp Duty on approved capital up to Rs.
  • Issuing a certificate of incorporation combined with a PAN and TAN
  • Establishing a current account for your business

Since MUDS’s business private limited company registration is entirely online (company registration online), you may preserve time and money by avoiding a trip to our office. Furthermore, you may register your business in only four easy steps, which are as follows:

Step 1: Buy the plan

Buy the company incorporation plan from us that best meets your needs. Your questions will be answered in a call from one of our professionals. By providing your email address and phone number and selecting “Request a Callback,” you may even connect with our specialists. You may also get in touch with us by emailing muds. Co. with your questions.

Step 2: Upload the documents to our website

The necessary papers to our website. The uploaded files will be securely kept in our vault with complete privacy.

Step 3: Document signatures and document verification by our specialists

Our professionals will check the papers you have provided. On the paperwork, you must certify your signature.

Step 4: Our professionals will submit the paperwork via the MCA site.

  • On your behalf, our professionals will submit the company incorporation form on the MCA site. 
  • The ROC and the relevant agencies will review the paperwork provided by our expert once the business incorporation form is filed on the MCA site. 
  • It takes around ten days to complete the verification procedure (subject to departmental approval and reverts from the respective departments).
  • Our professionals will pursue the matter with the appropriate authorities until you acquire the Incorporation Certificate. 
  • You will obtain the Incorporation Certificate, PAN, and TAN in around ten days once the verification procedure is over.

Final Checklist for Private Limited Company Registration in India

  • The following minimum number of directors or partners:
    • OPC requires a minimum of one director
    • PLC must have at least two directors.
    • Three at a minimum for a public limited company
    • for an LLP, a minimum of two partners
  • A corporation must have at least as many members as the following:
    • OPC needs a minimum of one member.
    • PLC requires a minimum of two members
    • Public limited companies must have a minimum of seven members.
  • DSC for all recognized partners and directors.
  • All directors of a corporation must have a DIN, and LLP-designated partners must have a DPIN.
  • Name of the firm/LLP, which is distinct from any other company, LLP, or trademarks already in use.
  • In the case of an OPC, PLC, or Private Limited Company, authorized capital.
  • In the case of an LLP, the partners’ capital contribution.
  • In the case of an OPC, PLC, or Private Limited Company, the MoA and AoA.
  • In the case of an LLP, an agreement between the partners.
  • Proof of the company’s or LLP’s registered office.

Compliances to be followed by the Company

  • Following private limited company registration, the firm must adhere to several yearly compliances. 
  • The business must adhere to regulations; for example, it must appoint its first auditor within 30 days of establishment. The opening board meeting. 
  • Every corporation is required to hold a minimum of 4 board meetings at predetermined times throughout the calendar year.
  • Every financial year, it must keep and file a profit and loss account, annual return, and balance sheet with the Registrar of Companies by the deadline, together with an auditor’s report. Certain Statutory Registers must be kept up to date by every business.
  • Please read our article on Compliances under the 2013 Companies Act for additional information on the firm’s requirements.
  • The business must submit a few yearly paperwork to the Registrar of Companies. 
  • Our post-ROC Compliance Calendar provides all forms’ specifics and their respective due dates.

Summary

There are several procedures involved in registering a company. Before applying for business registration (microfinance company registration), the firm’s directors must first decide on the structure and the company name and receive their DIN and DSC. It is important to choose the business’s structure before registering it, such as whether it should be established as an OPC, LLP, PLC, or public limited Company.

The business registration (micro finance company registration) form must be submitted on the MCA site following the company name selection and the acquisition of DIN and DSC. The SPICe+ form, and the business registration form, must be filled out, the necessary documents uploaded, and the application and associated costs must be submitted for company registration online via the MCA site. The ROC will issue the certificate of business establishment following the SPICe+ form’s verification. The incorporation certificate is evidence of the business’s registration, and the firm will become a distinct legal entity.

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