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other states, if any shall be paid by the client.
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The most famous and commonly used form of corporate legal organisation in India is private limited company. The incorporation of private limited corporations is covered by the Corporate Law of 2013, the Company Laws of Corporation of 2014. A minimum of two owners and two managers is mandatory to incorporate a private limited company.
Section 3(1) of the Companies Act, 2013 provides that a company may be formed for any lawful purpose by—
(a) seven or more persons, where the company to be formed is to be a public company;
(b) two or more persons, where the company to be formed is to be a private company; or
(c) one person, where the company to be formed is to be One Person Company that is to say, a private company, by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration.
A company formed under the Companies Act, 2013 may be either—
(a) a company limited by shares; or
(b) a company limited by guarantee; or
(c) an unlimited company.
The Companies Act, 2013 prescribes specific procedures for incorporation and registration of companies. A company can be formed either by:—
(i) incorporation of a new company; or
(ii) conversion of existing business (partnership firm or co-operative societies, society, limited liability partnership, or any other business entity) formed under any other law for the time being in force which applies for registration under this Part into company under the provisions of Chapter XXI, Part I and of the Companies Act, 2013; or
(iii) companies incorporated under section 8 of the Companies Act, 2013. The incorporation (birth) and strike off of name, winding up and dissolution (death) of a company are governed by the provisions of the Companies Act, 2013. Therefore, each company is subject to the provisions of the Companies Act, 2013, as may be amended from time to time.
The following procedure involves for incorporation of a company.
Liability on members for having below minimum members’ strength
The MCA vide the Companies (Amendment) Act, 2017 has inserted new section 3A w.e.f. 9-2-2018, vide Notification No. SO 630(E), dated 9-2-2018 to put liability on all the existing members of the company, in case the company defaults in minimum number of members’ criteria. If at any time the number of members of a company is reduced, in the case of a public company, below seven, in the case of a private company, below two, and the company carries on business for more than six months while the number of members is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognisant of the fact that it is carrying on business with less than seven members or two members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued therefor.
STEP-BY-STEP FORMALITIES FOR FORMATION OF A NEW COMPANY
Persons desirous of forming a company must adhere to the step-by-step procedure as discussed below:
*Stamp duty Vary State to State
* NRI/Foreign Directors,Charges are extra
Only Scanned Copies are needed, Scanned copy of PAN Card of all directors and Aadhar card/ Voter ID/ Passport/ Driving
Scanned copy of PAN Card of all directors and Aadhar card/ Voter ID/ Passport/ Driving License
Latest Bank statement/ Utility bill in the name of director which should not be older than two months
Latest passport size photograph
No Objection Certificate (NOC) from the owner, Utility bill (should not be older than two months) and Notarized Rent agreement (in case of rented property)/ Registry Proof or House Tax Receipt (in case of owned property)
Everything to open a bank account and Start your business
Digital signature for two directors to digitally sign the documents
Defines the rules and objective of the business
Defines the rules and objective of the business
PAN number of the company to open a bank account
Certificate of incorporation bearing company's registration number and details
TAN number of the company
|Private Limited||Limited Liability Partnership||One Person Company||Partnership Firm||Sole Proprietorship||Public Limited Company|
|Recommended For||Start-ups and growing companies||Professional services firms||Sole promoters||Home businesses||Small traders and manufacturers||Growth Stage and also for early stage with broad business vision|
|Ease of Accommodating Investment||Very easy to accommodate||Possible, but unlikely||Possible, but severely unlikely||Almost impossible||Impossible||Very easily|
|Limited Liability Protection||Yes||Yes||Yes||No||No||Yes|
|Tax Advantages||Few benefits||Most efficient||Few benefits||Minimal||Minimal||Minimal|
With a specific end goal to execute the thought into a long haul business, picking the correct type of business is critical. For new companies, Private Limited Company is the best alternative for the accompanying reasons:
.Limited legal compliances
.No minimum capital contribution
.Need only 2 directors and shareholders (both can be the same person)
.Funding can be raised
.Limited liability of the members
Any individual or association or even a NRI/outside nationals can turn into a chief in an Indian Private Limited Organization. Here are the conditions to wind up a chief in an Indian privately owned business:
.Director must be a natural person
.He must be over the age of 18 years
.He requires a Director Identification Number (DIN)
The private limited company formation comes into existence on issuing of incorporation certificate. A company remains active even though all the shareholders and directors of the pvt ltd company may be changed unless it is wound up either voluntarily or by order of the Court/ NCLT. Also, the Company may be struck off from the register of the ROC if:
.The Company has not commenced business within a period of 1 year from the date of incorporation, or
.The Company has not complied with the Annual Filing Compliance In such a case, the company will be liable to be struck off from the Register of the ROC after a period of time and the Director of such a company will be held in default.
At least 2 Shareholders is required for joining of Pvt Ltd Company. Nonetheless, a privately owned business can have a most extreme of 200 Shareholders.
Indeed, there is no such lawful requirement in the Companies Act if not confined by the business assention. You should simply check your business understanding since it might restrain you from turning into a chief in other organization at the same time.
No, the whole pvt ltd company incorporation process is online. You can send the scanned copy of all the required incorporation documents via e-mail. All the forms and documents are filed electronically and even signed digitally.
Indeed, FDI (Foreign Direct Investment) is permitted in a private restricted organization as this type of business substance is anything but difficult to raise reserves. FDI (Foreign Direct Investment) is permitted in private restricted organizations for non-occupants through programmed or endorsement course.
At least 2 Directors are required for joining of Pvt Ltd Company, one of the said Director should be an occupant in India, i.e. ought to be in India for a time of 182 days or more in the past budgetary year. In any case, a privately owned business can have a most extreme of 15 Directors.
The organization name ought to be chosen with most extreme care. The principles for choosing an organization are:
.The name should be ended with the words 'Private Limited' which are mandated by law.
.The name must be unique.
.Follow the naming guidelines for better chances of approval.
.Name should be suggestive of the company business.
According to the Companies Act 2013, there is no base prerequisite for Paid-up Share capital. Be that as it may, every investor should buy in to a base one offer.
The normal obligatory compliances are:
.Appointment of auditor
.Statutory audit of accounts
.Filing of annual return
.Filing of financial statements
.Holding Annual General Meeting (AGM)
.Prepare directors' report
You don't need a proper office address to incorporate a company. You can register your residential address as a registered office address of your business with MCA (Ministry of Corporate Affairs) for which some address proof along with the NOC (No Objection Certificate) has to be filed with the prescribed form.
NRIs just permitted to join constrained organizations in India and the private restricted organization is perfect for NRIs. Additionally, there is no necessity to acquire the earlier endorsement from the administration or RBI. In any case, keeping in mind the end goal to enlist a privately owned business no less than one chief must be an inhabitant of India.
Private constrained organization is a perfect type of business element for dominant part of medium and extensive estimated organizations as it offers points of interest from restricted risk security to simple transferability. In any case, it isn't reasonable for independent ventures.
Indeed, transformation of private restricted organization into an open organization or one individual organization or constrained risk association is conceivable. Be that as it may, a private restricted organization can't be changed over into a customary association or sole proprietorship.
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