Registering a Private LTD
Jul 04 2012, 17:53 | By SME Mentor
A lot of aspiring entrepreneurs often hit a stumbling block when it comes to registering their company as a private limited enterprise. Many questions such as the legalities involved, the proper documentation, fees etc can be muddling if you are a novice. The good news is that, it is a fairly simple process and you can do it online with the help of a lawyer, chartered accountant or company secretary. Let us help you chalk out the path for registering your enterprise as a private limited company.
As a prerequisite for setting up a private limited company, you are required to have a minimum authorised capital of Rs 1 lakh. However if you, wish to include certain words such as India, Hindustan, International, Enterprise or Corporation in the name of your company, the limit will be increased. A private limited company must also have a minimum of two directors.
Apply for a director identification number (DIN)
This is the first step towards registering your company. The Ministry of Corporate Affairs issues the DIN. The applicant will need to fill out the e-form DIN 1 that is available on the website www.mca.gov.in. This form needs to be signed digitally and uploaded on the MCA 21 portal along with the required identification proof such as proof of identity and residence proof that is not more than 2 months old. A copy of your PAN card is also mandatory. Physical copies of the documents are not required and you can do the entire process online. The application fee for DIN is Rs 100 that needs to be paid via net banking or credit card. You can get more information on DIN at http://www.mca.gov.in/MCA21/Din.html.
At least one director needs a digital signature
A digital signature is mandatory for at least one director. A digital signature contains the name and public key of the owner, the name of the issuer and the expiration date of the public key. This is issued by an authorised certification agency (CA). There are seven certification agencies that have been authorised by the Controller of Certification Agencies (CCA). They are TCS, NIC, MTNL, IDRBT, GNFC and e-Mudhra CA. You can approach any of these vendors to develop a digital signature for you for a fee. Although the fee differs from vendor to vendor a larger vendor is likely to charge between Rs 2000-2500 for a digital signature that will have a validity of two years.
Approval of the name of your company
You will need to inform the Ministry of Corporate Affairs about the name you have chosen for your company. You should have at least 4 suitable names ready, in case one or more is not available. Siddharth Mahajan, Founder and Managing Partner, Auxilium Partners a New Delhi based law and consultancy firm that has handheld many entrepreneurs' advises that the name of the company "should have at least one word that indicates the main object of the proposed company" . You need to make an application in e form 1 A that is available on the MCA website. The form will ask you to furnish information such as four alternative names of the proposed company, names and addresses of the promoters, authorised capital, main objectives of the company and names of other group companies. You will also need to attach the digital signature and pay a fee of Rs 500 to complete the filing of this form. If everything is alright, you will get a formal letter from the Registrar of Companies (ROC) within a maximum of 10 days.
Incorporation of Documents
Once the name has been approved you have to incorporate documents such as the Memorandum of Association (MOA) and Articles of Association (AOA). Any advocate or a practising company secretary will be able to draw up these documents for you. The MOA contains all the main objects of the company as is considered the principal document of the company. Kruti Desai Partner at Mumbai based law firm ALMT Legal and Ankit Goel, incorporation expert at ALMT legal point out that the MOA "should reflect clearly and unambiguously the activities to be carried out by the company".
The AOA on the other hand should define the manner in which the company intends to run its business. Details about how daily tasks such as handling of financial records, appointment of employees etc needs to be there in the AOA. ALMT Legal's Kruti Desai advises "As a foundation to prepare this document an entrepreneur simply has to think about the day to day operations of his firm." In addition to this some additional form numbers 1, 8, 32 must also be signed and submitted along with the above mentioned documents in the format that has been prescribed by the MCA.
Time and cost factor
Although an entrepreneur can manage to do all this himself, it is needless to say that there are a lot of legalities involved, so seeking professional assistance from legal form or CA firms may be a prudent decision. The total statutory costs for setting up a private limited company will be anything between Rs 20,000-50,000 including the government fees, stamp duty, certification charges and the fees that you will need to pay the professionals handling this for you. If you go step by step and get all your documentation right, your private limited company will be registered within a maximum of 4-6 weeks.
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