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Giving your business some legal identity is important. And setting it up as a Private Limited Company (PLC) is by far the most common way to go about it. Let’s understand a private limited company in more detail.

  1. What is a Private Limited Company(PLC)?
  2. Who should opt for PLC form of Business Structure?
  3. Steps for forming a PLC
  4. Documents required for filing SPICe (INC-32)
  5. What is the Cost involved in PLC Registration?
  6. What is the Time required to register a company?

1. What is a Private Limited Company (PLC)?

A private limited company is a company privately held for small businesses. This type of business entity limits owner liability to their shareholdings, the number of shareholders to 50, and restricts shareholders from publicly trading shares.

2. Who should opt for PLC form of Business Structure?

1. Limited risk to personal assets

The shareholders of a private limited company have limited liability. This means that as a shareholder you will be liable to pay for company’s liability only to the extent of the contribution made by you.

2. Legal Entity

A PLC has a separate legal entity different from you. This means that the Company is responsible for the management of its assets and liabilities, debtors and creditors. And you are not responsible for it. So, the creditors cannot proceed against you to recover the money.

3. Raising Capital

Even though registering a PLC comes with compliance requirements, it is preferred by entrepreneurs as it helps them raise funds through equity, expand and at the same time limits the liability.

4. Trustworthiness

Companies in India are registered with the Registrar of companies(ROC) under Companies Act 2013. Anyone can check the details of the company through Ministry of Corporate Affairs (MCA). Also, details of all the directors are provided while the formation of the company. Hence a PLC form of business structure is trusted more.

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3. Steps for forming a PLC

PLC

Step 1:  Obtain DSC (Digital Signature)

Digital signatures are required to file the forms for company formation. The registration process is online and the forms require a digital signature. DSC is mandatory for all subscribers and witnesses in the memorandum and articles of association. You must obtain the digital signature certificates from government recognized certifying agencies. The list of such certified agencies can be accessed here. Or you can get your DSC online in just two days from here. The cost of obtaining DSC varies depending upon the certifying agency. You must obtain either class 2 or class 3 category of DSC. Under Class 2 category, the identity of a person is verified against a pre-verified database whereas, under class 3 category, the person needs to present himself before registering authority to prove their identity. To acquire DSC

Step 2:  Apply for DIN (Director’s Identification Number)

DIN is an identification number for a director. It has to be obtained by anyone who wants to be a director in a company. One DIN is enough to be a director in any number of companies.

There are 3 ways of obtaining DIN:

Option 1: File form DIN 3. This form required basic details of the proposed director along with identity proof like PAN, Aadhaar Card, etc and address proof.

Option 2:  With filing SPICe, DINs gets issued to the proposed directors who do not have a DIN. Under this process of filing through SPICe (INC 32), maximum of three directors can apply for DIN.If you need the DIN of more than three directors, it can be applied through Form DIR-3.

Option 3: Click on the link & let a ClearTax expert procure DIN for you. If you go for Private Limited Company – Registration with ClearTax, up to 2 DINs are covered in the plan & there is no need to apply for DIN separately.

Step 3:  Name Approval

To get the name approval, there are two options:

Option 1: You can apply for the proposed name through SPICe(INC-32) but only one name can be applied to this form.It means you have to be sure of the proposed name and should follow name availability guidelines, existing trademarks to avoid rejection.

Option 2: Before filing SPICe (INC-32), you may file Form INC-1 in which up to 6 names can be proposed and then you can input the SRN of approved INC-1 into SPICe (INC-32).

Filing through SPICe(INC -32) is much faster process than going via the INC-1 route. The whole process including name approval and incorporation takes around 2-3 days.

If the name that you want is a bit difficult to get, because there are companies with similar names, you should file Form INC-1 instead of INC- 32.

Step 4: SPICe or Form INC-32

Ministry of Company Affairs recently introduced  SPICe or Form INC-32. It is a simplified proforma for incorporating a company electronically. It serves the following purposes with the benefit of a single application:

  • Application for allotment of DIN (Director Identification Number)
  • Reservation of company name
  • Incorporation of a new company

Prior to May 2015, the registration of companies required the filling up of several documents, such as the DIR–3 for acquiring the DIN (Director Identification Number), INC-1 for obtaining a name, INC–7 for registering the company with the Memorandum and Articles of Association, INC–22 for the registered office and finally, Form DIR-12 for the directors. Now, all of these forms have been merged together.

The digital signature of a professional is required to file Form INC-32. The professional must certify that all the information given in the form is correct. The professional can be Chartered Accountant, Company Secretary, Cost Accountant or advocate.

Step 5:  e-MoA(INC-33) and e-AoA (INC-34)

e-MoA refers to an electronic Memorandum of Association and eAoA is electronic Articles of Association. These forms have been introduced to simplify the process of company registration in India.

Memorandum represents the charter of the company while articles of association contain the internal rules and regulations of the company.

Earlier memorandum of association and articles of association were required to be filed physically. But now these forms are filed online on MCA portal as a linked form with SPICe (INC-32). Both these forms must be digitally signed by subscribers to the Memorandum and Articles of Association.

Step 6:  PAN and TAN Application

Through this single form SPICe, you can also apply for company’s PAN and TAN by using forms 49A for PAN and 49B for TAN. The system will auto-generate these forms after the submission of SPICe form. All you have to do is download it, affix digital signatures and upload both forms on MCA portal

If all the details in the form are duly filled in along with the required documents, MCA will approve the registration and a CIN (Corporate Identity Number) will be allocated.You can also track this CIN online on MCA portal.

If there are more than 7 Subscribers to MoA and AoA of a PLC the following forms have to be filed.

Form Purpose
DIR- 3 Allotment of  DIN
INC- 1 Name Approval
INC- 7 Incorporation of company
DIR -12 For Director’s details
INC-22 Registered Office

4. Documents required for filing SPICe (INC-32)

The following documents must be filed with SPICe (INC-32) for the incorporation of a company:

A. Where director and subscriber are Indian Nationals
  • An Affidavit on a Stamp Paper of Rs. 100 is to be given by all the subscribers of the Company to state their willingness to become the shareholders of the Company
  • Proof of office address – Rental Agreement
  • Copies of utility bills that are not older than two months
  • Copy of approval in case the proposed name of the company contains any word(s) or expression(s) that require approval from central government
  • If the proposed name is based on a registered trademark or is subject matter of an application pending for registration under the Trade Marks Act, then it is mandatory to attach the trademark registration certificate or trademark application copy
  • NOC from the owner of the property
  • In case of subscribers/ Director does not have a DIN, it is mandatory to attach, proof of identity and address proof of the subscribers
B.     Where director/subscriber is a foreign National
  • Passport
  • Address proof: It can be driving license, residence card, bank statement, Government issued form of identification containing an address
  • Registered office proof: It can be registered document which shows the title of the premises in the name of the company or notarized copy of lease deed or rental agreement

5. What is the Cost involved in PLC Registration?

The following is the government fees required for registration of a PLC:

Purpose Approx. Fees Through SPICe(INC -32) Approx. Fees Through multiple forms(INC-7, INC-1 etc.)
DSC Around Rs. 1500-2000 for 2 directors (varies depending on the agency) Around Rs. 1500-2000 for 2 directors (varies depending on the agency)
DIN Nil Rs. 500 per DIN. Approx 1000 for 2 directors.
Registration fees Depends on Authorised capital.

For Authorised capital up to Rs. 10 lakh the fee is Rs 2000 (for a Small company and OPC) Authorised capital up to Rs 1 lakh the fees is Rs 5000 (other than above)

INC-7 – Rs. 300

MoA – Rs. 2000

AoA – Rs. 300

INC-22 – Rs. 300

DIR-12 – Rs. 300

Total – Rs. 3200

Stamp duty on MoA, AoA and SPICe Cost depends on state of registration Cost depends on the state of registration
SPICe form filing fees Rs 500 NIL

6. What is the Time required to register a company?

The whole process including approval of DIN, Name, and Incorporation takes around 3-4 days.
If you go through another process of filing multiple it takes more time.

The approximate time will be as follows:

  • Allotment of DIN through Form DIR 3 takes 1-2 days
  • Name approval through form INC 1 takes 6-7 days
  • Incorporation of company through INC 7 and INC 22 takes 7-10 days

Thus all put together, it will take around 15-20 days whereas.

If you are looking to get the advantage of limited liability and want to register your business as a private limited company in the fastest way, check out ClearTax and register a Private Limited Company plan. Under the plan, following services are provided:

  • Filing of E-forms with the Registrar of Companies (ROC)
  • Director Identification Numbers (2 nos.)
  • Digital Signature Certificates (2 nos.)
  • Name approval (INC-1) including one resubmission
  • Drafting of Memorandum of Association (MOA) & Articles of Association (AOA)
  • Issue of Certificate of Incorporation
  • PAN Application
  • TAN Registration
  • Includes Government Fees & Stamp duty up to Rs. 1 Lakh Authorized Capital
  • Let our experts manage your taxes and business compliances!
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