What is a Private Limited Company?
A private limited Company is a type of organization you can set up to run your
business. As such they need to be registered with the Ministry of Corporate Affairs
(MCA) and are subject to relevant Rules and Regulations.
The word "Limited" means that the financial responsibility of the company is limited
to the value of the Company's shares that have not been paid for.
The word "Limited Liability" denotes that the basis of a Limited Liability company is,
that all debts incurred by a company are the company's liabilities and are not directly
the legal liabilities of the Company's shareholders or directors. The Directors of a
limited liability company do not incur personal liability as all their acts are undertaken
as agents of the company. However, liability may be imposed on directors in the event
of wrongful or fraudulent trading, i.e. if a director acts in an inappropriate manner.
Importance Of Registration
Private Limited Company is one of the most stable and a much used business structure in India,
owing to its stability and availability of limited liability protection. The Private Limited
Company registration is the most popular and useful form of business structure among the startups,
small and medium size businesses.
This helps in easy introduction of non related people or entities as shareholders of the company
and as such providing capital to the business without any hassles or personal guarantees. The
business, being in the form of a separate legal entity, allows the Company easy access to borrowed
funds from banks and financial institutions.
Registration Conditions
1. Members and Directors
- A minimum of two (2) subscribers to the Memorandum of Association
- A minimum of two (2) directors out of which one (1) should be a Resident of India and a maximum of fifteen (15) directors
- A minimum of two (2) shareholders/members and a maximum of 200 shareholders as required
- Authorised Capital - No Minimum Requirements
- Paid Up Capital - No Minimum Requirements
- All the Directors should obtain a Director Identification Number (DIN)
- All subscribers should obtain a Digital Signature (DSC)
2. Name of the Company
The name of your company is very important and should be one which adds on a positive/weightage
impression to the company and its operations.
Naming your new company can be an exciting yet challenging task. However, it is vital to follow
a few naming guidelines set by the Registrar of Companies (ROC) while selecting a name for your
new company.
Follow the rules and get your company name approved in no time.
Preferred Format accepted by the MCA
- Unique Company + Description + Private Limited
Unique Component
- For instance, in Targolegal Private Limited, Targolegal is a unique component. After you have
come up with a name, you need to ensure that no other company has been registered with a similar name.
While searching for your unique component, think creatively.
- In the case of unique components, abbreviations, adjectives and generic words are not allowed.
For e.g; the names like BBC or XYZ would be easily rejected.
Descriptive Name
From the above example, Targolegal comes under the consulting category. The descriptive name depends
on the type of business.
Check the availability of the company name
Your company name should be unique and needs to get approval from the ROC. Search for a unique name
for your company.
Check for a trademark, if any
It is impossible to register your company name if there is an existing trademark with a similar name.
List of things to consider when selecting a company name
- Choose a unique name and not an undesirable name
- Ensure that the name is not generic
- Do not use abbreviations in the name
- Do not include the country's name
- Do not use a name that is associated with the foreign government
Choosing the name of the company is often a technical task. A private limited company is required
to cover three aspects while deciding a name for itself:
- Main name
- Activity to be carried out
- Mention of 'Private Limited Company' at the end
Pro tip: It is not always necessary that the name the business owner is looking for
will be available, as no two companies can have the same name. Therefore, it is a requirement that at
the time of registration, every company has to send 5-6 names for approval to the Registrar of Company
(ROC). Moreover, the submitted names should not have a close resemblance with any other company's name.
3. Registered Office Address
After registration of the company, the next step is to file the permanent address of its
registered office with the registrar of the company (ROC). The registered office of the company
is where the company's main affairs are being conducted and where all the documents are placed.
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