Starting a private limited company is opening a door to numerous opportunities for the growth and development of your business. When it comes to raising funds in equity capital, a Private company is the business structure that most startup owners are attracted to.
However, business owners also need to be aware of the legal and regulatory complications related to the process of starting a private limited company. The online private limited company registration process involves a lot of compliance. In this article, you will get a comprehensive idea of both, the pre and post-registration compliance.
Pre – Registration Compliance
Before you start the private limited company registration process, you need to comply with certain terms. Completing these compliance requirements will help you get your company incorporated easily.
Reservation of Unique name
All companies registered in India need to have a unique company name. This means the name you choose for your company must not be similar to any existing company name or trademark. To make it easier for you to choose the most unique company names, the Ministry of corporate affairs provides the option to check the company name availability.
It is an easy process, you just need to go to the portal and enter your relevant name, business activity and click on search. If a list of names appears in the search result, it means that your name is not available. However, if no list appears, it means the name is available for reservation.
Then, you can fill out the Spice+ Part A form for the reservation of a unique name. In this form, you need to give at least two proposed company names and your business activity. Once you submit the form, the authorities go through your submission and either approve the name or ask for re-submission. Reserving a unique name before filing the incorporation form helps you in avoiding the entire hassle of changing all documents, if the name already exists for another company.
Obtaining the DIN
DIN stands for the Director’s Identification Number (DIN). This is a unique identification number allotted to everyone who is a Director in an Indian company. So, if you do not already have a DIN, you need to get one before you can apply for company incorporation.
Get Digital Signature Certificate (DSC)
Digital Signature Certificate is a mode of electronic verification. The DSC verification of shareholders is also needed to sign and submit the incorporation forms. Hence, before online private company registration, you will need to have the DSC ready.
Registration Process
Once you comply with the pre-registration requirements, you can move ahead and file your incorporation documents. Let’s take a look at that process:
Spice+ Part B
This is the incorporation form. Here, you need to provide all the details as per the charter documents of the company and file them for incorporation along with the documents as proof.
Incorporation Documents
The Memorandum and Article of Association are the charter documents of the firm. You need to submit the final copies of these documents for the ROC’s perusal and approval. Once you submit these forms, and the ROC goes through the details, you will get the final Certificate of Incorporation.
Post Company Registration Compliance
Once you receive your COI your company is incorporated. However, after incorporation, to commence the business, you will have to undergo certain post-registration compliance. These include:
PAN and TAN Application
A permanent Account Number is a must for a company incorporated in India because of its separate legal existence. TAN is mandatory for all who deduct tax at source. Hence, it is mandatory for
Current Account Opening
The separate bank account of companies or entities is a ‘current account’. Since the company has a separate legal existence, it makes sense for it to have its bank account. This makes accounting and bookkeeping simpler and hassle-free.
Appointment of statutory auditor
Once the company is registered, it is mandatory to appoint a statutory auditor within 30 days of formation. The subsequent appointments and tenure are based on the decisions of the annual general meeting.
Share Allotment
You need to allot the shares to respective shareholders within 60 days from the date of incorporation.
Board Meetings
The board must hold at least 4 meetings in a year. Further, you also need to ensure that the gap between two consecutive meetings must not exceed 120 days.
Annual General Meeting
It is also mandatory to conduct an annual general meeting within the first six months from the end of a financial year. Here, the aim is to make the shareholders up to date with the financials of the business.
Financial Statements submission
Every year, all private limited companies in India need to submit their audited financial statements (AOC – 4) and annual returns (MGT 7) post their annual general meetings. In case you miss out on these deadlines, it will lead to hefty compliance charges.
Income Tax Return Filing
It is mandatory for every person or entity that earns income from various sources in India. If a company misses to file the statement of income and expenses on or before the filing due date, they might be held legally liable and charged hefty penalties.
Maintaining statutory register and records
All private companies need to maintain certain registers. These include:
Register of members
This register includes the details of the entire shareholding pattern. This includes shareholder names, percent of the holding, and date of share acquisition.
Directors and Key Managerial Personnel
In this register, you need to provide all information about the key managerial personnel and the directors of the company. This includes name, number, PAN, address, date of appointment, etc.
Minutes of Meetings
In a private company, ownership and management are mostly different. Hence, for all the important management decisions taken after any AGM, board meeting, or any other important meetings, it is mandatory to maintain the minutes of those meetings. This allows transparency between the owners and the decision-making entities.
Conclusion
To run a business smoothly, it is very important to comply with the laws in India. With that said, it is also very distracting from the actual business goals, to focus on these statutory paperwork. Hence, as a business owner, you can hire professionals that can do your private company registration paperwork for you from the comfort of your home.