What is a Private Limited Company

Section 3 (1)(iii) of the Companies Act, 1956, defines a private limited company as
(a) one which has a minimum of Rs. one Lakh paid-up share capital or more
(b) one which by its Articles Association:
1. restricts the right of transfer of its share;
2. limits the number of its members to 50 which will not include:-
A.members who are employees of the company; and
B. members who are ex-employees of the company and were members while in such employment and who have continued to be members after ceasing to be employees;
3. Prohibits any invitation to the public to subscribe for any shares or debentures of the company; and
4. Prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives.

Steps to set up a Pvt. Ltd. Company

Entrepreneurs or corporate bodies thinking for forming a new company, should follow the following step by step procedures:-

1. Selection of type of the company. Depending upon the objectives of the company, proposed scale of operations & activities, capital involved, etc. the promoters have to decide precisely the type of company as the private company, public company, non-profit making company, etc.

2. Selection of name for the proposed company. A minimum of four proposed names of the company to be established, is selected by the promoters after proper observation of various provisions, circulars, and rules of the Ministry of Corporate Affairs (MCA). After receipt of the completed application in e-Form 1A, filled in up by the promoters, the concerned Registrar of Companies confirms the possibility of adoption of the sent proposed names, such confirmation being valid only for a period of six months. Failure of submission of required documents from the promoters side within this six month-time, necessitates the submission of another application together with proposed names, and payment of requisite fees.

3. Apply for Directors Identification Number (DIN) and Digital Signatures. Before the submission of completed e-Form1A, the directors of the proposed company must have legitimate DIN. In case they do not have the DIN, they are required to apply for the same as per the new section 266A of the Companies (Amendment) Act, 2006. Again, every document prescribed under the Companies Act, 1956, is needed to be filed with the digital signature of the managing director, or director, or manager, or secretary of the proposed company.

4. Drafting of Memorandum of Association (MOA) and Articles of Association (AOA). Drafting of the memorandum and articles of the association, is the very next step after getting confirmation of name by the Registrar. These two documents are of paramount importance as these contain ultimate objectives (as also shown in the e-Form) and cherished & ideal rules & regulations of the company. It should be noted that the main objects should match with the objects shown in e-Form. These must be drafted scrupulously with great care and concern, after comprehensive and elegant counsel of experts.

5. Filing of documents with the Registrar After the intimation of the availability of the proposed company name, the next thing the promoters have to do within a time of six months, is to file the following documents with the Registrar of Companies for the incorporation of the company, together with requisite registration fees:

i)	The original copy of the Memorandum of Association (MOA), duly signed by all the subscribers and witnessed, showing precisely the shares of the subscribers using electronically attached PDF file. The MOA ought to be duly and properly stamped according to the stamp duty applicable, based on the location (state) of registered office of the proposed company.
ii)	A copy of the whole Articles of Association (AOA), duly signed by the subscribers and witnessed, together with the original copy of the MOA. Both AOA and MOA should be appropriately stamped as per the applicable stamp duty of the state, in which the registered office of the company is to be located.
iii)	The copy of any agreement which the company may propose, to enter into with a person of any individual for appointment as its Managing Director or Manager, is to be attached in the PDF file.
iv)	Solemn declaration in the e-Form1 by an advocate or chartered accountant, or company secretary, engaged in the whole-time professional practice in anywhere in India, or by the person nominated in the Articles as a director, manager, or secretary of the company, that that all the essential requirements of the Companies Act, 1956 and the rules made thereunder have been strictly complied with in respect of the registration and matters precedent and incidental thereto, which may be accepted by the Registrar of the Companies as sufficient evidence of such compliance. It ought to be carefully and scrupulously noted that the details of all the companies in which directors are also director should be given, and the names, addresses and other particulars of directors and promoters should be matched censoriously with the information provided in the DIN application Form.
v)	A Power of Attorney should be furnished by all the subscribers in favor of any one subscriber or any other person authorizing him/her to file these documents with the Registrar and to obtain the certificate of incorporation. The power of attorney should be made on Non-Judicial stamp paper of appropriate value and shall be submitted to the Registrar.
vi)	Any other agreement which has been stated in the Memorandum of Association or Articles of Association, is also to be filed in the PDF file with the Registrar. Such any agreement would be considered as part of the basic documents.
vii)	E-Form 18 shall be filed with the Registrar of Companies electronically with the digital signatures in respect to the location (district, state) of the registered office of the proposed company. E-Form 18 is to be necessarily certified by the company secretary or chartered accountant or cost accountant in whole -time professional practice in India.
viii)	E-Form 32 is to be filed with the Registrar electronically for filing particulars of directors. The personal and professional details should match with the information given in the DIN. Following additional details are also required to be provided in the e-Form 32: (a) Name and CIN of all the companies in which they are directors; (b) Names of partnership concerns in which they are partner; (c) Names of proprietorship concerns in which they are proprietor; E-form 32 is needed to be digitally signed by the director or managing director or manager or secretary of the proposed company. E-Form 32 shall be filed along with the adequate filing fee as prescribed under Schedule XIII of the Companies Act, 1956. However, there is no separate filing

6. Payment of Registration Fees. The registration fees vary according to the authorized capital of the proposed company, which can be easily calculated from the Ministry of Companies Affairs portal.

7. Obtaining Certificate of Incorporation (sections 33 & 34). After the observation of required documents specified in sections 33(1) and 33(2) from the company side, the Registrar registers the memorandum and articles of the association and issues a certificate of incorporation within 7 days of receipt of the documents, as per the section 34(1).

8. Preparation and filing of Prospectus/Statement in lieu of Prospectus and e-Form 19/20 (in case of public companies) for obtaining the certificate of commencement of business.

9. Obtaining Certificate of Commencement of business (in case of public limited companies).