Requirements for Incorporation of a Private Limited Company 

Every business type has its own set of requirements before it is incorporated. The requirements for Incorporation of Private Limited Company are as stated below: 

Members and directors: As mentioned above, to get itself legally registered, a private limited company must show a minimum number of two and a maximum number of 200 members. This is a statutory requirement as mandated by the Companies Act 2013 for Incorporation of Private Limited Company

The directors should meet the following conditions:

• Each of the directors should have a DIN i.e. director identification number, which is given by the Ministry of Corporate Affairs for Incorporation of Private Limited Company
• One of the directors must be a resident of India, which means he/she should have stayed in India for not less than 182 days in the previous calendar year for Incorporation of Private Limited Company

Name of the company: 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 for Incorporation of Private Limited Company

1. Main name
2. Activity to be carried out
3. 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 for Incorporation of Private Limited Company

Registered office address: After the company has been incorporated, the permanent address of its registered office must be filed with the registrar of the company. The registered office of the company is where the company’s main affairs are being conducted and where all the documents are placed.

Obtaining other documents: For electronic submission of documents, every company must obtain a digital signature certificate that is used to verify the authenticity of the documents. Moreover, in a company employing professionals (secretary, chartered accountant, cost accountant, etc.) for varied activities, certifications by these professionals is necessary. 

Advantages for Incorporation of Private Limited Company

• Limited liability: In a private limited company, there is a limited liability, which means the members of the company are not at the risk of losing their private assets. If a company fails, the shareholders are liable to sell their assets for payment
• Less number of shareholders: Unlike a public company that requires seven shareholders, a private limited company can be started with just two shareholders
• Ownership: As the company’s shares are owned by investors, founders, and management, the owners are at the liberty of transferring and selling their shares to others
• Uninterrupted existence: As mentioned earlier, the company stays a legal entity until it is legally shut down, the company runs even after the death or departure of any member

Disadvantages of Incorporation of Private Limited Company

One of the disadvantages it gets with Incorporation of Private Limited Company is the compliance formalities for shutting it down. It often ends up getting too complicated and time-consuming. 

Documents Required for Incorporation of Private Limited Company

The documents required for Incorporation of Private Limited Company are:

• ID proof: PAN card and passport of Indian and foreign directors, respectively
• Address proofs: Ration card or Aadhar card or driver’s license or voter ID
• Residence proofs: Bank statement or electricity bill of the premise
• Notarized rental agreement
• NOC from the property owner
• A copy of the sale deed or property deed (for an owned property)