Formation Of Private Limited Company

Formation of private limited company? Section 3.(1)(iii) of the company Act of 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 the 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. Also, the minimum number of members in a private company is two, and such a company must have the words “Pvt Ltd” as the last part of its name. This goes to say that a private company, in addition to the earlier conditions, shall have a minimum paid-up share capital of Rupees One Lakh or such higher capital as may be prescribed and its Articles shall prohibit invitation or acceptance of deposits from persons other than its members, directors or their relatives. In case of such companies, public interest is not involved. The basic characteristics of a private company in terms of section 3(1)(iii) of the Act do not get altered just because it is a subsidiary of a public company in view of the fiction

in terms of section 3(1)(iv)(c) of the Act that it is a public company. May be it is a public company in relation to other provisions of the Act but not with reference to its basic characteristics. In terms of that section, a company is a private company when its articles restrict the right of transfer of shares, restrict its membership to 50 (other than employees shareholders) and prohibits invitation to public to subscribe to its shares. Therefore, all the provisions in the articles to maintain the basic characteristics of a private company in terms of that section is restriction on the right to transfer and the same will apply even if a private company is a subsidiary of a public company. Steps to be taken to get incorporated a private limited company:• Ensure that the name does not resemble the name of any other company already registered. • Apply to the concerned ROC to ascertain the availability of name in Form-1 A along with a fee of Rs.500/-. If proposed name is not available apply for a fresh name on the same application. • Drafting of the Memorandum and Articles of Association, vetting of the same by ROC and printing of the same. • Stamping of the Memorandum and Articles with the appropriate stamp duty. • Get the Memorandum and Articles signed by atleast two subscribers in his own hand, his father's name, occupation, address and the number of shares subscribed for and witnessed by atleast one person.

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Get the following forms duly filled up and signed:1. Declaration of compliance - Form-1 2. Notice of situation of registered office of the company - Form-18. 3. Particulars of Director, Manager or Secretary - Form-32. Present the following documents with ROC with filing fee and registration fee:1. Declaration of compliance - Form-1 2. Form-1, 18 & 32 in duplicate. Name availability letter issued by ROC. 3. Power of Attorney from the subscribers in favour of any person for making corrections on their behalf in the documents and papers filed for registration. Obtain Certificate of Incorporation from ROC.

Other Requirements company:

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There should be at least to directors of the company. The two directors will be the subscriber of the memorandum and they subscribe the minimum capital. Minimum capital for a private company is INR 1,00,000/Registration fee is depending upon the authorized capital of the company. It should be equal or more than the subscribed capital of the company. Regarding non-resident interest in the company Foreign Exchange management Act is controlled all the issue. You can invest up to 100% depending upon the type of industry

What are the Requirements for a Private Limited Company? A Registered Business Name: This must be followed by the word ‘Limited' or ‘Ltd'. The Companies Registration Office exercises some control over the choice of name, it cannot be identical (or very similar to) the name of an existing company. It won't be considered if it is offensive or illegal and the use of certain words in a company (for example, `Institute', `National') can only be used in certain circumstances. The company name must be displayed in a conspicuous place at every office, or other premises where the company carries out business. A Registered Office: This need not necessarily be the same address as the business is conducted from. Quite frequently the address used for the registered office is that

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