What Is A Private Limited Company?

Foreign compay set up law in india
a) Company has to amendment his MOA according to indian companies act 1956
b) Company has to decided in which form it want to set-up in india
• Private limited company

• Public Limited Company
• Unlimited Company
• Partnership
• Sole Proprietorship
In addition to the above legal entities, the following types of entities are available for
foreign investors/foreign companies doing business in India:
• Liaison Office
• Representative Office
• Project Office
• Branch Office
• Wholly owned Subsidiary Company
• Joint Venture Company
What is a Private Limited Company?

A Private Limited Company is a Company limited by shares in which there can be maximum 50 shareholders, no
invitation can be made to the public for subscription of shares or debentures, cannot make or accept deposits from
Public and there are restriction on the transfer of shares. The liability of each shareholder is limited to the extent of
the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. However,
the liability of a Director / Manager of such a Company can at times be unlimited. The minimum number of
shareholders is 2.
What is a Public Limited Company?

A Public Limited Company is a Company limited by shares in which there is no restriction on the maximum number of
shareholders, transfer of shares and acceptance of public deposits. The liability of each shareholder is limited to the
extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him.
However, the liability of a Director / Manager of such a Company can at times be unlimited. The minimum number of
shareholders is 7.
What are the advantages of a Limited
Company?
A limited company has following advantages:
• Members' (the directors and shareholders) financial liability is limited to the amount of money they have paid
for shares.
• The management structure is clearly defined, which makes it easy to appoint, retire or remove directors.
• If extra capital is needed, it can be raised by selling more shares privately.
It is simple to admit more members.
• The death, bankruptcy or withdrawal of capital by one member does not affect the company's ability to trade.
• The disposal of the whole or part of the business is easily arranged.
High status.
What are the disadvantages of a Limited

Company?
A limited company has following disadvantages:
• Requirement to register the company with the registrar of companies and provide annual returns and
audited statement of accounts. All details of the company are available for public inspection so there can be
no secrecy. There are penalties for failing to make returns.
• Can be more expensive to set up.
• May need professional help to form.
• As a director, you are treated as an employee and must pay tax.
• The advantages of limited liability status are increasingly being undermined by banks, finance house,
landlords and suppliers who require personal guarantees from the directors before they will do business.
What entity is best suited?

The choice of entity depends on circumstance of each case. Private Limited Company has lesser number of
compliances requirements. Therefore, generally where there is no requirement of raising of finances through a public
issue and the ownership is intended to be closely held by limited number of persons, Private Limited Company is the
best choice.
What is the minimum paid-up capital of a
Private Limited Company?
The minimum paid up capital at the time of incorporation of a private limited company has to be Indian Rupees
1,00,000 (about United States Dollars 2,250). There is no upper limit on having the authorized capital and the paid up
capital. It can be increased any time, by payment of additional stamp duty and registration fee.
What is the difference between

authorized capital and paid up capital?
The authorized capital is the capital limit authorized by the Registrar of Companies up to which the shares can be
issued to the members / public, as the case may be. The paid up share capital is the paid portion of the capital
subscribed by the shareholders.
What is the procedure in obtaining a

name approval for the proposed
Company?
An application in Form No. 1A needs to be filed with the Registrar of Companies (ROC) of the state in which the
Registered Office of the proposed Company is to be situated. The application is required to be signed by one of the
promoters. The details to be state in the said application are as follows:1. Four alternative names for the proposed
company. (The name can be coined names from the objects of the proposed company or the names of the directors,
etc. but should definitely be indicative of the main object of the company. Justification for the name needs to be
specified along with the application)2. Names and addresses of the promoters (Minimum 7 for a public company
while 2 for private company).3. Authorized Capital of the proposed company.4. Main objects of the proposed
company.5. Names of other group companies. On submitting the application, the ROC scrutinizes the same and
sends the approval / objections in about 10 days to the applicant. On fulfilling of the objections a formal letter of name
approval is issued.
What is the Memorandum of Association
(MOA) and the Articles of Association
(AOA) of a company and what is the
procedure in their regard?
On receipt of the name approval letter from the ROC the MOA and the AOA are required to be drafted. The MOA
states the main, ancillary / subsidiary and other objects of the proposed company. The AOA contains the rules and
procedures for the routine conduct of the proposed company. It also states the authorized share capital of the
proposed company and the names of its first / permanent directors. After the MOA and AOA are required to be
stamped.
A stamp duty is required to be paid on the MOA and on the AOA. The stamp duty depends on the authorized share
capital.
What are the documents required to be

executed for incorporation?
The following documents are required to be executed (signed) before they are submitted to the ROC:
1. MOA and AOA - These are required to be executed by the promoters in their own hand in the presence of a
witness in quadruplicate stating their full name, father's name, residential address, occupation, number of
shares subscribed for, etc.
2. Form No. 1 - This is a declaration to be executed on a non-judicial stamp paper of INR 20 by one of the
directors of the proposed company or other specified persons such as Attorneys or Advocates, etc. stating
that all the requirements of the incorporation have been complied with.
3. Form No. 18 - This is a form to be filed by one of the directors of the company informing the ROC the
registered office of the proposed company.
4. Form No. 29 - This is a consent obtained from all the proposed directors of the proposed company to act as
directors of the proposed company. (Not required in case of private company).
5. Form No. 32 - This is a form stating the fact of appointment of the proposed directors on the board of
directors from the date of incorporation of the proposed company and is signed by one of the proposed
directors.
6. Name approval letter in original.
7. Power of Attorney signed by all the subscribers of MOA authorizing one of the subscribers or any other
person to act on their behalf for the purpose of incorporation and accepting the certificate of incorporation.
8. Power of Attorney in case of a subscriber who has appointed another person to sign the MOA on his
behalf.9. Filing fees as may be applicable.
How is the certificate of incorporation
issued?
After the documents in FAQ 5 are filed, the ROC calls the attorney on a specific date for scrutiny and making the
corrections in the MOA and AOA filed. On complying with the same, the certificate of incorporation is granted to the
attorney.
When can the newly formed company

start its business operations?
On receipt of the certificate of incorporation, the public company has to complete certain other legal formalities such
as a statutory meeting (within 6 months), statutory report, etc. On completion of the said formalities and on filing of
the statutory report with the ROC the ROC issues the certification of commencement of business to the company.
Thereafter, the Public Company can start the business operations. The Private Company can start its business
immediately on incorporation.
How do we comply with the legal

formalities when we are not stationed in
India?
You can give Power of Attorney to a person to sign the documents on your behalf. After the Company is
incorporated, you can appoint Alternate Directors, to function on your behalf while you are not in India. But at least
once, you should be in India within one month of the incorporation of the Company. There can be one meeting of
Board of Directors during your stay in India and all other formalities including those of appointment of Alternate
Directors can be complied with.
What other IT is mandatory for foreign
approvals are investors to obtain governmental
approval for incorporating in India or
required for foreign forming a joint venture in India. In
investor in India? some sectors certain restrictions
apply. Proper legal advice must be
Generally, prior approval is required from the RBI before obtained before incorporating in India
investing in India. Some categories of businesses are to ascertain the eligibility and
covered under automatic approval process. However, one
has to apply for the same. There are some post- applicable restrictions.
incorporation filing formalities after the remittance of _____****_____
capital from overseas to India and on issue of shares.
What are other formalities before or after

incorporation?
• Obtaining Permanent Account Number (PAN) from Income Tax Department
• Obeying Shop and Establishments Act
• Registration for Import Export code from Director General of Foreign Trade
• Software Technologies Parks of India registration (STPI) if required
• RBI approval for foreign companies investing in India and FIPB approval, if required.
• The directors of an Indian company, both Indian and foreigner directors, are required to
obtain Director Identification Number - DIN and Digital Signature Certificate - DSC

What Is A Private Limited Company?

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What Is A Private Limited Company?

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Foreign compay set up law in india

b) Company has to decided in which form it want to set-up in india

• Private limited company

What is a Private Limited Company?

What is a Public Limited Company?

What are the disadvantages of a Limited

What entity is best suited?

What is the difference between

What is the procedure in obtaining a

What are the documents required to be

When can the newly formed company

How do we comply with the legal

What are other formalities before or after

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