Structured Biiz

PRIVATE LIMITED COMPANY​

Who must opt for a Private Limited Company & Why?

A Private Limited Company enjoys the status of being a separate legal entity having perpetual existence, unless dissolved. It can own, sell and transfer property and can also incur debts.

It enjoys a Limited Liability structure benefits, wherein the Owner’s personal assets are not attached to the business liabilities for repaying off the debts or for paying off the creditors.

  1. There are so many ways to raise funds in a Company:

 

  • Funds can be raised through Debt instruments like Convertible Notes (which is available to recognised Start ups), Compulsorily Convertible Debentures, Non Convertible Debentures, Preference Shares (Convertible into Equity) and Share Warrants as well.
  • Venture Capital Investors prefer Private Limited Structure, since they can invest in a Company in the form of so many instruments as described above.
  • Chances of expansion are greater, since it can be converted into a Public Limited Company. Public Limited Company can also be listed on the Stock Exchanges for raising funds from the public.

100% FDI is permitted in a Company under the automatic route barring few sectors wherein permission needs to be obtained for FDI. Companies having 100% FDI are also permitted to invest in another Company or LLP in which 100% FDI is allowed under the automatic route.

Separate Judicial authorities are constituted under Companies Act, 2013. For resolving the dispute matters, there is a National Company Law Tribunal.

  • Functioning of Company is more transparent, since majority administrative decisions are taken collectively in the Board Meetings and the Minutes are also recorded;
  • Directors can be changed & Shareholdering can be transferred, subject to approval of the Board and the Company can still function without any disruption.

Cons

Mandatory Audit, Tax Filing and Secretarial Compliance Filings

  • A Director of the Company can be disqualified for a period of 5 years by the Registrar of Companies, in case the Director has not filed the Financials or Returns for a continuous 3 Financial years.
  • If annual compliance forms are not filed within the due date, there is Rs. 100/- per day penalty fee for not filing annual compliances.

 

For raising of funds, procedural aspects and taxation that may be applicable in the instruments utilised needs to be analysed. Debt & Equity can be issued by following right Issue process (wherein the shares are issued and allot to the existing shareholders of the Company on a rights issue basis) or preferential issue process (wherein the shares are issued to the existing and / or the shareholders other than the existing shareholders of the Company) except the Convertible Note wherein Recognised Start Ups need not had to go through Rights or Preferential Issue Process.

Dissolution is more complex and expensive than formation. So, you must think carefully before you start a Private Limited Structure.

Requirements

Compulsory Compliances

Post Formation Compulsory Compliances

Compliances & Registrations After Formation

Company Formation Package

Rs. 6,899/-

All inclusive

Timeline: 10-20 Days
(*Inclusive of Govt. Fees on Form filing. Govt Fees is as applicable in Maharashtra. Govt Fees will vary as per the State and the Govt. fee over and above mentioned herein shall be payable by the Client.)

Request you to provide 2 Unique Names of the Company. In case the name approval is not granted in the first instance, Govt Fee of Rs. 1,000/- and Our Fee of Rs. 999 shall be charged separately for re-application of name.

Post Formation Compliance Package

Rs. 9,999/-*

Inclusive of GST

(*Excluding Govt. fee and reimbursements, if any. and any penalty levied due to delay from the Client's end..)