What Is a Private Limited Company?

A private limited company (Pvt Ltd) is a separate legal entity that protects the personal assets of its owners. Regulated by the Companies Act, 2013, it’s ideal for startups and SMEs due to limited liability, ownership control, and scalability. Startups like Swiggy chose this model to attract funding while ensuring founder protection. It restricts share transfers and maintains a close-knit ownership, making it suitable for confidential and independent operations.

Definition as per the Companies Act, 2013

• Restricts the Transfer of Shares – – Shares cannot be freely transferred to the public, maintaining internal ownership.
• Limits the Number of Members – – Maximum of 200 members, excluding employee shareholders. (OPC can have only one member.)
• Prohibits Public Invitations – Cannot invite the public to subscribe to its shares or securities.

The Companies Act, 2013

The Companies Act 2013 (No. 18 of 2013) is the primary source of Indian company law. It received presidential assent on 29 August 2013 and largely replaced the Companies Act 1956. The Act was implemented in stages. Section 1 came into force on 30 August 2013. 98 sections became effective on 12 September 2013 with some changes. Another 183 sections were enforced from 1 April 2014.

Key Features of a Private Limited Company

• Limited Liability – Shareholders' personal assets are protected from company debts.
• Separate Legal Identity – The company can own assets, sue, or be sued independently.
• Perpetual Existence – Continues to exist regardless of director/shareholder changes.
• Flexible Membership – Allows 2 to 200 members, making it ideal for SMEs.
• Controlled Share Transfer – Shares can only be transferred within a defined group.
• No Capital Requirement – No minimum capital required for incorporation.
• Structured Leadership – Requires 2–15 directors, expandable with resolution.
• Business Privacy – Confidential data is not publicly disclosed.
• FDI Friendly – Eligible for 100% FDI in many sectors without prior approval.
• Startup-Friendly Compliance – Simplified tax and legal requirements for startups.

Benefits of a Private Limited Company

1. Easier Fundraising – Structured setup attracts VCs and private investors.
2. Credibility Boost – MCA registration builds trust with stakeholders.
3. Attracts Skilled Talent – ESOP offerings help retain professionals.
4. Management Control – Owners retain full decision-making authority.
5. Small Company Advantages – Enjoys tax and compliance benefits under Section 2(85).
6. Business Continuity – Operations continue smoothly despite ownership changes.
7. Legal & Financial Protection – Legal framework ensures long-term stability.

Advantages of a Private Limited Company

• Limited Liability Protection
• Separate Legal Entity
• Perpetual Succession
• Ease of Raising Funds
• Enhanced Trust & Credibility
• Tax Benefits for Startups
• Ownership Flexibility
• Structured Management
• Business Continuity
• Compliance Builds Transparency
• Value for Cost

Disadvantages of a Private Limited Company

• Personal Guarantees for Loans
• Complex Legal Documentation
• Limited Shareholder Flexibility
• Restricted Fundraising Options
• Mandatory Financial Disclosures
• Ongoing Tax Compliance
• Slow Decision-Making
• Complex Exit Process
• High Compliance Risks
• Higher Operational Costs

Required Documents for Private Limited Company Registration

For Directors and Shareholders (Individuals):

• PAN Card (for Indian nationals)
• Passport (for foreign nationals)
• Aadhaar Card (for Indian nationals)
• Address Proof (recent utility bill, bank statement, driving license, or voter ID)
• Passport-size Photograph
• Digital Signature Certificate (DSC)
• Director Identification Number (DIN)

For Registered Office Address:

• Utility Bill – Electricity/Water/Property Tax Receipt
• NOC from Property Owner (if rented)
• Rental Agreement or Lease Deed

Step-by-Step Private Limited Company Registration Process

1. Digital Signature Certificate (DSC) – Required for signing electronic MCA documents.
2. Director Identification Number (DIN) – Unique number for directors issued by MCA.
3. Name Approval – Reserve a unique name using the RUN form.
4. SPICe+ Form Filing – Single form for incorporation, DIN, PAN, TAN, GST, etc.
5. MOA & AOA Drafting – Defines company objectives and internal rules.
6. Certificate of Incorporation – Received after RoC approval; enables PAN, TAN, and bank account setup.

Mandatory MCA Compliance for Private Limited Companies

• Annual Return Filing (Form MGT-7) – Within 60 days of AGM.
• Financial Statement Filing (Form AOC-4) – Within 30 days of AGM.
• Board Meetings – At least 4 times a year, max 120 days gap.
• Annual General Meeting (AGM) – Held by September 30 each year.
• Director KYC (Form DIR-3 KYC) – Annual validation of director details.
• Income Tax Return (Form ITR-6) – File annually to avoid penalties.
• Statutory Audit – Yearly audit by a Chartered Accountant.
• TDS Return Filing – Quarterly filing to report tax deductions.
• Compliance Certificate – Mandatory if paid-up capital ≥ ₹10 crore.
• Form INC-20A – Declare commencement of business within 180 days.
• DIN Maintenance – Keep Director Identification Number active and valid.

Why Sperso Filings?

Starting a Private Limited Company involves complex processes and legal formalities. Sperso Filings simplifies your journey by offering end-to-end support—from DSC and DIN procurement to SPICe+ filing and post-registration steps like PAN, TAN, and GST registration. Our expert assistance ensures a hassle-free experience so you can focus on business growth.