Minimum requirements to incorporate a private limited company

To register a private limited company in India, you are required to fulfill certain basic things as per Companies Act 2013.

In this article, we will let you know the minimum requirements to start a private limited company in India. You should know all these basic things before approaching a professional for registration of a private limited company.

In case you want to get converted your company from OPC to Pvt Ltd, you are required to have certain additional documents and fulfill certain additional conditions.

Find a Unique Company Name

Before starting the registration process of a private limited company, you must have a unique name. As per companies act 2013, you are required to apply for name approval by using RUN features at MCA site. If government is satisfied, then they will approve your name.

In certain cases company name cannot be approved. For instance if the name is similar or identical to an existing company, words and expressions used are prohibited or not allowed as per law, then your applied name will not be approved. It should not even resemble with any trademark.

We suggest you to search MCA and Trademark database before finalizing your company name.

Please note, without name approval letter, you can not start your registration process.

If you don’t know how to get approval for company name then read our article how to choose your company name or else talk to a practicing chartered accountant or cost accountant or company secretary or advocate to help you out.

Required Number of directors

A minimum number of 2 directors are required to form a private limited company.

If one of your director died or resigned, then you are mandatorily required to take another director in place of him from the date when he ceased to exist.

Number of shareholders

Number of subscriber/shareholder to incorporate a private limited company is 2. Based on the paid-up share capital, in proportion to the percentage of shareholding, you are required to mention the number of shares to be allocated post incorporation in the memorandum of association or MOA.

If you don’t have anyone to join in, then better to register One Person Company. OPC requires only one director and one shareholder to register. Both subscriber and director can be the same person.

Minimum share capital for private ltd

To start a private limited company, you are not required to have any minimum share capital.

However, whatever money you want to invest into the company after its incorporation, it has to be shown as paid-up share capital in proportion to the percentage of subscriber’s contributions.

This means, if you have decided to invest Rs 1,00,000 as paid up share capital, then in proportion to subscribers shareholding percentage, you need to mention it in subscription page and post incorporation, deposit it to the company’s bank account.

In case of conversion of OPC to Private Limited

While converting a OPC to Private Limited, in addition to all above basic requirements of private limited, you are also required to satisfy following minimum requirements.

  • the one person company has completed 2 years, or
  • Paid up share capital has crossed Rs 50 Lakhs, or
  • Average annual turnover of immediately preceding 3 years has crossed Rs 2 Crore.

We have written a article,  when you can convert your OPC to Pvt Ltd, this might help you to understand the procedure and requirements.

Documents and Digital Signature Certificate

Here are certain documents that you must have to incorporate a private limited company:

  • Income Tax Permanent Account Number or PAN of directors and subscribers.
  • Voter ID or Driving License or Passport or ration card as Identity proof.
  • Telephone bill or Bank statement or mobile bill or electricity bill not older than 2 months as address proof.

Apart from above documents, you are also required to attach certain other legal documents to be prepared by your professional or you such as declaration, MOA and AOA. However, to get started you should fulfill above basic conditions and keep above documents ready with you.

To file form online with government, you require to sign it by using digital signature certificate. If you are using SPICe for registration, then e_MOA is also required to be signed by all the subscribers by using their DSC. Therefore, one director and subscribers are required to have digital signature certificates or DSC before starting the process of registration.

If one of the director is also a subscriber, then no separate DSC is required.

You can register your company without a registered office. Therefore, it’s not a mandatory requirement. However, within 30 days from the date of registration, you have to file e-form INC-22 for registered office address along with rent agreement, electricity bill and NOC from house owner.

is a fellow member of the Institute of Chartered Accountants of India. He lives in Bhubaneswar, India. He writes about personal finance, income tax, goods and services tax (GST), company law and other topics on finance. Follow him on facebook or instagram or twitter.