To start a small company with 2 members Private Limited Company Registration is a good option which facilitates the dignity of a Private Limited Company with a nominal amount of investment and less cost of registration.
Along with various benefits available to a private limited company there are also some restrictions applicable to it which includes the prohibition of trading shares in the open market. Unlike any public limited company a private limited company can not trade its shares in the open market.
As per section 3(1) of the Companies Act, 2013 any 2 more members can form a private limited company for any lawful purpose.
Section 7of the Companies Act, 2013 defines the process private limited company registration which is stated below;
One need to follow below mentioned procedure for private limited company registration in Delhi;
(1) Directors digital signatures approval; All the directors of the proposed company must make an application for the digital signatures certificate in order to sign the relevant forms and documents related to the company registration.
(2) Preparation of Memorandum of Association and Articles of Association ; Once all the digital signatures of all the directors are ready, the second step will be the drafting of memorandum of association and articles of association of the company. The memorandum of association must contain the aims and objects of the company which the company will work for after its registration and the articles of association of the company will contain the rules and regulation which shall be followed by the company after its incorporation.
(3) Filing of incorporation forms and documents with the registrar ; The company must file with the concerned registrar in whose jurisdiction the registered office the company is to be situated the forms and documents along with the prescribed fee.
(4) The companies Act, 2013 mandates for every company registered under this act to maintain and preserve copies of all documents filed with the registrar at the the time of its registration at its registered office till its dissolution.
(5) Registration of the company ; On receipt of the required forms, documents and information the registrar if satisfied shall issue a Certificate of Registration of the company.
what are the Benefits of Private Limited Company registration
1. Separate Legal Entity ; A Private Limited Company is a separate legal entity and has its own recognition in the law; unlike any proprietorship, a private limited company has own roles and responsibilities in the eyes of the law.
2. Limited Liability; In the event of the winding up of the company, the members of a private limited company shall have limited liability to the extent of amount unpaid amount on their shares.
3. Eassy Share Transfer; A member of a private limited company can transfer its share to any other person easily by just signing share transfer form and and handing over the share certificate.
4. Ownership of property ; As discussed a private limited company is a separate legal entity, hence it can hold, sell or transfer property on its own name.
5. Capacity to sue and to be sued; Suing means to bring a suit in a court of law. A private Limited Company like any other person a company also has the rights to sue or to be sued against any person or entity.
6. Dual Relationship ; A duel relationship with the members of the company is also valid in case of private limited company i.e an employee of the company can also be become the member of the company and vise versa.
7. Borrowing Capacity; A company enjoys variety of borrowing benefits like issue of debentures, bank loan etc.