Once you have a definite idea for starting a business, the first thing you need to decide is the type of business structure you would like to have. There are basically five types of business structure allowed for business set up in India, namely sole proprietorship, partnerships, limited liability partnership, private limited company and public limited company. Each structure has its own benefits depending on the nature and scale of business. You have to carefully choose a structure based on the current and future plans for your business. In this article here, we will discuss private limited company, Business setup in India & its registration process in India.

Private Limited Company

This business structure is suitable for small businesses. It is a privately held company which can be started with minimum two members and maximum of 200 members, and a minimum paid up capital of Rs1,00,000. The general public cannot subscribe to its shares. As the name indicates, the liability of the owners is limited to their shareholding in the company. It has to have a minimum of two directors. A private limited company has a perpetual succession, which means it continues to exist even if there is death, insolvency, or bankruptcy of any member. More than 90% of companies incorporated in India under the Companies Act are private limited concerns.

The Registration Process

The process of registration of a private limited company is similar to that of any other business structure. It is a completely online procedure, and is quite simple and hassle free. The steps involved in the registration process are described below.

Digital Signature Certificate

The first step in the registration process is to obtain a digital signature certificate (DSC).

DSC contains personal information of the holder and it is an electronic identity proof . All subscribers and witnesses mentioned in the memorandum and articles of association are required to obtain the digital signature certificate.  Subscribers are the promoters and shareholders of a private limited company. DSC is a mandatory requirement for online filing of documents. A digital signature certificate can be procured from certifying agencies recognized by the government or it can be obtained online. It takes just two days to get it online.  One has to obtain it under class 2 or class 3 categories. Under class 2 category the verification of the applicant is done through the available data base, whereas in class 3 category the applicant has to physically appear before the certifying agency. DSC, which is valid for two years, can be obtained by submitting a completed application form containing self-attested photograph, address proof, and a copy of PAN card along with the applicable fees.

Director Identification Number

It is a unique identification number issued by the Ministry of Corporate Affairs to any person who wants to register a limited company and intends to be a director in that company. Once a person obtains a director identification number, he/she can use that number to become a director in other companies as well. It can also be used to register another company. The DIN has lifetime validity unless it is surrendered.

Initially, a provisional DIN is issued on submission of online form which has basic details of the applicant, such as name, father’s name, address, DOB, email address, etc. After you get the provisional DIN, you can get it regularized at a later stage by submitting the required documents. The required documents are the same as that of the DSC.

Name Reservation

The next step in the process is the reservation of name. Before you apply for incorporation and registration of your company, you have to get the name approved and reserved. The application for name reservation can be made online through the RUN (reserve unique name) form. You can submit two names in order of preference. You must make sure that the proposed names are not similar to the name of any existing company, or make any trademark violation, or else it may get rejected. If it is not approved, you get another chance to submit two more names. Once a name is approved, it will be reserved for 60 days within which you have to register your company otherwise the name reservation will lapse.


The final step to register private limited company is to get the certificate of incorporation. After your company name is reserved, you can make an application for incorporation. Application can be made online by submitting the SPICe form. Memorandum and articles of association along with other documents, such as address proof, consent to act as a director in form DIR-2, and affidavit by first subscribers and directors with identity proof, have to be submitted at the time of application. Also, the applicable fees and stamp duty has to be paid.

The application is then verified and approved, after which the certification of incorporation is issued. The PAN and TAN in the name of the company is also issued at the same time. Once the certificate of incorporation is issued, the company becomes a separate legal entity and your business set up in India is complete. You can now start your business.


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