- Lawyer Mr. Shaman Jain
- Skills Business Registration, Private Limited Company
- CATEGORY Business Registration
ABOUT THIS PRACTICE
An LLP is considered as the right mix of corporate and partnership firm character ship into a single form. LLP is a quite common form of doing business amongst the Small and medium enterprises due to the very obvious reasons pertaining to lesser compliances, various tax exemptions, corporate character, limited liability, easy share transferability and much more. Previously LLP Form of doing of business was predominating in countries like US, UK, Singapore, Australia etc. An LLP registration in India is regulated by the LLP (Limited Liability Partnership) act 2008 with effective from 1st April 2008.
The idea of LLP registration connotes to the fact wherein previously the partnership firm based business persons operating at international and national level, which expose them to the personal liability hence restricting business operations and expansions: a need to eradicate such problem was strongly felt, which thereby coined for LLP form of doing business was introduced. In LLP Registration, the LLP and the partners encompass it, is a separate legal entity and are liable only to the extent of their contribution and except in cases of mala fide intention. However in no their scenario the court can encroach to their private property of such partners.
The Registrar of Companies (RoC) has issued naming guidelines for LLPs. It is essential that you follow the rules closely or your application may end up getting rejected, leading to a much longer process.
- Think wisely while choosing your name of the LLP keeping in mind that every business you incorporate with a vision of long term growth.
- Easy to spell/remember & Short/simple
- Unique: One can use prefix to make the name distinct from others
- Meaning: The name should be such that it helps people to connect with the LLP and its branding and help to establish a Brand and Trademark.
- The name should not be such that it is offensive to any religion, caste, race, community, group, society etc.
- It should not be opposed to public policy.
- It should not include any word that can lead to the impression that the entity is having any connection or association with Local/ State/ Central Government.
- The name should not be similar with any existing company/ LLP and also with any Trademark. However, if you are willing to reserve same name, you can apply the same with the consent of owner by submission of NOC.
- Not to include any word, prohibited by the Government or any under any law prevailing in India.
- Always try to provide maximum six names to your professional to seek the best advice on choosing the name for your LLP.
- Requisite of Approval: Names which include words such as ‘Finance’, ‘Bank’, ‘Insurance’, ‘Mutual Fund’, etc., the in-principle approval of concerned Regulatory such as SEBI, RBI, IRDA, etc. is required to be submitted along with the name approval application.
- You may check the availability of the name at the online portal of MCA at http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do.
The whole process including approval of DIN, Name, and Incorporation takes around 7 working days. However, now-a-days registering a Company has become a fast process as all documents are dragged in a single application form with MCA. It is a big step towards e- governance and for businesses who are looking for expansion of operations.
- Limited Liability - Businesses often need to borrow money. In structures such as General Partnership, partners are personally liable for all the debt raised. So if it cannot be repaid by the business, the partners would have to sell their personal possessions to do so. In a private limited company, only the amount invested in starting the business would be lost; the directors’ personal property would be safe.
- Separate Legal Entity -A Private Limited Company is legal entity and juristic person established under the Companies Act. Therefore, a company has a large range of legal capacities including that of opening of a bank account, hiring employees, taking on the equity or obtaining the licenses and more as an independent corporate entity. A member (Shareholders/Directors) of a company has no personal liability to the creditors of a company for company’s debts.
- Investment-ready -Private limited companies easily accommodate equity funding as there is a clear distinction between shareholders and directors as well as limited liability. In fact, venture capitalists and private equity funds are unlikely to invest in any other structure. This is because LLPs would require them to become partners in the business, while an OPC can have only one shareholder. This feature also gives you the ability to hire top talent you may not be able to afford by merely paying a salary.
- Easy Debt Access -A private limited company has more options for taking on debt than LLPs. Not only are bank loans easy to obtain (relative to OPCs and LLPs), the option of issuing debentures and convertible debentures are always available to it.
- Borrowing Capacity - A Private Limited Company can raise the equity funds in India. The Companies can also issue equity shares, preference shares, debentures and accept the deposits with RBI permission. The Banks and Financial Institutions prefer to provide the funding to a company rather than the partnership firms or proprietary concerns.
- Uninterrupted Existence -A Private Limited Company has ‘perpetual succession’, that means, it has an uninterrupted existence until it is legally dissolved. As a company is a separate legal person, it is unaffected by death or other the departure of any member and it continues to be in existence irrespective of the changes in ownership.
- Easy Transfer-ability - The ownership of a business can be very easily transferred in a company by transferring the shares. The signing, transfer and filing of share transfer form and the share certificates is adequate to transfer the ownership of a company. In a private limited company, the consent of other shareholders may be required to effect share transfers.
- Owning Property - A Private Limited Company being an artificial person, can obtain, enjoy, own and alienate, property in its name. Property owned by a company may be building, machinery, intangible assets, land, residential property, factory, etc., No shareholder can stake a claim upon the property of the company – as long as the company is the going concern.
Here is what is required of all new private limited companies, at the very least:
- Two Directors - A private limited company must have at least two directors, At most, there can be 15 directors. Of the directors in the business, at least one must be a resident of India.
- Minimum Capital Contribution - There is no minimum capital requirement for a company. A company should have an authorised capital of at least Rs. 1 lakh.
- Registered Office - The registered office of a company does not have to be a commercial space. Even a rented home can be the registered office, so long as an NoC is obtained from the landlord.
- Identity & Address Proof - Identity and the address proof will be needed for all the directors and the shareholders of the company to be incorporated. In case of an Indian national, PAN card is mandatory. For the foreign nationals, apostilled or notarised copy of the passport has to be submitted mandatorily. All documents submitted should be valid. The residence proof documents like the bank statement or the electricity bill must be less than 2 months old.
- Registered Office Proof - All companies should have a registered office in India. To prove admittance to the registered office, a recent copy of electricity bill or the property tax receipt or water bill must be submitted. Along with the rental agreement, utility bill or the sale deed and a letter from the landlord with her/ his consent to use the office as a registered office of the company should be submitted.
- Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
- Scanned copy of Voter’s ID/Passport/Driver’s License
- Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill Scanned passport-sized photograph Specimen signature (blank document with signature [directors only])
- For The Registered Office -
- Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill Scanned copy of Notarized Rental Agreement in English
- Scanned copy of No-objection Certificate from property owner
- Scanned copy of Sale Deed/Property Deed in English (in case of owned property)