FAQ on Indian Companies
FAQ on Indian Companies
What is Private Limited(Pvt Ltd) Company?
A Private Limited Company is a Company limited by shares in which there can be maximum 50 shareholders, no invitation can be made to the public for subscription of shares or debentures, cannot make or accept deposits from Public & there are restriction on the transfer of shares.
The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value & the premium thereon in respect of the shares held by him. The minimum number of shareholders is two(2).
What is Public Limited Company?
A Public Limited Company is a Company limited by shares in which there is no restriction on the maximum number of shareholders, transfer of shares & acceptance of public deposits. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value & the premium thereon in respect of the shares held by him. The minimum number of shareholders is seven(7).
Which entity is best suited?
The choice of type of company formation depends on circumstance of each case. Private (pvt) Limited Company has lesser number of compliance requirements. Therefore, generally where there is no requirement of raising of finances through a public issue & the ownership is intended to be closely held by limited no of persons, Private Limited Company is the best choice.
What is the minimum paid-up capital of a Private Limited Company?
The minimum paid up capital at the time of incorporation of a private limited company has to be Indian Rupees one lack(1,00,000). There is no upper limit on having the authorized capital & the paid up capital. It can be increased any time, by payment of additional stamp duty & registration fee.
What is the difference between authorized capital & paid up capital?
The authorized capital is the capital limit authorized by the Registrar of Companies up to which the shares can be issued to the members &/ public, as the case may be. The paid up share capital is the paid up portion of the capital subscribed by the shareholders.
What is the procedure in obtaining a name approval for the proposed Company?
An application in Form No. 1A needs to be filed with the Registrar of Companies (ROC) online through Digital Signature(DSC) of 1 of the proposed director. The details to be furnished in the said application are as follow:
|•||Alternative names of the proposed company. (The name can be coined names from the objects of the proposed company /or the name of the directors, etc. but should definitely be indicative of the main object of the company. Justification for the names needs to be specified along with the application)|
|•||Names and addresses of the promoters (Minimum seven(7) for a public company while two( 2) for private company).|
|•||Authorized Sh Capital of the proposed company.|
|•||Main objects of the proposed company.|
|•||Name of other group companies.|
|On submitting the application, the ROC scrutinizes the same & sends the approval / objections in about 3-4 days to the applicant through e-mail.|
What is the Memorandum Of Association (MOA) and the Articles Of Association (AOA) of a company and what is the procedure in this regard?
On receipt of the name approval intimation from the ROC the MOA and the AOA are required to be drafted. The MOA states the main, ancillary / subsidiary & other objects of the proposed company. The AOA contains the rules & procedures for the routine conduct of the proposed company. It also states the authorized sh capital of the proposed company & the names of its first / permanent directors. After that MOA & AOA are required to be stamped.
A stamp duty is required to be paid on Memorandum MOA and AOA. The stamp duty depends on the authorized share capital.
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