What is Private Limited Company

Private Limited Company: A Private Limited company is a privately owned business entity formed for any lawful purpose in accordance with the Companies Act, 2013, with a minimum of two and a maximum of two hundred members, and the company’s name must be suffixed with the words ‘Private Limited.’

Any company incorporated outside India and having an interest to start their operations in India as a start-up form may incorporate a Private Limited company with a relaxed and lesser compliance regime compared to a Public Limited Company.

Why Choose a Private Limited Company?

●      Limited Liability: The liability of the shareholders is restricted to their shareholding.

●      FDI-Friendly: The sectors are FDI-friendly, and 100% FDI can be done without approval.

●      Separate Legal Entity: The company and the owners are separate entities, making it easy to operate independently.

●      Easy to Scale: It’s easy to raise capital and scale up.

Key Features of a Private Limited Company

1. Separate Legal Entity
2. Limited Liability
3. Minimum of 2 Shareholders and 2 Directors Required
4. At Least One Director Should Be an Indian Resident
5. No Minimum Capital Requirement
6. Shares Not Allowed to Be Traded

Advantages of PLP Registration for Foreigners

1. 100% Foreign Ownership

Allowed in most sectors under the automatic route.

2. Limited Liability

Personal assets of shareholders are protected.

3. High Credibility

Liked by investors, banks, and clients.

4. Easy Fundraising

Funds can be raised through equity, venture capital, etc.

5. Perpetual Succession

The company exists irrespective of changes in ownership.

6. Tax Benefits

Has a tax structure with deductions.

Types of Private Limited Company for Foreigners

1. Wholly Owned Subsidiary (WOS)

100% ownership by foreign individual/company

Most common form for foreign investors

2. Joint Venture Company

Partnership between foreign and Indian shareholders

Helpful for getting expertise in the Indian market

3. Subsidiary of Foreign Company

Indian subsidiary of an existing foreign company

Step by Step Procedure of Private Limited Company for Foreigners

Step 1: Understand Eligibility and Requirements

Minimum Directors:

At least two directors are required. One director should be a resident of India, i.e., he/she should have stayed in India for at least 182 days in the previous financial year.

Minimum Shareholders:

At least two shareholders are required. Foreign nationals/companies can be shareholders.

Capital Requirement:

There is no minimum capital requirement. However, a nominal amount of INR 1 lakh may be required to cover initial expenses.

Registered Office:

A physical address in India is required. This can be a commercial or residential address.

Step 2: Obtain Digital Signature Certificate

A DSC is required for the digital signing of the incorporation documents.

For Foreign Nationals:

Foreign Nationals need to apply for a DSC from a Certifying Authority (CA) in India such as e-Mudhra or Sify.

Documents required:

Self-attested copy of passport, address proof, and photograph.

The above-mentioned documents should be notarized from the home country of the foreign national. The notarized document should be apostilled if the home country of the foreign national is a member of the Hague Convention or legalized through the Indian Embassy if it is not a member of the Hague Convention.

Step 3: Director Identification Number

●      It is essential to obtain a DIN for every director. DIN is a unique identifier issued by the Ministry of Corporate Affairs (MCA).

Process:

The application for DIN can be done during the incorporation process by filling out the SPICe+ form (Part B).

Foreign nationals need to submit the copies of the apostilled/legalized passport and address

Step 4: Name Reservation

Select a unique name for the company that complies with the naming guidelines of the MCA:

The name should reflect the objective of the company (e.g., “TechSolutions Pvt Ltd” for a technology company).

It should not resemble an existing company/trademark or contain prohibited words (e.g., “Government,” “India” without permission).

Step 5: Prepare Incorporation Documents

Essential Documents:

Memorandum of Association (MoA): This document includes the objectives, capital structure, and details of shareholders.

Articles of Association (AoA): This document includes the regulations of the company.

Declaration by First Directors and Subscribers: This document includes a declaration of compliance with the Companies Act, 2013.

Proof of Registered Office: This includes a utility bill (not older than 2 months) and a No     Objection Certificate (NOC) from the owner of the property.

Identity and Address Proof: This includes a passport and address proof for foreign nationals, while PAN and Aadhaar are for Indian nationals.

Requirements for Foreign Nationals:

All the documents furnished by foreign nationals must be notarized. A board resolution of the foreign entity, which must be a shareholder of the proposed company in India.

Step 6: Filing of SPICe+ Form for Incorporation of Company

The SPICe+ form is a single window form for incorporation of companies.

After the approval of the application, the MCA will issue a Certificate of Incorporation (CoI), CIN, PAN, and TAN for the company.

Why choose Tax Esquire

Expert help for registration of your foreign company in India

Complete guidance on Foreign Direct Investment (FDI) regulations

One-stop solution for end-to-end company incorporation services

Effortless handling of your foreign documents (Apostille and Notarization)

Quick registration with the Ministry of Corporate Affairs

Correct compliance with Reserve Bank of India regulations

Customized business structure according to your needs

Required Documents for Foreigners

For Foreign Directors/Shareholders:

1. Passport (Notarized & Apostilled)
2. Overseas Address Proof
3. Passport Size Photograph
4. Board Resolution (in case of a Foreign Company as a Shareholder)
5. Digital Signature Certificate (DSC)

For Indian Director:

1. PAN Card
2. Address Proof
3. Photograph

Registered Office:

1. Utility Bill
2. Rent Agreement
3. No Objection Certificate (NOC)

It is not just about filling forms and registering your company. Starting a Private Limited Company in India as a foreigner is your ticket to business in one of the most exciting economies in the world! India has opened its doors to FDI and made it much easier for businesses to do business in the country. So, it’s a great opportunity to expand your business in this exciting marketplace, provided that’s your intention. But let’s face it—doing business in India means that you have to get it right in terms of the laws and tax regulations. And that’s where we at Tax Esquire come in—because we understand the nitty-gritty of starting a company in India and we believe that proper planning at this stage is the key to your success.