1. Does registration process require my physical presence?
As registration of companies is now a fully online process, physical presence is not mandatory once the documents as prescribed are filed online.
2. How long does it take to register a private limited company?
As a result of various measures taken by the Govt. of India and Ministry of Corporate Affairs a dedicated Central Registration Center has been opened and this has resulted in completion of registration within 1-3 working days, subject to submission of requisite documents and workload of the Registrar.
3. What is to be kept in mind while selecting a name for the company?
Name of a company could be divided into 2 components viz. Key word and object oriented. Key word has to be unique and shall not resemble to the name of an existing company. Even phonetic resemblance should be avoided. Approval of name of a company shall be subject to the Naming Guidelines issued. Trademarked words cannot be used as a keyword, unless an NOC from the trademark owner is submitted. Object oriented word should describe the activity of the company.
4. What documents are to be submitted for the process?
Gazetted officer or Bank Manager attested copies of PAN card, any valid address proof (Passport / Voters ID / Driving License / Aadhar etc.) and a secondary address proof (Utility bill or bank statement).
5. Can company have its registered office at residential address of promoters?
The Registered office of the company can be either residential address of the promoters or separate premises taken on rent by the company. Documents viz., rent agreement or ownership proof, utility bill and building tax receipt, would have to be submitted for the registered office address.
6. Is there any minimum capital requirement?
There is no minimum capital requirement and the promoters are at liberty to choose the amount. The registration fee and stamp duty payable is based on the authorized share capital chosen by the promoters.
7. Should accounts be maintained and audited by a Chartered Accountant?
Yes, a private limited company must appoint an auditor, no matter what its revenues. In fact, an auditor must be appointed within 30 days of incorporation. Compliance is important with a private limited company, given that penalties for non-compliance can run into lakhs of rupees and even lead to the blacklisting of directors.
8. What are the annual compliance requirements for a company?
No matter what the revenue is every company whether active or inactive has to mandatorily file the following documents annually:
- Income Tax return with IT Dept.
- Financial statements and Annual Returns with Registrar of Companies
Failure to do so within the time prescribed would invite additional fine which can go as much as 12 times the normal fee. Also the promoters stand a risk of being disqualified to act as a Director, in case of continuing defaults, in addition to penalties which run into lakhs of rupees.
9. What are the options available if the business doesn’t go well?
- A legally registered entity can be wound up legally only. In the event business doesn’t go well or for some other reasons you do not wish to continue with the business it is always advisable to wind up the company and not leave the company as such assuming that as the company is inoperative it could be left as such. Doing this may cause heavy fines being imposed apart from the risk of prosecution in the event of continuing defaults. Companies Act, 2013 has also introduced the concept of acquiring status of dormant company, if you temporarily decide to stop operations and to restart it sometime in the future.Income Tax return with IT Dept.
- Financial statements and Annual Returns with Registrar of Companies
Failure to do so within the time prescribed would invite additional fine which can go as much as 12 times the normal fee. Also the promoters stand a risk of being disqualified to act as a Director, in case of continuing defaults, in addition to penalties which run into lakhs of rupees.