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 and 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 and the premium thereon in respect of the shares held by him. The minimum number of shareholders is 2.
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 and acceptance of public deposits. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. The minimum number of shareholders is 7.
The choice of entity depends on circumstance of each case. Private Limited Company has lesser number of compliance requirements. Therefore, generally where there is no requirement of raising of finances through a public issue and the ownership is intended to be closely held by limited number of persons, Private Limited Company is the best choice.
The minimum paid up capital at the time of incorporation of a private limited company has to be Indian Rupees 1,00,000. There is no upper limit on having the authorized capital and the paid up capital. It can be increased any time, by payment of additional stamp duty and registration fee.
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 portion of the capital subscribed by the shareholders.
An application in Form No. 1A needs to be filed with the Registrar of Companies (ROC) online through Digital Signature of one of the proposed director. The details to be furnished in the said application are as follows:
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 and other objects of the proposed company. The AOA contains the rules and procedures for the routine conduct of the proposed company. It also states the authorized share capital of the proposed company and the names of its first / permanent directors. After that MOA and AOA are required to be stamped. A stamp duty is required to be paid on MOA and AOA. The stamp duty depends on the authorized share capital.
The following documents are required to be executed before they are submitted to the ROC:
After the documents are filed, the ROC calls the attorney for scrutiny and making the corrections in the MOA and AOA filed. On complying with the same, the certificate of incorporation is issued.
On receipt of the certificate of incorporation, the public company has to complete certain other legal formalities such as a statutory meeting (within 6 months), statutory report, etc. On completion of the said formalities and on filing of the statutory report with the ROC the ROC issues the certificate of commencement of business to the company. Thereafter, the Public Company can start the business operations. The Private Company can start its business immediately on incorporation.
You can give Power of Attorney to a person to appear before ROC to complete the necessary formalities after getting MOA, AOA, Power of attorney and other allied documents notarised by notary public and attested by Indian Embassy/Consulate situated in foreign country.
Once the company is incorporated in India, foreign investor has to either intimate Reserve Bank of India (RBI) of the foreign equity or take approval of Foreign Investment Promotion Board (FIPB). Intimation to RBI or approval from FIPB is dependent upon sector in which foreign investor intends to do business.