Private limited company registration in India requires 2 directors, 2 shareholders, and SPICe+ filing. Complete guide covering Section 2(68), registration steps, documents, fees, and critical post-incorporation compliance. This article is written by Neeli Neelay Shah, Senior Legal Content Writer at LawSikho.

If you are a law student preparing for company law examinations, an early-career professional advising clients on business structures, or an entrepreneur ready to formalize your startup, understanding private limited company registration is foundational knowledge you cannot do without. Private limited companies constitute approximately 96% of all registered companies in India, making this the dominant corporate structure in the country. With over 185,000 new companies incorporated in FY 2023-24 alone, the demand for professionals who understand the registration process continues to grow. This guide will walk you through everything you need to know, from the legal definition to the registration steps and critical post-incorporation compliance. 

Private Company Definition Under Section 2(68) of the Companies Act, 2013

Before diving into registration procedures, you need to understand what legally makes a company “private.” The definition is found in Section 2(68) of the Companies Act, 2013 (“the Act”), and it is not merely academic knowledge. This definition determines what restrictions your Articles of Association must contain, what exemptions the company can claim, and how the company can raise capital throughout its existence.

According to Section 2(68), a private company is one which, by its articles, restricts the right to transfer its shares, limits the number of its members to 200 (excluding present and former employees), and prohibits any invitation to the public to subscribe for its securities. Think of these as the three walls that define the “private” character of the company. Without these restrictions in your Articles of Association, the Registrar will not approve your incorporation as a private limited company.

Three Mandatory Restrictions for Private Companies

Restriction on Transfer of Shares

The restriction on share transfer means shareholders cannot freely sell their shares to anyone they want. Typically, the Articles require that existing shareholders get the first opportunity to buy shares before an outsider can purchase them. This keeps ownership within a controlled group, which is exactly what most founders want.

Limitation on Number of Members to 200

The 200-member limit sounds restrictive, but for most startups and SMEs, this is never a practical concern. Moreover, employees and former employees who hold shares are not counted in this limit. This matters when you implement Employee Stock Option Plans (ESOPs) because employees exercising their options and becoming shareholders will not push you toward the 200 limit.

Prohibition on Public Invitation for Securities

The prohibition on public invitation means no IPO, no public offering, and no listing on stock exchanges. Private companies raise money through private placement from angel investors, venture capital funds, and private equity investors, not from the general public. If you ever want to access public markets, you will need to convert to a public company first.

Key Advantages: Private Limited Company vs LLP vs Sole Proprietorship 

This is perhaps the most common question law students and entrepreneurs ask: which structure is right? The answer depends on your goals, but for most growth-oriented businesses, a private limited company wins on several factors.

Compared to a Limited Liability Partnership (LLP), a private limited company offers significantly better fundraising capability. Venture capitalists and institutional investors prefer the equity structure of private companies because they can acquire shares, implement anti-dilution protections, and plan exits through share sales. LLPs cannot issue shares, making equity financing nearly impossible. FDI in private companies is permitted under the automatic route in most sectors, while LLP investment requires RBI approval.

Compared to a sole proprietorship, the private limited company offers limited liability protection. In a proprietorship, your personal assets are at risk if the business fails. In a private company, your liability is limited to your shareholding. The company is a separate legal entity that can own property, sue, and be sued in its own name. Yes, compliance is higher in a private company, but the protection and credibility benefits usually outweigh the additional paperwork.

Private Limited Company Registration Requirements 

Before you open the MCA portal and start filling forms, you need to ensure certain minimum requirements are met. Getting these wrong means application rejection and wasted fees.

Minimum Number of Directors and Shareholders

A private limited company needs minimum two directors and minimum two shareholders. The good news: the same two people can serve as both directors and shareholders. So technically, you and a co-founder can incorporate a company with just the two of you filling all four positions.

Directors must be individuals (not companies or LLPs), must be at least 18 years old, and must not be disqualified under Section 164 of the Act. Most importantly, at least one director must be a resident of India, meaning they must have physically stayed in India for at least 182 days in the previous calendar year. This resident director requirement cannot be waived.

Shareholders can be individuals or body corporates (including foreign companies). There is no residency requirement for shareholders. Foreign nationals can be shareholders in Indian private companies, though the investment must comply with FEMA regulations and FDI policy.

One persistent myth: there is no minimum capital requirement. The earlier requirement of ₹1 lakh paid-up capital was repealed in 2015. You can incorporate with any amount, even ₹10,000. However, keep in mind that very low capital may raise questions from banks and potential investors about your seriousness.

Shareholding Structure and Capital Requirements

A private limited company requires a minimum of two shareholders and can have up to 200 members, excluding current and former employees. Shareholders can be individuals or corporate entities (including foreign companies), with no residency restrictions, unlike directors. The same two persons can act as both directors and shareholders, making incorporation possible with just two individuals.

The minimum paid-up capital requirement of ₹1 lakh was repealed by the Companies (Amendment) Act, 2015, effective May 29, 2015. Currently, no statutory minimum capital is mandated; companies can incorporate with as little as ₹1,000. The authorized capital should be strategically determined during incorporation, as subsequent increases require Form SH-7 filing with additional fees and stamp duty.

Registered Office 

Every company must establish a registered office from incorporation, serving as the official address for all communications and legal notices. Section 12 mandates verification of this address with the Registrar within 30 days through Form INC-22.

The registered office can be a commercial property, co-working space, or residential premises; there is no legal bar on using residential addresses, though housing society or landlord restrictions may apply. The address must be a valid physical location within India where statutory registers and records are maintained or accessible for inspection.

Private Limited Company Registration Through SPICe+: Step-by-Step Process

The Ministry of Corporate Affairs introduced SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) in February 2020. This single web-based form replaced multiple earlier forms and integrated 10 services from 3 Central Government ministries. Understanding this process is essential for any company law examination and practical advisory work.

Step 1: Reserving Your Company Name Through SPICe+ Part A

Your company name is its identity, and the MCA is strict about what names are permitted. Rule 8 of the Companies (Incorporation) Rules, 2014 provides detailed naming guidelines.

Names that will be rejected include: names identical or similar to existing companies or LLPs, names similar to registered trademarks without NOC, names using restricted words like “Bank,” “Insurance,” “National,” or “Republic” without approval, and generic names that do not have a distinctive element.

A good company name has three parts: a distinctive word (your unique identifier), a descriptive word (indicating your business), and “Private Limited” at the end. For example, “Nexus Technologies Private Limited” follows this structure.

You file SPICe+ Part A for name reservation, proposing up to two names in order of preference. The fee is ₹1,000. Once approved, the name is reserved for 20 days, within which you must file Part B for incorporation. If you miss the deadline, the name lapses and someone else can take it.

Step 2: Applying for Director Identification Number (DIN) 

Every individual appointed as a director must obtain a Director Identification Number (DIN) under Section 153 of the Companies Act, 2013. This unique identification number remains valid for life unless surrendered or deactivated due to disqualification. DIN serves as a permanent identifier across all directorships held by an individual.

For new company incorporations, DIN for up to three directors can be obtained directly through the SPICe+ form, eliminating separate applications. The form captures personal details, identity proof, address proof, and photographs, with DIN allotted upon incorporation approval. Companies requiring more than three directors must incorporate with three initially and appoint additional directors later.

For directors joining existing companies or additional directors beyond the initial three, Form DIR-3 must be filed separately with a fee of ₹500. The application requires personal information, identity and address proof, and digital signature certification by a practicing professional (CA, CS, or Cost Accountant). Processing typically takes 3-5 working days, with the DIN approval letter sent via email.

Step 3: Getting Your Digital Signature Certificate (DSC)

Every person, including all proposed directors and all subscribers to the Memorandum of Association, who will sign incorporation documents needs a Digital Signature Certificate. If someone is both a director and subscriber (which is common), one DSC works for both purposes. You can obtain DSC from certifying authorities licensed by the Controller of Certifying Authorities. Popular providers include eMudhra and Sify.

For foreign nationals, the DSC must still be from an Indian certifying authority, but documents like passport and address proof must be apostilled or consularised from their home country.

Step 4: Filing for Incorporation Through SPICe+ Part B

SPICe+ Part B is where the actual incorporation happens. This form captures company details, director information, shareholder details, capital structure, and registered office address. Along with it, you will complete linked forms:

e-MOA (INC-33): The electronic Memorandum of Association containing the company’s name, objects, liability clause, and capital clause. All subscribers must digitally sign it.

e-AOA (INC-34): The electronic Articles of Association containing internal rules for managing the company. Private companies can adopt standard Table F of the Schedule I of the Act or create customized articles.

AGILE-PRO (INC-35): This linked form applies for GST registration (optional), EPFO registration, ESIC registration, Professional Tax registration (Maharashtra), and initiates bank account opening.

INC-9: Declaration by all subscribers and directors that all information is true and they are not involved in any fraud.

When all forms are completed and digitally signed, you upload them to the MCA portal and pay the fees. The Central Registration Centre processes the application and, if approved, issues the Certificate of Incorporation containing the company’s CIN (Corporate Identity Number), along with PAN and TAN.

Essential Documents for Private Limited Company Registration

Here is a consolidated checklist of documents you will need:

For Directors (Indian Nationals):

• PAN card (mandatory)
• Address proof: Aadhaar, Voter ID, Passport, or Driving License
• Passport-size photograph

For Directors (Foreign Nationals):

• Passport (entire copy, apostilled/notarized)
• Address proof from home country (apostilled/notarized)
• Photograph

For Registered Office:

• If owned: Sale deed or property tax receipt, plus recent utility bill
• If rented: Rent agreement, recent utility bill in owner’s name, No Objection Certificate from owner

Digital Signature Certificates:

• Class 3 DSC for all directors and subscribers (obtained from licensed certifying authorities)

Registration Fees and State-Wise Stamp Duty

MCA Registration Fees

The MCA fee structure is prescribed in the Companies (Registration Offices and Fees) Rules, 2014, as amended from time to time. Fees depend primarily on the authorized capital of the company.

SPICe+ Part A and Part B Filing Fees

SPICe+ Part A (Name Reservation): The fee is ₹1,000 regardless of the authorized capital.

SPICe+ Part B (Incorporation): The fee structure for incorporation is as follows:

Authorized Capital	Filing Fee
Up to ₹1,00,000	Nil
₹1,00,001 to ₹5,00,000	₹2,000
₹5,00,001 to ₹10,00,000	₹2,000 + ₹200 for every ₹1,00,000 above ₹5,00,000
Above ₹10,00,000	Calculated as per slab

Fee Exemption for Companies with Authorized Capital Up to ₹15 Lakh

For companies with authorized capital up to ₹15 lakh, the SPICe+ Part B filing fee is minimal or nil. This is a significant incentive for startups and small businesses. The zero-fee structure for small companies is part of the government’s Ease of Doing Business initiative.

However, remember that stamp duty is separate and payable based on state-specific rates. So while MCA fees may be nil, stamp duty will still apply.

Additional Fees for DIN, PAN, and TAN Application

DIN: When applied through SPICe+, DIN allotment is included in the incorporation fee at no additional cost. If applied separately through DIR-3, the fee is ₹500 per DIN.

PAN and TAN: These are automatically processed through the SPICe+ system. The combined fee for PAN and TAN application is approximately ₹150-200, which is included in the overall SPICe+ processing.

State-Wise Stamp Duty Variation 

Stamp duty is a state subject under the Indian Constitution, meaning each state has its own Stamp Act and fee structure. Stamp duty is payable on the Memorandum of Association, Articles of Association, and certain other incorporation documents. The duty is calculated based on the authorized capital and the state-specific rates. Higher authorized capital means higher stamp duty.

Some states have a flat rate system while others use an ad valorem (percentage-based) system. For example, in the State of Maharashtra, the stamp duty payable by a Company (whether it has no share capital or nominal share capital or increased share capital) towards Articles of Association is 0.3 per cent on share capital or increased share capital (ad-valorem), subject to a maximum of Rs, 1,00,00,000; and towards Memorandum of Association (if accompanied with AoA) it is Rs. 1000 (flat rate). 

Stamp duty increases with higher authorized capital. Always verify current rates on the respective state’s stamp duty portal or through the MCA SPICe+ system, which auto-calculates stamp duty.

E-Stamp Duty Payment Through SPICe+

The SPICe+ system has integrated e-stamp duty payment, making the process seamless. When filing SPICe+ Part B, the system automatically calculates the applicable stamp duty based on the selected state and authorized capital. The duty is paid online along with the MCA filing fees.

This integration has eliminated the earlier requirement of purchasing physical stamp papers, getting documents franked, and uploading stamped documents. The e-stamping is reflected in the final incorporation documents.

Post-Registration Compliance for Private Limited Companies

Getting the Certificate of Incorporation feels like crossing the finish line, but it is actually the starting point. Several mandatory compliances must be completed within specific timelines, and missing them carries penalties that can be severe.

Private Limited Company Registration: First 30 Days Compliance Requirements 

First Board Meeting: Section 173(1) of the Act requires the first board meeting within 30 days of incorporation. In this meeting, you will typically: appoint the first statutory auditor, authorize opening the bank account, adopt the registered office, and pass resolutions on various administrative matters. Minutes must be prepared and signed by the chairperson.

Auditor Appointment: Section 139(6) of the Act mandates appointing the first auditor within 30 days. The auditor must be a practicing Chartered Accountant or CA firm. They provide consent in Form ADT-1, which must be filed with ROC within 15 days of appointment. The first auditor serves until the first AGM.

Bank Account: Open a current account in the company’s name and deposit the subscription money (what shareholders agreed to pay for their shares). This is essential for the next critical filing.

Share Certificates: Within 60 days of incorporation, issue share certificates to all subscribers. These must be signed by directors and bear the company seal if you have adopted one.

Form INC-20A Filing Requirements

This is perhaps the most critical post-incorporation filing, and many new directors are not aware of it until it becomes a problem.

Under Section 10A, inserted by the 2018 amendment, a company with share capital must file Form INC-20A within 180 days of incorporation. This declaration confirms that every subscriber has paid the value of shares agreed to be taken by them.

What happens if you do not file within 180 days?

• The company cannot legally commence business or exercise borrowing powers
• The company faces a penalty of ₹50,000
• Every officer in default (typically directors) faces a penalty of ₹1,000 per day of continuing default
• The Registrar may initiate action to strike off the company

The form requires a bank statement showing receipt of subscription money and must be digitally signed by a director and certified by a practicing professional. The filing fee is just ₹200, making non-compliance purely a matter of negligence, not cost.

Obtaining Additional Registrations After Private Limited Company Registration

While not all registrations are mandatory, several enhance business operations, compliance, and access to sector-specific benefits.

GST Registration

GST registration is mandatory if turnover exceeds ₹40 lakh for goods (₹20 lakh in special category states) or ₹20 lakh for services (₹10 lakh in special category states), for inter-state supplies, TDS deduction under GST, or e-commerce platform sales. Voluntary registration is advisable for B2B businesses to claim Input Tax Credit and enhance credibility. Registration can be completed through AGILE-PRO during incorporation or separately via the GST portal.

Professional Tax Registration

Professional Tax is a state-level levy applicable in Maharashtra, Karnataka, West Bengal, Gujarat, and other states. Maharashtra integrates this registration with SPICe+ through AGILE-PRO, while other states require separate registration. Companies must register as employers to deduct Professional Tax from employee salaries and director remuneration above threshold limits.

Shops and Establishment Registration

Companies with physical premises must register under the state’s Shops and Establishment Act, which governs working hours, holidays, and employment conditions. Registration is done with the local municipal corporation or labour department, requiring proof of premises, director identity proof, and business address proof.

MSME Registration and Startup India Recognition

MSME registration through the Udyam portal (udyamregistration.gov.in) is free and provides benefits including priority lending, subsidies, and delayed payment protection. Companies meeting DPIIT startup criteria (incorporated within 10 years, turnover under ₹100 crore, innovation-focused) can obtain Startup India recognition for tax exemptions under Section 80-IAC, angel tax exemption under Section 56(2)(viib), and faster IP processing with reduced fees.

Always check the latest classification thresholds and eligibility details on the official portals, as criteria (such as MSME investment and turnover limits) were revised effective April 1, 2025.

Conclusion

Private limited company registration in India, while procedurally streamlined through SPICe+, remains a legal process that demands attention to detail and awareness of ongoing compliance obligations. For law students, understanding Section 2(68), the registration process, and post-incorporation requirements forms the foundation of company law knowledge that will serve you throughout your career. For entrepreneurs, this knowledge helps you make informed decisions about business structure and ensures you start your venture on a compliant footing.

The key takeaways are straightforward: private companies need minimum two directors and two shareholders (can be the same people), there is no minimum capital requirement, the SPICe+ form integrates multiple services into a single application, and post-incorporation compliance begins immediately with critical deadlines at 30 days and 180 days. Miss these deadlines, and the penalties can be substantial.

Whether you are advising a client, appearing for examinations, or launching your own startup, the fundamentals covered in this guide provide the essential framework. The details may change as the MCA issues new notifications and amendments, but the underlying structure of private company registration under the Companies Act, 2013 remains your constant reference point.

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