How do I set up a Private Limited company in India?

## How to Set Up a Private Limited Company in India

### Why Private Limited?

The Private Limited company is by far the most common structure for funded startups, tech businesses, and SMEs in India. It offers: - Limited liability protection for shareholders - Separate legal identity from founders - Ability to issue equity and raise VC/PE investment - Professional credibility with clients and vendors - Eligible for Startup India recognition (Section 80-IAC tax holiday)

### Prerequisites Before Starting

• **Minimum 2 directors and 2 shareholders** (the same 2 people can be both)
• **Maximum 200 shareholders** (one of the key Private Limited restrictions)
• **Registered office address in India** (not a P.O. Box; must be a physical address that can receive ROC correspondence)
• **DIN (Director Identification Number)** for all directors (obtained as part of SPICe+)
• **DSC (Digital Signature Certificate)** for all directors (Class 2 or Class 3 DSC; must be obtained before filing)
• **Minimum authorised share capital:** INR 1 lakh (no minimum paid-up capital requirement since 2015)

### Step-by-Step Process

#### Step 1: Obtain DSC for all directors (2-3 days)

Every proposed director must have a Digital Signature Certificate before filing SPICe+. Apply through NeSL (NSDL e-Governance) or other authorised DSC providers. Cost: INR 1,000-2,000 per DSC. Documents required: Aadhaar, PAN, passport-size photo.

#### Step 2: Name reservation via RUN (Reserve Unique Name) — optional

You can reserve a name first via the RUN (Reserve Unique Name) service on MCA21, or include name reservation as part of SPICe+ directly. Names must: - Not be identical to or closely resemble an existing company name - Not be offensive or violate any trademark - End with 'Private Limited' - Ideally not use generic/descriptive words alone

#### Step 3: File SPICe+ (Integrated Incorporation Form)

SPICe+ is the single integrated form that covers: - Part A: Name reservation - Part B: Company incorporation, DIN application, TAN application, PAN application, EPFO registration, ESIC registration, bank account opening (through integration with select banks), GST registration (optional)

Documents to attach: - Memorandum of Association (MoA) — prepared via INC-33 (eMoA) - Articles of Association (AoA) — prepared via INC-34 (eAoA) or customised AoA - Proof of registered office (sale deed or lease agreement + utility bill) - Director consent (INC-9) for each director - Declarations by subscribers to MoA - KYC documents for all directors and subscribers

#### Step 4: ROC review and Certificate of Incorporation

The ROC reviews the application. For most straightforward applications: 7-10 working days. Complex names or queries may extend to 15-21 days.

On approval, the ROC issues: - Certificate of Incorporation (CIN) with the Company Identification Number - Company PAN (linked automatically via SPICe+) - Company TAN (linked automatically via SPICe+)

#### Step 5: Post-incorporation compliance (within 30-60 days)

• Open a company bank account in the company's name
• Deposit the paid-up capital (minimum INR 1 lakh of authorised capital, subscribed amount per AoA)
• Hold the first Board Meeting within 30 days of incorporation
• File INC-20A (Declaration of Commencement of Business) within 180 days of incorporation — without this, the company cannot start business
• Apply for GST registration if applicable
• Register for EPFO and ESIC once employees are hired (20+ for mandatory EPF)
• Appoint a statutory auditor within 30 days of incorporation (Form ADT-1)

### Government Fees (SPICe+)

| Authorised Capital | Filing Fee | |---------------------|------------| | Up to INR 10 lakh | INR 0-1,000 | | INR 10-50 lakh | INR 2,000 | | INR 50 lakh-1 crore | INR 4,000 | | Above INR 1 crore | INR 5,000 + INR 10 per lakh |

Note: MoA/AoA stamp duty is separate and varies by state (INR 200-1,000 typically).

### Ongoing Annual Compliance Cost

Factor in INR 15,000-40,000 per year for statutory audit, ITR-6 filing, and ROC annual forms (AOC-4, MGT-7). Professional fees are the main cost, not the government filing fees.