Role Of Registrar Of Companies In Pvt Ltd Registration

In India, a company cannot come into existence without the prior approval of the Registrar of Companies (ROC). The ROC is the ultimate authority that issues the certificate of registration to a private limited company, in addition to public company and limited liability partnership firms.

The registrar of companies, functioning under the Ministry of Corporate Affairs (MCA), operates in all the major states and Union territories. The Central government facilitates administrative control over the ROCs with the assistance of Regional Directors. Currently, seven such Regional Directors in India are supervising the ROC’s operation within their respective regions.

ROC plays a pivotal role in establishing an ethical, healthy, and promotional business culture in the corporate world. The registrar maintains a record of a myriad of information made accessible for public scrutiny, requires companies to timely file their financial reports, and enforces responsible corporate governance conduct.

Let’s understand in depth the role of the registrar in private limited company registration and a step-by-step guide on how to Register a Private Limited Company.

Private Limited Company as per Companies Act, 2013

According to the Companies Act, 2013 Section 2(68), a private limited company, or a Pvt Ltd Company has to maintain a minimum paid-up capital as prescribed by the law and can have a maximum of 200 members. Such companies AoA (Articles of Association) restrict the right to transfer their shares, making them a ‘private’ company. They cannot issue a prospectus to invite the public to subscribe to its shares which means Pvt Ltd company can only raise capital through private placement and rights issues, and not through IPO, FPO, or OFS.

A private limited company is usually established by a few individuals and is mostly preferred by small and medium-scale business owners. The term ‘limited’ refers to the restricted liability of all shareholders or members. It means that when a company faces a bankruptcy or loss-like situation, the personal assets of the shareholders will not be seized to repay any of the company’s obligations.

A Pvt Ltd company must have the words ‘private limited’ in its name. A person can Register a Private Limited Company with varying degrees of their member’s liabilities. Thus, there are several types of Pvt Ltd companies, such as:

1. Pvt Ltd Company Limited by Shares: The limited by Shares clause restricts shareholders’ liability equivalent to the amount unpaid on their shares. It means they remain safeguarded from any liability beyond their investment.

2. Pvt Ltd Company Limited by Guarantee: The liability of members is restricted to the amount of money these members agree to pay in case of winding up. Such companies have a ‘guaranteed amount’ and guarantors instead of shareholders.

3. Pvt Ltd Company Unlimited Liability: A person can Incorporate Pvt Ltd Company by adding the unlimited liability clause in the Memorandum of Association (MoA). Here, the liability of shareholders is unlimited which signifies that in case of winding up, members’ personal assets can be seized to repay creditors and fulfil other obligations.

What is the Role of ROC in Pvt Ltd Company?

The role of ROC includes a wide range of activities including, registration of companies, ensuring their compliance with the company law, collection of necessary documents, overseeing their filing of financial statements and annual returns, and acting as a central registry. The ROC’s elaborated functions are as follows:

1. Incorporate Pvt Ltd Company: The Registrar of Companies (ROC) is responsible for registering private limited companies in India. This includes verifying the company’s name and documents, obtaining a DIN (Director Identification Number), and issuing of Certificate of Registration.

2. Approve Company Name: The registrar ensures that no company register itself with an objectionable name. It provides a system where an applicant can check whether their name is unique or already in use. This way, it can either approve or reject the proposed name.

3. Maintain the Register: ROC maintains an extensive registry of all the entities registered under it. To Register a Private Limited Company, the applicant has to submit two important documents – a Memorandum of Association (MOA) and Articles of Association (AOA) – which provide information on its scope of work, rules, objectives, and internal management. This way, the registrar meticulously documents their operational and financial information.

4. Regulatory Compliance: ROC ensures that all the registered companies are filing their financial statements, annual returns, specific resolutions, and other documents in accordance with the specified norms. This enables the registrar to enforce and monitor compliance with regulatory and legal requirements.

5. Approve Changes: Once the ROC successfully Register a Private Limited Company, its role does not end there. Any significant changes within the registered entity such as changes in directors, company structure, or registered official address, require prior consent from the ROC.

6. Promote Good Governance: One of the major roles of ROC is to promote good governance practices. Such practices enable open communication of key information among stakeholders, lays down rules for board composition, and promote ethical conduct, among others.

7. Investigations and Audits: The ROC can search the premises of a company, inspect and seize its books of accounts, and ask for supplementary information with prior approval of the court.

8. Oversee Dissolution: Once a company is incorporated with ROC, it cannot close down or cease existing unless its name is struck off from the register of ROC. The registrar plays a crucial role in overseeing the liquidation and dissolution process of the companies.

9. Public Interface: A less-known but equally significant role of the registrar is to make accessible information about a company to the public. It includes details about the company’s registered office address, registration number, status, and other important financial information. This helps potential creditors, investors, or partners in the decision-making process.

Step-by-Step Guide to Register a Private Limited Company

The registration process encompasses various steps and requirements that are necessary to obtain a certificate of registration in a seamless and hassle-free manner. The steps include:

1. Determination of Business Structure: Choose a business structure – whether a private limited company, limited liability partnership, or public company – you wish to register for. The choice is extremely important as it will impact the registration process and other obligations.

2. Obtain Digital Signature Certificate (DSC): A DSC is important for all the shareholders and directors of the company to sign electronic documents like annual returns and others.

3. Apply for DIN: To Register a Private Limited Company, the Director Identification Number is a unique ID for its directors obtained through the DIR-3 form on the MCA portal. For this, directors must attach their photograph, proof of identity and address, etc.

4. Get Name Approval: Propose a distinct and unique name for your private limited company. The MCA will then check its availability and give its approval if it meets all the criteria and is not in use by any other entity. The name is filed in Part A of the SPICe+ form.

5. Prepare Documents: Prepare MOA which includes the company’s powers and objectives and AOA which contains rules for internal management. Attach declaration of compliance and details of shareholders and directors.

6. File SPICe+ Form: The Ministry of Corporate Affairs introduced the SPICEe+ form to help a company register with a single application. SPICe is an acronym for Simplified Proforma for Incorporating a Company Electronically. In this, the applicant needs to fill in details of registered office address, share capital, business activity, etc. Further, the applicant has to pay the requested fees.

7. Verification and Approval: Upon submission of all the documents and application forms, ROC will review everything. If it is in order and complies with all the specified regulations, the ROC will issue an incorporation certificate.

8. Prepare PAN and TAN: After incorporation, the company has to apply for PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) for taxation requirements. TAN is necessary for TDS compliance and PAN is issued by the income tax authorities.

9. Post-Registration Requirements: Upon registration, a company has to comply with several requirements. The company must open a bank account under its name to facilitate all financial transactions. Within two months from the date of incorporation, they must issue share certificates to its shareholders. In addition, the company has to appoint an auditor within 30 days and file a declaration within 180 days specifying that every MOA subscriber has paid the value of the shares agreed by them. The company also has to maintain statutory registers such as register of members, directors, and register of charges. Further, it must register for GST if its turnover is beyond the prescribed threshold limit in inter-state supply.

Final Thoughts

The ROC plays a pivotal role by ensuring that companies operate in compliance with company law and other corporate regulations set out in the business ecosystem. Since legal compliance is the topmost priority in the business realm, the ROC acts as a key regulator and guides/oversees companies from its inception to winding up.

Not only does the registrar Incorporate Pvt Ltd Company, but it also maintains a national database of crucial information on each registered company, including data about their financial status, directors, operational information, etc. Avail the services of Legal Raasta Technologies Private Limited to enhance your compliance with the mandated norms. Grow your business, build trust and reputation among partners and investors, and receive long-term benefits, including transparency, legal protection, and growth.