Private Limited Company Registration

By Published On: May 30, 20223.7 min readViews: 1006

Private Limited Company Registration

By Published On: May 30, 20223.7 min readViews: 1006
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A private ltd company is a corporation which does not sell company shares to the public and keeps them private.

The company is either managed by the shareholders or they appoint directors for the purpose.

These are usually small to medium-sized businesses.

The financial statements of a private limited company are not public, their shares do not trade on Stock Exchange.

What are the RESPONSIBILITIES of a Private Limited Company?

The board of directors of a private company is primarily responsible for

  • Determining the strategic objectives and policies of a company.
  • Monitoring progress of operations and business activities towards achieving the objectives and policies.
  • Appointing senior management.

Who has the DECISION-MAKING POWERS in a Private Limited Company?

Given below are some of the decision-making powers of a director

  • Borrow money.
  • Investment of funds in a company.
  • Make loans.
  • Approve employees’ bonus.
  • Consider the long-term prospects of a company and its reputation.

REGISTRATION WITH AUTHORITIES

  1. It is mandatory to register a company with SECP under the Companies Act, 2017 as a company cannot otherwise exist.
  2. It is mandatory to register with FBR for National Tax Number (NTN) and Sales Tax Number (STN).

REGISTRATION WITH SOCIAL SECURITY

It is mandatory for an establishment having 5 or more employees, to register with Social Security.

What are the ADVANTAGES of Registering a Private Limited Company?

A Private Limited Company has many benefits over sole proprietorship; some of which are:

  • Shareholders’ liability is restricted to the scope of their shareholding. Apart from fraudulent cases, they are not required to pay the company’s debts with their personal assets.
  • They work under the Companies Act 2017.
  • Since there is no trading of shares publicly, the chances of a hostile takeover are very low.
  • They have a separate and individual legal entity and have their own liabilities and assets.
  • They have a self-reliant identity and an uninterrupted succession, unlike their shareholders. In case of the death or termination of a shareholder, the company will still be existent.
  • The tax burden is low.

What are the DISADVANTAGES of Private Limited Company?

  • Due to statutory requirements of (SECP) companies have to follow these requirements. This definitely increases the workload for documentation.
  • In the stock exchange shares cannot be quoted.

What is MINIMUM and MAXIMUM No of Shareholders limit for Private Limited Company?

  • Minimum Shareholders: 2
  • Maximum Shareholders: 50
    The number of shareholders cannot exceed a fixed figure (commonly 50)

How to CONVERT Private Limited Company TO Single Member Company?

A private company may be converted into a single-member company with prior approval of the Commission in writing by passing a special resolution on this behalf by the private company amending its memorandum and articles of association, in such a manner that they include the provisions relating to a single-member company in the articles and complying with all the requirements as may be specified.

  • On an application for change in status of a company, if the Commission is satisfied that the company is entitled to be so converted, such conversion shall be allowed by an order in writing.
  • A copy of the order, confirming the conversion duly certified by an authorised officer of the Commission shall be forwarded to the company and to the registrar within seven days from the date of the order.
  • A copy of the memorandum and articles of association as altered shall, within fifteen days from the date of the order, be filed by the company with the registrar and he shall register the same and thenceforth the memorandum and articles so filed shall be the memorandum and articles of the newly converted company.

If a company, being a single-member company, alters its articles in such a manner that they no longer include the provisions which are required to be included in the articles of a company in order to constitute it a single-member company, the company shall—

  • as on the date of the alteration, cease to be a single-member company; and
  • file with the registrar a copy of the memorandum and articles of association as altered along with the special resolution.
  • If the default is made in complying with the provisions of any of the preceding sub-sections, the company, and every officer of the company who is in default, shall be liable to a penalty not exceeding level 2 on the standard scale.

DOCUMENTS REQUIRED FOR REGISTRATION

  • 3 Proposed Names of the company.

  • The principal business of the Company.

  • Registered address of the Company.

  • Name of the Chief Executive of the Company.

  • Name of Directors of the Company.

  • Scanned copies of CNICs of the Directors and nominee director.

  • NTN of the proposed C.E.O, director/subscriber and nominee director.

  • Authorized Capital & Paid-up Capital

  • Share Value Rs. 10, Rs. 50 or Rs. 100 per share

  • Mobile Number & Email ID of the C.E.O & directors of the Company

  • SECP login details of the director/subscriber (if available)

Registration Charges

Rs. 20,000

Registration Time

2-3 Working Days

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