devesh02's blog

Introduction

One problem that arises when you consider launching a new company -- how much capital should be issued? The promoters who are also looking for online registration of a Company in Indiaare not excluded by this. The minimum capital requirements for a Private Limited Company with share capital are a constant source of confusion for the promoters.

The conflict starts when a nominal amount of money is required for the intended business. The amount of money needed to incorporate in this case is never clear, especially if the co-founders have limited resources.

Therefore, we will now talk about how much capital is needed to form a private limited company in India, OPC, Section 8 companies etc (except LLP). The Indian Companies Act, 2013, specifies the required for share capital to establish Private Limited Companies. The above-mentioned Act eliminates the need for a minimum paid-up capital, when the authorized capital is specified as Rs. 100,000. It is in the promoter’s best interest to be aware of these terms and types of capital before forming a company.

Types of capital

There are three categories—authorized capital, subscribed capital, and paid-up capital, which are used to classify the company's capital.

1. Authorized capital of a company

The total sum that a company can raise via the issuance of shares, both during registration and after incorporation, is known as the authorised capital of a Company.

• The capital clause in the company's Memorandum of Association contains information about the authorised capital of any company.

• During its existence, the company cannot raise capital by issuing shares in surplus of the specified number.

• The Companies Act, 2013 mandate to maintain Rs 100,000 as authorised capital for incorporation of company in India.

The authorised capital may also be raised at anytime for Private Limited registration by complying with provision of the Companies Act, 2013. The approved capital determines the stamp duty and government fees that must be paid for a Private Limited Company, as well as any applications or documents that the company must submit. Therefore, it's advisable to avoid maintaining your company's authorised capital at a high level because it can change in the future.

2. Paid-up capital of a company

A company's paid-up capital is the real sum of money that is raised by issuing shares to the investors. As the company cannot issue shares over the allowed capital, the paid-up capital is always less than the authorised capital. The paid-up capital thereby acquired is frequently used to control the company's expenses.

When it comes to a Private Limited Company's minimum paid-up capital, earlier there used to be a requirement that it must have a capital of Rs.100,000. This would mean that the shareholders should spend at least 100,000 on buying the shares in order to start the company. However, the Companies Amendment Act, 2013 eliminated this requirement, making it possible for business owners to incorporate Private Limited companies without any obstacles.

3. Issued share capital of a company

A company can obtain capital from a variety of sources during its service life by issuing shares. The shares that are issued to offer allotment and subscription are considered part of the company's issued share capital. It is to be noted that the total number of shares "to be" issued and "already" issued will not exceed the authorised capital specified in the MOA's capital clause.

Conclusion

The type of company and operational needs determine how much capital is required for a company. Both the authorised capital and the paid-up capital must be declared during the online registration process of a Company in India.

Introduction

A Private Limited Company is a separate legal entity from its directors or shareholders. For it to remain operational, it needs to be kept in check by submitting regular paperwork to the Ministry of Corporate Affairs (MCA).

The Annual General Meeting must be conducted within 6 months from closure of the financial year i.e., 30th March every year. Once the AGM is concluded, the Private Limited Company in Indiamust file annual returns, financial statements, DIN eKyc and any other compliance with Registrar of Company.

Annual Compliance for Private Limited Company

1. Annual general meeting: Companies should hold their AGM within six months from the closure of the financial year. The AGM should be conducted with the purpose of preparing financial statements, annual returns, director's report etc.

2. Appointment of auditor: All companies to appoint a statutory auditor within 15 days from the date of AGM and submit the ADT-1 Form with the auditor's information. The fine for delay of filing this form depends on the days of delay like if up to 30 days then fine is 2 times of normal fees or more than 30 days and less than 60 days then fine is 4 times of normal fees and so on.

3. Financial statements:For submitting the company's financial statements, the AOC- 4 Form must be filed within 30 days of the date of AGM. Failure to file it will result in a penalty of Rs. 100 per day.

4. Annual returns:For submitting the company's annual returns, the MGT-7 Form must be filed within 60 days of the date of AGM. Failure to file it will result in a penalty of Rs. 100 per day.

5. DIN eKYC: It must be filed for each and every director of the company. The Director must include a separate mobile number and a personal email address in DIR-3 eKYC. Failure to submit DIN eKYC will lead to a fine of Rs 5000.

6. Director's report:All the information required by Section 134 will be included in the preparation of the Director's report.

7. Income tax return: According to the Income Tax Act of 1960, all companies are required to file ITR-6. It must be filed on or before 30th October (for the year 2022). It should be noted that the ITR-6 deadline is constantly shifting and is announced by the authorities each year.

Conclusion