Incorporation of Private Limited Company

A Private Limited Company has become one of the most widely used business entities lately. A Private Limited Company offers protection of Limited Liability to its members and offers greater flexibility in terms of raising funds from private equity. We have discussed the steps for the incorporation of a private limited company in this blog.

We can broadly divide the steps of incorporation of a private limited company into seven sub-steps as shown in the picture below.

Object Drafting

An Object of a Company refers to the objective for which a Company is registered. The main object of the company gives a clear insight into what the company is doing. The memorandum of association of a company has different clauses, and the object clause is one of them. The promoters of the company are required to define the objective for which the company is being incorporated. The main object of the proposed company needs to be mentioned while applying for the name under Reserve Unique Name (RUN). Therefore the first step to registering a company is to draft the main object of the company.

Name Approval

Once the main object is drafted, the promoters are required to decide the name by which the company will be known. The Companies Act has laid down certain rules regarding the naming of the company. In brief, the company name should not be identical or nearly resemble the existing registered company or LLP.

Further, a company cannot be registered with a name that contains a word that gives the impression that the company is connected with the Government or local authority. The act also provides that a name will be rejected if it is a registered trademark in the same class of services or goods in which the activity of the proposed company is to be carried out. Rules regarding the naming of companies are explained in detail in our article How to name a Company or LLP.

Digital Signatures

All the Directors and Shareholders of the company are required to sign the incorporation forms with the Digital Signature. It is therefore very important to procure the digital signature at the start of the process to save time.


Once the main object is drafted and the name is approved, the promoters can apply for the incorporation of a private limited company. Incorporation application includes filing of a few forms which include the company’s PAN and TAN applications, PF & ESIC registration, and GST Registration (optional). The documents to be submitted at the time of application for incorporation includes identity and address proofs of all the Directors and Shareholders of the proposed company, registered office address with proof of registered office address proof, etc.

Bank Account

It takes between 3 to 6 days to get the incorporation certificate after applying for company incorporation. It is very important to note here that a company cannot immediately start its business after receiving the certificate of incorporation. The first step to follow upon receiving a Certificate of Incorporation is to open a Bank Account with any bank that the Directors of the company may think fit. It generally takes between 3 to 15 days to open a bank account for a private limited company.


As soon as the bank account is opened, all the shareholders are required to deposit their subscribed share capital in the bank from their respective bank accounts. It is very important to remember that the shareholders cannot introduce their share capital by depositing cash in the Bank Account of the company. The subscription money should be paid from the Bank Account of the subscriber to the bank account of the Company.


All the companies incorporated on or after 2nd November 2018 are required to file the intimation of commencement of business with the MCA in Form 20A. A declaration under Section 10A of the Companies Act along with proof of deposit of subscription amounts by the subscribers also needs to be attached to the form. The company cannot initiate any transaction in name of the business before the filing of Form 20A. This means that the incorporation process is not complete unless the filing of Form 20A is done as the company will not be able to commence business activities. There are penalty provisions for not filing intimation for commencement.

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