Different Types of Companies in India

DIR-3 KYC

Form DIR-3 KYC is an important annual compliance step that every person holding a Director Identification Number (DIN) must complete. Whether you're currently a director in a company or not, if you have a DIN, you must file this form each year.

The Ministry of Corporate Affairs (MCA) mandates filing this form every year to ensure that directors’ records are current and accurate.

Failing to file this form within the deadline will lead to the DIN being marked as “Deactivated due to non-filing of DIR-3 KYC,” restricting a director from participating in company matters until compliance is restored.

Purpose of the Form DIR-3 KYC

The purpose of DIR-3 KYC is to keep director information in sync with official records and maintain a transparent and compliant corporate ecosystem. It ensures that directors update their information annually with the MCA.

Who Has to File e-Form DIR-3 KYC?

Every individual who holds a DIN, regardless of whether they are currently serving as a director, must file the e-Form DIR-3 KYC with the MCA each year. This includes:

• Directors of private and public companies
  
• Individuals whose DIN is active or approved but inactive
  

There are no exemptions, so it's essential to comply regardless of your status or position.

Applicable Fee For Form DIR-3 KYC

• Filing Fee: Free if filed on or before September 30
  
• Penalty: ₹5,000 if filed after the due date, and the DIN will be deactivated until payment is made
  

Due Date for Filing DIR 3 KYC Form

The KYC form must be submitted by September 30 every year. There are two formats:

• DIR-3 KYC: For first-time filers or those updating details
  
• DIR-3 KYC Web: For those who have filed previously and have no changes
  

Penalties for Late Filing of the Form DIR-3 KYC

Missing the September 30 deadline results in:

• DIN Deactivation
  
• A penalty of ₹5,000 to reactivate the DIN
  

Documents Required to File DIR-3 KYC Form

Directors need the following documents:

• Self-attested PAN card
  
• Self-attested Aadhaar card
  
• Passport (if available)
  
• Valid mobile number and email ID
  
• Digital Signature Certificate (DSC)
  

Key Verification Steps for Filing the Form DIR-3 KYC

Filing the DIR-3 KYC form may seem straightforward, but following the steps carefully is important to ensure successful submission and avoid any delays or penalties. Here's a detailed breakdown of the process:

Step 1: Collect Personal Documents

Before starting the filing process, gather all the required documents.

Step 2: Ensure Accuracy of Details

Ensure that all the information you enter in the form matches the details mentioned in your official documents (especially PAN and Aadhaar). Any mismatch can lead to rejection or delays in processing.

Step 3: Verify with OTP

Once you enter your email ID and mobile number, an OTP (One-Time Password) will be sent for verification. This is an essential part of the KYC process and ensures that your contact information is valid and belongs to you.

Step 4: Sign with a Digital Signature Certificate (DSC)

The DIR-3 KYC form must be digitally signed by the director using a valid DSC (Class 2 or Class 3). This step certifies the authenticity of the information being submitted.

Step 5: Get it attested by a Professional

After signing the form with your DSC, the form must be certified by a practising professional like a Chartered Accountant (CA) or a Company Secretary (CS). The professional must verify the form’s contents and affix their own digital signature. Their membership number, certificate of practice number, and contact details must also be provided.

Step 6: Upload the Form to the MCA Portal

Once the form is digitally signed and attested, upload it on the Ministry of Corporate Affairs (MCA) portal.

Process After Submitting the DIR-3 KYC Form

Once the DIR-3 KYC form is successfully submitted on the MCA portal, the following steps take place:

• SRN Generation: An SRN (Service Request Number) is instantly generated upon submission. This SRN is important for tracking your application and for any future correspondence with the Ministry of Corporate Affairs (MCA).
  
• Email Acknowledgement: The director receives an acknowledgment email at their registered email address. This email confirms the receipt and approval of the DIR-3 KYC form and usually includes a receipt of the submission. It is advisable to save this receipt for your records.
  
• MCA Verification: The MCA system verifies the details provided in the form. If all information is correct, the status of the Director Identification Number (DIN) is updated to reflect successful KYC completion.
  
• Error Handling: If there are any errors or discrepancies in the submitted information, the form may be rejected, and the director will be required to correct the errors and resubmit the form.
  
• Late Filing Consequences: If the DIR-3 KYC form is filed after the due date (generally 30th September), a late fee of Rs. 5,000 is applicable. In such cases, the DIN remains deactivated due to non-filing until the form is submitted and the late fee is paid.
  

Key Points to Remember:

• Save the SRN and acknowledgment receipt for future reference.
  
• Check your email for approval or any further instructions from MCA.
  
• If filed late, ensure payment of the prescribed penalty to reactivate your DIN.
  

Conclusion

Filing your DIR-3 KYC might feel like just another task, but it plays a big role in keeping things smooth and compliant for you as a company director. It helps the government maintain updated records, ensures transparency, and keeps your Director Identification Number (DIN) active.

If you miss the September 30 deadline, your DIN can be deactivated, which means you won’t be able to sign documents or carry out official duties as a director. So, take a few minutes each year to check your details, fill out the form, and stay compliant.

Frequently Asked Questions

Partnership vs LLP

Why Choose LLP Instead of a Partnership Firm?

• Limited Liability: Unlike partnership firms, LLPs protect the personal assets of partners.
• Separate Legal Identity: An LLP can own property, sue, and be sued in its own name.
• Ease of Ownership Transfer: Ownership and management can be easily transferred.
• Tax Benefits: LLPs are taxed as partnerships but enjoy exemption from dividend distribution tax (DDT).
• Investor Friendly: LLPs are seen as more credible and structured by banks and investors.
• Perpetual Existence: Business continuity is not affected by partner exit or death.

Requirements for Converting a Partnership Firm into an LLP

1. The partnership firm must be registered under the Indian Partnership Act, 1932.
2. All partners must consent to the conversion.
3. There should be no security interest (like a charge) on firm assets at the time of conversion.
4. All partners of the firm must become partners of the LLP.
5. Digital Signature Certificates (DSC) and Director Identification Numbers (DIN) for designated partners are mandatory.
6. The firm must comply with all necessary clearances and approvals (if any) before the conversion.

Ready to upgrade your partnership? Start your LLP registration with expert assistance today.

How do you convert a partnership firm into an LLP?

Here’s the step-by-step process:

Step 1: Obtain DSC & DIN

At least two designated partners need DSCs, which can be applied for in the FiLLiP form.

Step 2: Name Reservation (RUN–LLP)

To reserve the name, file the “Reserve Unique Name–LLP” (RUN–LLP) form with the MCA. It should ideally be the same as the partnership firm’s name.

Step 3: File Form FiLLiP

File Form FiLLiP (Form for Incorporation of LLP) with all partner details, registered address, and capital structure. This form can also be used to apply for DIN.

Step 4: File LLP Form 17 (Conversion Form)

This is the key form for conversion. It must be filed with all supporting documents (listed below) and submitted to the MCA.

Step 5: File LLP Form 2

Submit the incorporation document and subscriber details, including the proposed LLP Agreement.

Step 6: Certificate of Incorporation

Once all forms are verified and approved, the Registrar of Companies (RoC) will issue a Certificate of Incorporation for the LLP.

Documents to be Filed

• Copy of the partnership deed
• Statement of assets and liabilities (certified by a CA)
• Latest Income Tax Return acknowledgement
• Consent letters from all partners
• NOC from creditors, if applicable
• Proof of registered office (rent agreement + utility bill)
• Identity and address proof of all partners
• Copy of resolution (if applicable)
• LLP Agreement (after incorporation)

Registration

Registration is completed once the Certificate of Incorporation is issued by the RoC under the LLP Act, 2008. This certificate legally establishes the LLP as a distinct entity.

The firm must also:

• Apply for PAN & TAN in the LLP’s name.
• Update bank accounts and register under GST, Shops & Establishment, etc.
• File Form 3 with the MCA within 30 days to register the LLP Agreement.

Post-registration:

• The original partnership firm is deemed dissolved.
• All assets, liabilities, obligations, and rights of the firm get transferred to the LLP.
• All contracts and agreements entered into by the partnership firm are considered valid under the LLP.
• Business continuity is maintained under the new structure.

Partners' Liability Before Conversion

It’s important to note:

• Partners remain personally liable for all firm obligations and liabilities incurred before conversion.
• The LLP is not discharged from any previous liability just because of the conversion.
  
  
• Creditors can enforce pre-conversion obligations against the LLP or partners individually, depending on the terms.

LLP Form No. 17

LLP Form 17 is an important conversion form to be submitted during the process. It includes:

• Declaration by partners
• Statement of assets and liabilities
• Consent of all partners
• Details of all secured creditors and their NOC
• Copy of the latest ITR
• Copy of the partnership deed

The form must be digitally signed and submitted with a prescribed fee.

Part A: Application

• Name and registration details of the existing firm
• Proposed name of the LLP
• Details of all partners (name, PAN, address)
• Statement of consent from partners
• Statement of financial position of the firm

Part B: Statement

• Statement confirming that the partners will be part of the LLP
• Declaration that all regulatory and tax obligations have been complied with
• Acknowledgement of previous liabilities

Attachments

• Consent letters from all partners
• NOC from creditors
• Copy of PAN and Aadhaar of partners
• Copy of the partnership deed
• Digital signatures of partners
• Latest IT return
• Rental agreement and utility bill for registered office
• LLP Agreement (to be filed within 30 days of incorporation)

Frequently Asked Questions (FAQs)

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Private Limited Company Examples

Here are some examples of private limited companies in India

• Google India Pvt. Ltd. A subsidiary of Google LLC
• Amazon Retail India Private Limited: An online shopping platform
• Microsoft Corporation (India) Private Limited: An information technology company with its registered office in Delhi.

Types of Private Limited Company

There are three types of Pvt. Ltd. Company registration, and entrepreneurs can choose the one that best suits the needs of their business.

1. Company Limited by Shares

• Ownership: The ownership of the company is divided into shares.
• Liability: The liability of the shareholders is limited to the amount of shares they have subscribed to.
• Capital Structure: The company raises capital by issuing shares to shareholders.
• Common Use: This is the most common type of company, suitable for businesses of all sizes.

2. Company Limited by Guarantee

• Ownership: Ownership is not based on shares but on membership.
• Liability: The liability of the members is limited to the amount they guarantee to contribute to the company in the event of winding up.
• Capital Structure: The company doesn’t raise capital through shares but relies on donations, grants, or membership fees.
• Common Use: Often used for non-profit organizations, clubs, or societies.

3. Unlimited Company

• Ownership: The ownership structure can vary.
• Liability: The liability of the members is unlimited, meaning their personal assets can be used to settle the company’s debts.
• Capital Structure: The company can raise capital through various means, including issuing shares.
• Common Use: This type of company is less common and is usually used for specific purposes, such as family businesses or holding companies.

Characteristics of a Private Limited Company

Following are some of the main advantages of a private limited company:

1. Members

The act mandates that a minimum of two shareholders are required to start such a company, while the limit for maximum number of members is fixed at 200.

2. Directors

The Act specifies the number of directors in a private limited company, requiring a minimum of two directors, while allowing a maximum of up to 15 directors.

3. Limited Liability Structure

In a private limited company, the liability of each member or shareholder is limited. Therefore, even in the case of loss under any circumstances, the shareholders are liable to sell their assets for repayment. However, the personal and individual assets of the shareholders are not at risk.

4. Separate Legal Entity

This is a separate legal entity and continues in perpetual succession. This means that even if all the members die, or the company becomes insolvent or bankrupt, the company still exists in the eyes of the law. The life of the company will be perpetual, not affected by the lives of its shareholders or members unless dissolved by way of resolution.

5. Minimum Paid-Up Capital

A private limited company is required to have and maintain a minimum paid-up capital of ₹1 lakh. It could go higher, as prescribed by MCA from time to time.

Requirements to Start a Private Limited Company

Every business type has its own set of requirements before it is incorporated.

The requirements for registering this are as stated below:

1. Members and Directors

As mentioned above, to get itself legally registered, a private limited company means it must show a minimum number of two and a maximum number of 200 members. This is a statutory requirement as mandated by the Companies Act 2013.

The directors should meet the following conditions:

• Each of the directors should have a DIN i.e. director identification number, which is given by the Ministry of Corporate Affairs
• One of the directors must be a resident of India, which means he/she should have stayed in India for not less than 182 days in the previous calendar year.

2. Name of the Company

Choosing the name of the company is often a technical task. A private limited company is required to cover three aspects while deciding a name for itself:

1. Main name
2. Activity to be carried out
3. Mention of ‘Private Limited Company’ at the end.

Pro tip: It is not always necessary that the name the business owner is looking for will be available, as no two companies can have the same name. Therefore, it is a requirement that at the time of registration, every company has to send 5-6 names for approval to the Registrar of Company (ROC). Moreover, the submitted names should not have a close resemblance with any other company’s name.

3. Registered Office Address

After the company has been registered, the permanent address of its registered office must be filed with the registrar of the company. The registered office of the company is where the company’s main affairs are being conducted and where all the documents are placed.

4. Obtaining Other Documents

For electronic submission of documents, every company must obtain a digital signature certificate that is used to verify the authenticity of the documents. Moreover, in a company employing professionals (secretaries, chartered accountants, cost accountants, etc.) for varied activities, certifications by these professionals are necessary.

List of Documents Required for Private Limited Company

The documents required to incorporate a Pvt Ltd company include:

1. Identity Proof

Document verifying the identity of individuals such as PAN card and passport of Indian and foreign directors, respectively.

2. Address Proof

Document confirming the residential address of individuals such as utility bills or rental agreements.

3. Director Identification Number (DIN)

Unique identification number allotted to directors by the Ministry of Corporate Affairs.

4. Digital Signature Certificate (DSC)

Electronic signature ensuring the authenticity of documents filed electronically.

5. Memorandum of Association (MoA)

Legal document defining the company’s objectives and scope of operations.

6. Articles of Association (AoA)

Document outlining the rules and regulations governing the internal management of the company.

7. Declaration by Directors and Subscribers

Formal statement by directors and subscribers confirming compliance with legal requirements for company incorporation.

8. No Objection Certificate (NOC) from the landlord

Consent from the landlord permitting the use of premises as the company’s registered office.

9. Shareholding Pattern of the Proposed Company

Overview of the distribution of shares among shareholders in the company.

10. Proof of Registered Office Address

Documentation confirming the address where the company is registered and operates from.

How to Register Pvt Ltd Company? A Step-by-Step Guide

To register a private limited company in India the following steps are mandatory:

STEP 1: Choose a Unique Name for Your Business

• Choose a unique name that reflects your business’s identity and vision and is not in use by another company or trademarked by someone else.
• You can check for name availability on the Ministry of Corporate Affairs (MCA) official company registration website or the relevant regulatory authority in your state or union territory.

STEP 2: Obtain Digital Signatures from Authorised Agency

• Obtain Digital Signature Certificates (DSC) for your company’s proposed directors and shareholders from any authorised agency or vendor registered with the MCA or the Certifying Authority (CA) under the Information Technology Act, 2000.
• Digital signatures are essential for filing online documents with government authorities and verifying your identity and authenticity.

STEP 3: Obtain Director Identification Number (DIN) from MCA Portal

• Apply for a Director Identification Number (DIN) online through the MCA portal by filling out the form DIR-3 and uploading the required documents, such as identity proof, address proof, and photographs for each of the directors of your company.
• The MCA assigns a unique identification number to every individual who intends to be a company director.

STEP 4: Prepare Memorandum and Articles of Association

• The MOA is a document that defines your company’s main objectives, scope, and activities whereas AOA lays down the rules and regulations for the management and administration of your company.
• You can prepare the MOA and AOA online through the MCA portal by using the SPICe+ form and the templates provided by the MCA.

STEP 5: Get Consent and Declarations

• The directors must consent to act as directors by filling out the form DIR-2 and attaching their DSC.
• The shareholders must provide their declarations of compliance with the Companies Act, 2013 and the rules made thereunder by filling out the form INC-9 and attaching their DSC.

STEP 6: Apply for Company Name Approval

• Submit the name approval application with the required documents to the Registrar of Companies (RoC) of the state or union territory where your company will be registered.
• You can apply for name approval online through the MCA portal using the SPICe+ form and paying the prescribed fees.

STEP 7: File Incorporation Documents

• You can file the incorporation documents for LLC online through the MCA portal using the SPICe+ form and pay the prescribed fees.
• You need to attach documents, including the MOA, AOA and a few more, like AGILE-PRO, INC-14, 1NC-15, etc., along with the SPICe+ form.

STEP 8: Pay Registration Fees

• The registration fees vary depending on the amount of authorised share capital and the state or union territory where your company is registered.
• You can pay the fees online through the MCA portal using the SPICe+ form and the payment gateway.

STEP 9: Verification and Approval

• The RoC will carefully assess the documents, and if they meet all requirements, they will issue the Certificate of Incorporation which can be downloaded from the MCA portal.
• It is a legal document that confirms the existence and registration of your company.

STEP 10: Obtain PAN and TAN

• Apply for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) online through the MCA portal using the AGILE-PRO form and the payment gateway.
• PAN is a 10-digit alphanumeric code used to identify your company for tax purposes.
• TAN is a 10-digit code used to deduct and collect tax at source from payments made by your company.

STEP 11: Open a Bank Account in a Company’s Name

• Open a bank account in your company’s name and deposit the minimum capital required. The minimum capital for a pvt. ltd. company is ₹1 lakh.

STEP 12: Obtain Business Licenses

Licencing and permit requirements can differ depending on the nature of your business.

You may need to obtain them from various authorities, such as:

• Trade licence from Municipal Corporation or Panchayat
• Environmental clearance from the Pollution Control Board
• Industrial licence from the Department of Industrial Policy and Promotion (DIPP)
• Quality certification from the Bureau of Indian Standards (BIS)
• Trademark, patent, or design registration from the Intellectual Property Office (IPO)

STEP 13: Register Your Business Under GST

• Register for GST and comply with other tax obligations. You must register for GST if your annual turnover exceeds ₹40 lakh (₹20 lakh for special category states).

STEP 14: Commence Business Operations

• After diligently completing the above procedure, your Private Limited Company is ready to commence its operations.

Read More About: How to register a Private Limited Company online in India?

What Are the Registration Costs for a Private Limited (Pvt Ltd) Company?

The registration charges for a Private Ltd. Company depend on share capital, number of directors, stamp duty of the state where you want to register the company and other fees.

What Is the Registration Timeline for a Private Limited Company?

The answer is not very simple, as it depends on various factors such as the availability of the company name, the documents required, and the workload of the government authorities. Therefore, the overall timeline for registering a private limited company in India can take around 12-18 days, depending on the time taken to complete each step and the workload of the government office processing the application.

Advantages of Private Limited Companies

1. Limited liability

In a private limited company, there is a limited liability, which means the company’s members are not at risk of losing their private assets. If a company fails, the shareholders are liable to sell their assets for payment.

2. Less number of shareholders

Unlike a public company that requires seven shareholders, a private limited company can be started with just two shareholders.

3. Ownership

As the company’s shares are owned by investors, founders, and management, the owners are at the liberty of transferring and selling their shares to others

4. Uninterrupted existence

As mentioned earlier, the company stays a legal entity until it is legally shut down, the company runs even after the death or departure of any member.

Disadvantages of Private Limited Companies

Now that you know what is Pvt Ltd company, its benefits, and how to register a company in India, let’s understand the disadvantages.

One of the disadvantages it gets with Pvt limited company is the compliance formalities for shutting it down. It often ends up getting too complicated and time-consuming.

FAQs