Effect of Registration of Private Limited Company

What is the Effect of Registration of Private Limited Company?

I will first start with the basics of Registration of Company followed by Effect of Registration of Private Limited Company. A Private Limited Company is an artificial person and in order to perform business activities it first needs to come into existence. Its existence is legalized when it registers itself with the Registrar of Companies (ROC) in India.

Every company in order to commence its business must get itself registered, the process of Private Limited Company Registration is mentioned in Companies Act, 2013 and Company Rules. Unless a company is registered it won't get its Company Identification Number, Permanent Account Number (PAN), Tax Payer Identification Number (TIN) and other important validations.

The registration of a Company is said to complete once the company receives the Certificate of Incorporation. The company is said to be registered from the date mentioned in the Certificate of Incorporation.

Effects of registration

Commencement of Business

As per Companies Act, 2013 a company comes into existence from the date mentioned on its Certificate of Incorporation (COI). Once a COI is received from ROC, a company can commence business. Infact, a company can only commence business after it gets the COI.

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Opening & Operation of Bank Account

A very important effect of registration is the Opening of Bank Account. The directors cannot open Bank Account in Companies name. Therefore, in order to commence business and get legal identity, registration is a must.

Subscribers and Shareholders

From the date of incorporation, all the subscribers mentioned in the Subscription Clause of the Memorandum of Association (MOA) become members of the company. All such members, also known as shareholders, shall together become a body corporate by the name mentioned in the COI and Name Clause of MOA. They will be able to carry on business in the name of the company.

Perpetual Succession & Common Seal

Such body corporate will have perpetual succession and a common seal. With the use of common seal the company will be able to acquire or dispose off properties, both tangible and intangible, conduct business transactions, get into a contract, initiate a law suit, get sued and various other things all in its name.

Separate Legal Entity

The Indian Laws considers a registered company as a separate legal entity. It will have legal recognition and will be treated as a separate person from its members. This means the liability of members become limited after a company is registered.

Duties of Members

With the registration of company, registration of MOA and AOA also takes place. The Registration of MOA & AOA is binding on each and every member of the company. Every member will have to sign them along with company's signature. Once the registration is Complete all the provisions mentioned in both the documents will apply to everyone. Secondly, every single amount paid to the company by the members because of MOA and AOA will be treated as debt to the company. 

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