The current generation of an entrepreneur involves more than just bright ideas as the world switches to the digital economy. It involves interaction and coordination with legal and financial and compliance frameworks of organisations. Being a strategic and effective business model for modern managers, the Private Limited Company (PLC) is preferred and widely used among the entrepreneurs in India. The above structure gives legal protection, increases believability, and access to capital. Finally, where the above process is to be completed in an efficient manner, usefulness of Class 3 Digital Signature Certificate (DSC) is mandatory.
In this blog, we are going to explain how to register a Private Limited Company while having a Class 3 Digital Signature. Here we will discuss the steps involved in detail, analyze the necessity of the use of digital signatures, and demonstrate how they help in simplification of the registration process.
What is a Private Limited Company?
A Private Limited Company (PLC) is one of the most popular business forms that exist in India. It has limited liability for its shareholders which implies that the shareholders’ risk their business capital but not their own money. This structure is optimal for businesses that are big enough to and fulfill mid-sized obligations, yet not so large that they must rigidly standard their operation for professional managing and governing.
A PLC has several key advantages:
- Limited Liability: This means that shareholders are only responsible up to their worth that they invested in the company.
- Separate Legal Entity: The company is regarded as an independent whole in relation to owners.
- Ease of Raising Capital: The funding can be raised more easily from venture capitalist, private equity and angel investor.
- Perpetual Existence: This structure also exits the company even though shareholders change or die.
- However, to enjoy these benefits one has to meet several legal requirements during registration. This is where Class 3 Digital Signatures come in to play an important role..
But for one to be able to experience these benefits the person must follow certain legal formalities during the registration process. Class 3 Digital signatures serve a useful purpose in this regard.
What is a Class 3 Digital Signature?
A Digital Signature Certificate (DSC) is another term for the electronic signatures that are used for signing documents in electronic media. It affirms the identity of a person who signs the document to conform the document signed is authentic and has not been altered. There are three types of DSCs available in India:Class 1, Class 2 and Class 3 where class 3 being the most secured and authentic class.
Class 3 Digital Signature Certificates are used for:
- The Use of Class 3 Digital Signature Certificate is required for some filing that has been prescribed by the Ministry of Corporate Affairs (MCA).
- Online Tenders and Auctions: The majority of the government deals and e-Procurement sites accept only Class 3 DSC.
- Income Tax Filing: Compulsory for company directors and firms.
- Trademark Filing: Used for certification of trademarks, patents and other intellectual property rights.
Why You Need a Class 3 Digital Signature for Private Limited Company Registration
The integration of digital principles of governance through MCA21 portal has necessitated the need to have a Class 3 DSC while registering a Private Limited Company. The use of a Class 3 DSC is mandatory for the following reasons:
- Enhanced Security: This is because, Class 3 DSC certify that the documents attached are not altered in any way and are from a verified entity. It discourages people from accessing it with intent of changing the registration details and also makes the process secure.
- Faster Processing:For instance with a Class 3 DSC, the documents may be signed electronically and can be submitted which in turns accelerates the entire registration process. There is no need for paper work in this virtualized world.
- Legal Validity: A DSC offers an equal legal status as a physical signature in India for any kind of documentation. E-signatures are legally enforceable and acknowledged by most departments of the government.
- Convenience: Since registration is conducted online, using a Class 3 DSC provides a means of registration without printing, scanning, and sending the documents.
Now let take a look at the process of Private Limited company Registration.
Step-by-Step Guide to Register a Private Limited Company with Class 3 Digital Signature
- For registering with ministry of corporate affairs, India, the first requirement that the user requires is to possess a Class 3 Digital Signature Certificate (DSC).
- The first process is to acquire Class 3 Digital Signature certificate for each director or share holder applying for company incorporation. Here’s how you can get it:
- Select a Certifying Authority (CA): Some of the certifying authorities include; eMudhra, VSign, and Sify offer Class 3 DSCs in India.
- Submit Application: You need to manually apply for Class 3 DSC through an empanelled DSC operator. All applicants have to provide documents such as their PAN card, Aadhaar card, colour passport size photograph, and a self-attested application form.
- Verification: Web-based or tangible certification will be carried out by the Certifying Authority.
- Issuance: Once this verification is completed the Class 3 DSC is provided in a USB token which can be used to sign documents electronically.
2. Apply for Director Identification Number (DIN)
A DIN is a unique number assigned to an individual applying for directorship in a company and each director of the company. DSA can be obtained in the SPICe+ form that is available on the MCA website where you can also apply for DIN.
3. Name Reservation with RUN (Reserve Unique Name)
It is very important to select your preferred company name. In order to hold a name for your company, you would have to fill a RUN form on the MCA web site. Special attention should be paid to the fact that the name chosen should not be used by other companies, and should meet requirements of the MCA. After the name has been approved it will be held for 20 days before anybody else can use it.
4. Filing SPICe+ Form (Simplified Proforma for Incorporating a Company Electronically)
SPICe+ on-line form is a single unified web form to register a private limited company in India. It deserves mention that this form consolidates several others related to company formation and registration, DIN assignment, and PAN as well as TAN granting into a single form.
Steps for filing the SPICe+ form:
- Fill Part A: The name reservation if not done through RUN is the first part A on the form.
- Fill Part B: The second part relates specifics to the directors and incorporated capital, as well as to its registered office.
- Upload Documents: To register your LLP you will have to upload digital scanned copies of the Memorandum of Association (MOA), Articles of Association (AOA), and identity and address proof of all the proposed partners.
- Sign Using Class 3 DSC: Upon uploading the documents, signing with a Class 3 Digital Signature Certificate is mandatory. As a result, this step helps to avoid the submission of fake and / or unlawful materials.
- Submit: After completing the form, affix the necessary payments as per the directions on the form. Upon review of your application form, the MCA will issue your company with a COI given all details are correct.
5. PAN and TAN Allotment
As soon as the Private Limited Company has been incorporated, the MCA allots the PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) for the company. These are necessary for tax related purposes.
6. Open a Bank Account
The other step that follows the issue of the Certificate of Incorporation is the opening of a corporate bank account in the company’s name. PAN, TAN, Certificate of Incorporation and board resolution are required to open this account.
Benefits of Registering a Private Limited Company with Class 3 DSC
Using a Class 3 Digital Signature Certificate during the registration of a Private Limited Company offers several benefits:
- Efficiency: They are being computerized and this helps to minimize the time spent on paper work.
- Cost-Effective: Concerning cost, they minimize paper work, couriers and storage.
- Security: Different from Class 3 DSC, offers high secure encryption making it very difficult for third parties to interfere with any document.
- Compliance: It is important for any company to operate within the legal framework as set by the government and when it comes to the filing of documents in particular at the MCA, this can only be possible by use of a DSC.
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