Corporate Identification Number (CIN) Explained: Importance, Usage and More

Dec 30, 2024
Private Limited Company vs. Limited Liability Partnerships

A Corporate Identification Number (CIN) is a unique identifier issued to companies registered with India's Registrar of Companies (ROC). This number is provided at the time of registration and plays a vital role in company compliance. It must be included in all official filings, audits, and reports submitted to the Ministry of Corporate Affairs (MCA). 

To ensure smooth business operations, you must include your CIN in all required documents. It’s mandatory and demonstrates your company’s legal standing.

Table of Contents

What Is a Corporate Identification Number (CIN)?

A Corporate Identification Number or CIN number is a 21-character alpha-numeric code assigned to companies registered under the Registrar of Companies in India. It acts as a unique identifier, reflecting details like the type of company, its state of registration, and year of incorporation.

A CIN is provided to all companies registered in India, including:

  • Private Limited Companies (PLCs)
  • One Person Companies (OPCs)
  • Companies owned by the Government of India
  • State Government Companies
  • Not-for-Profit Section 8 Companies
  • Nidhi Companies, etc.

In contrast, Limited Liability Partnerships (LLPs) are assigned an LLPIN (Limited Liability Partnership Identification Number). The CIN plays a vital role in company identification and compliance with legal obligations.

Importance of Corporate Identification Number

The CIN is critical for identifying and tracking a company’s activities from its incorporation. Assigned by the Registrar of Companies, it ensures every registered company has a distinct identity under the Ministry of Corporate Affairs. This 21-character alpha-numeric code provides key details, such as the company’s registration type, state, and year of incorporation.

For example, a typical CIN might look like U12345MH2024PLC567890, where each segment represents specific company details.

The CIN must be included in all filings, audits, and reports submitted to the ROC or MCA. It is essential for verifying company information during legal and financial transactions, offering transparency and credibility. The CIN acts as the foundation for company identification, ensuring compliance with Indian business regulations.

Breaking Down Corporate Identification Number

A CIN is a 21-character alphanumeric code that reveals key details about a company. It is structured into six sections, each offering specific information that aids in company identification and regulatory tracking by the ROC and the MCA. Here’s a breakdown:

Section-1: Listing Status

The first character indicates whether a company is “Listed” or “Unlisted” on the stock market.

  • L: Listed on the Indian stock exchange.
  • U: Unlisted.

Section-2: Industry Classification

The following five numeric digits represent the company’s primary economic activity or industry. The MCA assigns each category of economic activity a specific code. For example, 12345 could signify a particular industry, such as technology or healthcare.

Section-3: Registration State

The following two letters identify the state where the company is registered. Examples include:

  • TN: Tamil Nadu
  • GJ: Gujarat
  • UP: Uttar Pradesh

This section functions similarly to state codes in vehicle registration numbers.

Section-4: Year of Incorporation

The next four numeric digits represent the company’s year of incorporation. For example, "2015" signifies that the company was established in 2015.

Section-5: Company Classification

The following three characters indicate the company type. Examples include:

  • PLC: Public Limited Company
  • NPL: Not-for-Profit Organisation
  • SGC: State Government Company

Section-6: Unique Registration Number

The last six digits are the company’s unique registration number, assigned by the ROC to distinguish it from other entities.

CIN number example: U12345TN2015PLC789101

This example shows an unlisted company (U) operating in a specific industry (12345), registered in Tamil Nadu (TN), incorporated in 2015 (2015), classified as a public limited company (PLC), with a unique registration number of 789101.

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Abbreviations in CIN Number

The abbreviations used in Section 5 of the CIN include:

  • FLC: Financial Lease Company as Public Limited.
  • FTC: Private Limited Company Subsidiary of a Foreign Company.
  • GAP: General Association Public.
  • GAT: General Association Private.
  • GOI: Government of India-owned companies.
  • NPL: Not-for-Profit License Company.
  • PLC: Public Limited Company.
  • PTC: Private Limited Company.
  • SGC: State Government-owned Companies.
  • ULL: Unlimited Liability Limited Company.
  • ULT: Unlimited Liability Trust.

Usage of Corporate Incorporation Number

The CIN is essential for ensuring compliance and maintaining legitimacy. It must be used in the following:

  • Invoices: To identify the company in financial transactions.
  • Notices: For official communication with stakeholders.
  • Letterheads: To reflect the company’s legal identity in correspondence.
  • Annual Reports: As a mandatory disclosure for regulatory purposes.
  • MCA e-forms: To ensure accurate filing with the Ministry of Corporate Affairs.
  • Publications: For transparency in public-facing materials.

Using the CIN correctly ensures smooth corporate communication and compliance with Indian legal requirements.

Penalty for Non-Compliance of Mentioning CIN Number

Failing to comply with the requirement of mentioning the CIN on official documents can lead to significant penalties. If the requirements are not met, the defaulting company and its officers in default face a penalty of ₹1,000 per day, continuing until the non-compliance is rectified. The maximum penalty for such defaults is capped at ₹1,00,000. These penalties ensure strict adherence to regulatory norms and maintain transparency in corporate operations.

Changing Corporate Identification Number

You cannot directly change the Corporate Identification Number (CIN), but it automatically updates when specific changes occur in your company’s status or structure. These changes include:

  • Listing Status: The CIN updates automatically if your company transitions from private to public or is delisted. For example, a Private Limited Company converting into a Public Limited Company will update its CIN to reflect the new listing status.
  • Registered Office Location: Moving your company’s registered office to another state will result in an updated CIN to match the new state code. For example, if your company relocates its registered office from Maharashtra to Karnataka, the CIN will change from 'MH' to 'KA'.
  • Industry or Sector: A change in your company’s primary business activity will update the industry classification in the CIN. For example, a company shifting from software services to financial services will modify its CIN to reflect the new industry.

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Limited Liability Partnership
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  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
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  • Freelancers, Small-scale businesses
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  • Businesses looking for single-ownership

Private Limited Company
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1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

How to apply for CIN?

A CIN is automatically assigned to a company during its registration with the Registrar of Companies (ROC). You do not need to apply for it separately. Ensure you complete all registration requirements with the Ministry of Corporate Affairs (MCA).

How do I find my company's CIN number?

You can find your company’s Corporate Identification Number (CIN) on the MCA website by following these steps:

  1. Visit the MCA website.
  2. Click on the 'MCA Services' tab on the homepage.
  3. From the 'Company Services' dropdown, select 'Find CIN'.
  4. Choose the 'Search Based on Existing Company/LLP Name' option.
  5. Enter the company name in the 'Existing Company' field, complete the captcha, and click 'Search'.

Is CIN allotted to LLP?

No, CIN is specific to companies registered under the Companies Act. Limited Liability Partnerships are assigned a unique identification called an LLPIN instead of a CIN.

What is an example of a corporate identity number?

An example of a CIN is U12345MH2020PTC098765, where:

  • U indicates an unlisted company.
  • 12345 represents the industry.
  • MH denotes Maharashtra as the state of registration.
  • 2020 is the year of incorporation.
  • PTC indicates a private limited company.
  • 098765 is the unique registration number.

How to get a CIN certificate?

Once a company is successfully registered, the ROC provides a CIN certificate. The certificate includes the CIN and other registration details as official proof of the company’s incorporation.

Are CIN and GST the same?

No, CIN and GST are entirely different. CIN is a company identification number issued during registration, while GSTIN (Goods and Services Tax Identification Number) is related to business tax compliance under the GST Act.

Is mentioning CIN on the company’s invoices, bills, and receipts mandatory?

Yes, the Corporate Identification Number (CIN) must be mentioned on invoices, bills, receipts, letterheads, notices, and other official documents. Non-compliance can result in penalties.

Akash Goel

Akash Goel is an experienced Company Secretary specializing in startup compliance and advisory across India. He has worked with numerous early and growth-stage startups, supporting them through critical funding rounds involving top VCs like Matrix Partners, India Quotient, Shunwei, KStart, VH Capital, SAIF Partners, and Pravega Ventures.

His expertise spans Secretarial compliance, IPR, FEMA, valuation, and due diligence, helping founders understand how startups operate and the complexities of legal regulations.

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Credit Guarantee Fund for Startups | Razorpay Rize

Credit Guarantee Fund for Startups | Razorpay Rize

To improve the credit delivery system and make credit more accessible to small and medium-sized businesses, Credit Guarantee Scheme (CGS) was launched. It accelerates the access to finance for the underprivileged, making the availability of finance from conventional lenders to new-generation entrepreneurs.

Description Who is it for? Benefits
To improve the credit delivery system and make credit more accessible to small and medium-sized businesses For Micro and Small Enterprises The credit facilities are eligible to be covered both term loans and/or working capital for a collateral-free loan up to a limit of Rs. 200 lakh is available for individual MSE on payment of guarantee fee to the bank by the MSE.

A credit guarantee is provided to banks and financial institutions by CGTMSE (Trust) under this scheme so that they can, in turn, lend collateral-free credit to MSEs.

Application procedure

There are namely four types of Credit Guarantee schemes:

1. Credit Guarantee Scheme for banks

Borrowers avail of the scheme through banks.

2. Credit Guarantee Scheme for NBFCs

Borrowers avail of the scheme through eligible NBFCs.

3. Sub-debt scheme

Credit guarantee coverage for distressed MSMEs.

4. PM Svanidhi

Credit facilities for the street vendors.

Table of Contents

Eligibility

  • New and existing Micro and Small Enterprises engaged in manufacturing, service, or retail activity, excluding Educational Institutions, Agriculture, Self Help Groups (SHGs), Training Institutions, etc.
  • All service sector enterprises under the MSMED Act are eligible for coverage.
  • Must be a “First-generation” entrepreneur.

Application procedure for Startups

  • Go to https://www.cgtmse.in/Home.
  • The homepage will open.
  • Click on the “Register” option seen on the homepage.
  • Enter your details and click on “Get OTP.
  • After typing in the OTP, the registration will be completed.
  • Login” to the page again. You will have to fill in the required information such as GST details, Bank Account details, and ITR.
  • Click on “Submit” to avail the benefits under this scheme.
  • Download the financial report, calculate the guarantee, etc, if needed.

Benefits of the Scheme

  • The guarantee cover available under the scheme is to the extent of 75 percent of the sanctioned amount of the credit facility.
  • Credit or loans in the northeast region, UT of J&K, and UT of Ladakh for credit facilities up to Rs 50 lakh, are covered by an 80 percent guarantee.
  • For micro and small businesses operated or owned by women, as well as SC/ST individuals, the guarantee cover stands at 85%.
  • For up to 5 lakh micro-enterprise loans, the guarantee cover stands at 85%.
  • The credit is without any collateral or third-party guarantees.

The guarantee will commence from the e-date of payment of the guarantee fee. It will run for the agreed term credit tenure in the event of term loans / composite loans and for a period of 5 years in the case of working capital facilities only granted to borrowers or for such period as the Guarantee Trust may specify in this regard.

Frequently Asked Questions

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Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

What types of loans are covered under the Credit Guarantee Fund?

The Credit Guarantee Fund may cover various types of loans, including term loans, working capital loans, equipment financing, and other credit facilities extended by participating lending institutions to eligible borrowers.

How does the Credit Guarantee Fund work?

Under the Credit Guarantee Fund scheme, lending institutions extend loans to eligible borrowers without requiring traditional collateral. Instead, the loans are backed by a guarantee provided by the Credit Guarantee Fund, which covers a certain percentage of the loan amount in case of default.

Are there any fees associated with accessing credit under the Credit Guarantee Fund?

Borrowers may be required to pay certain fees, such as guarantee fees or processing charges, to avail of credit under the Credit Guarantee Fund scheme. The specific fees and charges may vary depending on the terms and conditions of the scheme.

Can borrowers avail of multiple loans under the Credit Guarantee Fund scheme?

Yes, borrowers may be eligible to avail of multiple loans under the Credit Guarantee Fund scheme, subject to the approval of lending institutions and compliance with the fund's guidelines.

 Advantages of a Private Limited Company: Why Choose a Pvt Ltd?

Advantages of a Private Limited Company: Why Choose a Pvt Ltd?

Choosing the right structure is one of the most important decisions when starting a business. And for many, a private limited company is an ideal choice.

A private limited company is a type of business structure commonly chosen by entrepreneurs in India for its unique benefits. It’s a separate legal entity, meaning the company is distinct from its owners, with its own assets and liabilities. 

It offers limited liability protection, meaning personal assets are safeguarded from business debts. Unlike sole proprietorships or partnerships, the structure of a private limited company provides a clear separation between the business and its owners, creating a stable foundation for growth. 

This structure provides greater protection for founders and enhances the company’s credibility with investors, banks and clients, making it easier to secure funding and build partnerships. With the ability to issue shares, private limited companies also have the advantage of raising capital more effectively than other business types. 

Table of Contents

What is a Private Limited Company?

A private limited company is a business structure that is privately held by a small group of shareholders. In this type of company, ownership is divided into shares, but these shares cannot be publicly traded on the stock market. 

Private limited companies combine the benefits of limited liability, where owners' personal assets are protected and can raise capital through private investors.

This structure is popular among entrepreneurs and small—to medium-sized businesses because it provides a formal framework with legal protection for the owners, transparent governance and financial transparency. In India, private limited companies are governed by the Companies Act of 2013, which sets out the rules for formation, operation and compliance.

Advantages of a Private Limited Company

The advantages of being a private limited company are manifold, which makes them an attractive option for business owners. Here are some key benefits of a private limited company:

1. Limited Liability

One of the most prominent advantages of a private limited company is limited liability. This means that the shareholders are only responsible for the company’s debts up to the value of their shares. 

For example, if a shareholder owns 100 shares worth ₹10 each, their maximum liability in case of company debts would be ₹1,000, regardless of the company’s financial situation. This protects personal assets such as homes and savings from being used to pay company debts, offering peace of mind to the owners.

Limited liability ensures that shareholders are insulated from risks beyond their initial investment in the company, making it an ideal structure for reducing personal financial exposure.

2. Separate Legal Entity

Another benefit of a private limited company is that it is recognised as a separate legal entity from its owners. This means that the company can enter into contracts, own property and incur debts in its own name rather than in the name of its shareholders. 

The limited liability of members is also a key feature of this concept, ensuring that individual shareholders are not personally responsible for the company’s liabilities beyond their shareholding. 

As a result, the company can conduct business activities independently, protecting the personal assets of its owners.

3. Uninterrupted Existence

A significant advantage of a private limited company is its concept of ‘perpetual succession.’ This means that the company continues to exist despite changes in its membership or the status of its members. 

For instance, if a shareholder leaves or passes away, the company is not dissolved, and its operations remain unaffected. The company’s existence is independent of any individual member, ensuring long-term stability and continuity. 

This uninterrupted existence allows the company to plan and operate for the future without the disruptions that could occur in other business structures, such as partnerships.

4. Easy Transferability of Shares

One of the key benefits of a private limited company is the ease with which shares can be transferred. 

Unlike a sole proprietorship or partnership, which requires complex agreements or dissolutions for ownership changes, shares in a private limited company can be transferred relatively easily, subject to approval by the other shareholders. This is a significant benefit of a Pvt Ltd company over a proprietorship

This provides flexibility in ownership and is especially beneficial in attracting new investors or facilitating succession planning.

5. Owning Property

As a separate legal entity, a private limited company can own property in its own name. This is distinct from property ownership in a sole proprietorship, where assets are owned personally by the business owner. 

In a private limited company, shareholders do not have personal claims to the company’s assets. This allows the company to acquire, hold and manage property independently, which can be used for business operations, expansion or as an investment.

6. Capacity to Sue and Be Sued

As a separate legal entity or a juristic person, a private limited company has the legal capacity to sue and be sued in its own name. This essential feature allows the company to take legal action or defend itself in court without involving its individual shareholders.

It helps establish the company’s ability to operate as a distinct business entity responsible for its own legal matters.

7. Borrowing Capacity

Private limited companies have significant advantages when it comes to financing. They can raise capital through the issuance of debentures, secure public deposits, and benefit from preferential treatment by banks and financial institutions. 

These advantages make it easier for private limited companies to access funding compared to sole proprietorships or partnerships, which may struggle to raise significant capital. This makes the company more financially stable and better positioned for growth.

8. Tax Advantage

The private limited company tax benefits are significant. Companies enjoy lower Corporation Tax rates compared to sole traders and partnerships. Additionally, private limited companies have the option to reinvest profits back into the business, benefiting from various tax incentives. 

The company can also claim tax deductions for legitimate business expenses, such as staff parties, pension contributions, and other operational costs, providing more tax flexibility than other business structures. These benefits can also streamline the process of self-assessment tax returns, as allowable expenses can lower the overall tax burden, helping companies maximise their profitability.

9. Credibility and Professionalism

A private limited company enhances the credibility and professionalism of a business. Being a registered company with clear governance structures helps build trust with clients, suppliers and investors. 

The formalised nature of the business structure makes it appear more reliable and stable, which can attract larger clients and partners. In contrast, sole proprietorships and partnerships may struggle to command the same level of trust and confidence from stakeholders.

10. Easier Access to Capital

Private limited companies have a distinct advantage when it comes to raising capital. By issuing shares, they can attract investors who are willing to provide funding in exchange for a stake in the company. 

Additionally, private limited companies are eligible for tax incentives like the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS), which make it easier to attract investors and secure growth funding. 

Private limited companies are also eligible for recognition under the Department for Promotion of Industry and Internal Trade (DPIIT) and the Startup India initiative, which provides significant benefits to startups in India. DPIIT recognition offers access to various government schemes, funding opportunities and more straightforward compliance requirements. 

Additionally, being part of the Startup India program enables private limited companies to avail of tax exemptions, reduce compliance burdens and raise capital more easily from angel investors and venture capitalists.

11. Confidentiality and Privacy

One key benefit of a private limited company is the level of confidentiality it offers. While the company must disclose certain financial and regulatory information, shareholders' personal details remain private. 

12. Brand Protection

Brand protection is a significant advantage of operating as a private limited company. Since the company is a separate legal entity, its name is registered with the government, ensuring exclusive rights to its use. This protects the company’s brand identity from being copied or misused by competitors. 

Furthermore, registering the company name prevents others from using similar names that could confuse consumers, providing a strong legal foundation for brand recognition. As a private limited company, you can also trademark logos, slogans and other intellectual property, giving you additional legal protection.

This brand security not only boosts credibility but also helps in building long-term customer loyalty and trust.

Try our free search tool to find and verify company name availability instantly. Our user-friendly tool also allows you to search trademarks, domain names and social media handles linked to your business name with a single click, using accurate data sourced from the Trademark and MCA databases.

{{company-search-cta}}

13. Flexibility in Ownership

A private limited company offers significant ownership flexibility. Ownership can easily be transferred through the sale of shares, allowing the company to accommodate new investors or adjust ownership as needed. This is advantageous compared to other business structures like partnerships, where ownership changes can be more complicated and disruptive.

Conclusion

In conclusion, there are multiple benefits of Pvt Ltd company structure, making it an appealing business structure for entrepreneurs and investors. From limited liability and tax benefits to greater access to capital and enhanced credibility, the private limited company provides a solid foundation for business growth and stability.

With its flexibility, legal protections and ability to attract investment, it remains a top choice for those looking to build a successful and sustainable business.

Frequently Asked Questions:

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Register your Limited Liability Partnership in just 1,499 + Govt. Fee

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Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


One Person Company
(OPC)

1,499 + Govt. Fee
BEST SUITED FOR
  • Freelancers, Small-scale businesses
  • Businesses looking for minimal compliance
  • Businesses looking for single-ownership

Private Limited Company
(Pvt. Ltd.)

1,499 + Govt. Fee
BEST SUITED FOR
  • Service-based businesses
  • Businesses looking to issue shares
  • Businesses seeking investment through equity-based funding


Limited Liability Partnership
(LLP)

1,499 + Govt. Fee
BEST SUITED FOR
  • Professional services 
  • Firms seeking any capital contribution from Partners
  • Firms sharing resources with limited liability 

Frequently Asked Questions

Who is the owner of a private limited company?

The owners of a private limited company are its shareholders. The company can have one or more shareholders, and each shareholder owns a certain percentage of shares in the company. 

Shareholders have the right to vote on important company decisions, such as the appointment of directors and approval of financial statements, based on the number of shares they hold. 

However, the company itself is a separate legal entity, meaning the ownership is distinct from the personal assets of its shareholders.

What are the features of a private limited company?

A private limited company has several key features:

  • Limited Liability: Shareholders are only responsible for the company’s debts up to the value of their shares.
  • Separate Legal Entity: The company exists independently of its shareholders, meaning it can own property, enter into contracts and incur liabilities in its own name.
  • Perpetual Succession: The company continues to exist even if the shareholders or directors change.
  • Transferability of Shares: Shares can be transferred, but the transfer usually requires approval from other shareholders.
  • Number of Shareholders: A private limited company can have between 2 and 200 shareholders.
  • Restriction on Public Share Trading: Shares cannot be sold or traded on the stock exchange.

Are there any disadvantages of private limited companies?

There are both private limited company advantages and disadvantages. Here are some disadvantages of private limited companies to consider:

  • Compliance and Regulation: Private limited companies must comply with various regulations, including annual filing with the Registrar of Companies (RoC), which can be time-consuming and costly.
  • Limited Capital Raising: While private limited companies can raise capital by issuing shares, the process is more complex than that of public companies.
  • Restrictions on Share Transfers: Unlike public companies, the transfer of shares in a private limited company may require approval from other shareholders.
  • Higher Costs: Setting up and maintaining a private limited company involves higher costs due to registration, auditing and compliance fees.

What is the difference between Limited and Private Limited?

The primary difference between Limited and Private Limited companies lies in the public availability of shares:

  • Limited: A limited company can be a public limited company, where shares are freely traded on the stock exchange. It is not restricted to the number of shareholders, and its financial information is available to the public.
  • Private Limited: A private limited company has restrictions on share transfers, and its shares are not publicly traded. It can have a maximum of 200 shareholders, and its financials are not publicly disclosed.

In short, a Private Limited company is a private entity with a restricted number of shareholders and limited share transferability, while Limited companies are public entities with freely transferable shares.

Which is better, Private Limited or LLP?

Whether a Private Limited Company or an LLP (Limited Liability Partnership) is better depends on the specific needs and goals of the business:

  • Private Limited Company (PVT Ltd): This type of company is ideal for businesses looking to raise capital through investments or venture capital. It offers limited liability, a separate legal entity, and easier transferability of ownership through shares. 

However, it comes with more regulatory compliance and governance requirements.

  • Limited Liability Partnership (LLP): LLPs offer flexibility in management, with fewer formalities and less regulatory burden. Partners enjoy limited liability, protecting their personal assets, but an LLP cannot raise capital as easily as a private limited company. 

It is better suited for small businesses and professional services.

Swagatika Mohapatra

Swagatika Mohapatra is a storyteller & content strategist. She currently leads content and community at Razorpay Rize, a founder-first initiative that supports early-stage & growth-stage startups in India across tech, D2C, and global export categories.

Over the last 4+ years, she’s built a stronghold in content strategy, UX writing, and startup storytelling. At Rize, she’s the mind behind everything from founder playbooks and company registration explainers to deep-dive blogs on brand-building, metrics, and product-market fit.

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What is a Patent? Types, Registration Process & Example Explained

What is a Patent? Types, Registration Process & Example Explained

In a world driven by innovation, protecting intellectual property is critical, not just for inventors but also for the advancement of science, technology, and industry as a whole. Patents are a powerful tool for safeguarding inventions, offering exclusive commercial rights, and encouraging investment in new ideas.

In this comprehensive guide, we’ll explore patents, the different types available, the filing process in India, what qualifies (and what doesn’t), and notable real-world examples.

Table of Contents

What is a Patent?

A patent is a legal right granted by a government authority to an inventor or assignee. It provides exclusive rights to make, use, sell, or license the invention for a fixed period, typically 20 years from the filing date (in the case of utility patents).

In India, patents are granted by the Indian Patent Office under the Indian Patent Act, 1970. Once granted, the patent gives the owner the legal authority to prevent others from commercially using the invention without consent.

In simple terms, a patent:

  • Protects original inventions
  • Offers a time-bound monopoly
  • Encourages innovation by offering a return on investment

Types of Patent

There are three main types of patents recognised globally (India primarily follows the utility patent framework):

1. Utility Patent

Covers new processes, machines, or compositions. These are the most common patents.
Example: A new smartphone battery technology.

Protection Duration: 20 years from the filing date.

2. Design Patent

Protects the unique visual appearance of an object, not its function.
Example: The contour design of a Coca-Cola bottle.

Protection Duration: 15 years (in countries where design patents are recognised separately).

3. Plant Patent

Covers new, asexually reproduced plant varieties.
Example: A genetically modified rose variety.

Protection Duration: 20 years (not commonly filed in India).

Related Read: Types of Patent 

Types of Patent Applications

In India, there are four primary types of patent applications, each serving a distinct purpose:

1. Provisional Application

A temporary application filed to secure a priority date while the invention is still being finalised. It is valid for 12 months (must file a complete specification within this period).

2. Complete Application

It contains the full invention description, claims, and drawings. Can be filed directly or after a provisional application. It's the final and examinable document.

3. Divisional Application

It is filed when a single application contains multiple inventions. It allows the applicant to split them into separate applications while retaining the same priority date.

4. Additional Application

It is filed for improvements or modifications of an already filed invention. It must be linked to the main patent and cannot stand alone.

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Importance of a Patent

Patents are more than just legal documents; they are strategic assets for innovation-driven businesses. Here’s why they matter:

  • Protects Innovation: Prevents unauthorised use or duplication of your invention.
  • Drives Research: Encourages R&D by granting exclusivity.
  • Public Disclosure: Adds to the pool of technical knowledge through public databases.
  • Market Advantage: Offers a monopoly that helps recover R&D investments.
  • Licensing Revenue: Can be monetised via licensing deals or sales.
  • Investor Confidence: Adds credibility and attracts funding.
  • Eligibility for Government Support: Many startup schemes and grants favour IP-holding firms.

What Can Be a Patent?

Under Indian law, an invention is patentable if it meets the following criteria:

  • Novelty: It must be new and not disclosed anywhere else.
  • Inventive Step: It must involve technical advancement or economic significance.
  • Industrial Applicability: It should be capable of being made or used in an industry.

Patentable Categories:

  1. Processes (e.g., water purification method)
  2. Machines (e.g., robotic arms)
  3. Articles of Manufacture (e.g., ergonomic chairs)
  4. Compositions of Matter (e.g., pharmaceutical formulations)
  5. Improvements on existing inventions (e.g., a faster version of a known algorithm)

What Cannot Be Patented?

Under Sections 3 and 4 of the Indian Patent Act, certain inventions are not patentable, even if they are novel.

Key Exclusions:

  • Frivolous or contrary to natural laws (e.g., perpetual motion machine)
  • Scientific theories or mathematical methods
  • Methods of agriculture or horticulture
  • Traditional knowledge (e.g., turmeric for healing wounds)
  • Medical treatments or surgical methods
  • Business methods or algorithms
  • Mental acts or abstract ideas
  • Atomic energy-related inventions (under Section 4)

These exclusions maintain ethical, cultural, and practical boundaries in IP law.

Patent Examples

Here are a few real-world patent examples that transformed industries:

  1. Wright Brothers' Airplane (1906):
    The first powered aircraft patent. Paved the way for modern aviation.
  2. Apple’s Slide-to-Unlock (2009):
    A design feature that defined smartphone interaction.
  3. Pfizer’s Lipitor (1993):
    A cholesterol-lowering drug that became one of the best-selling medications.
  4. Dyson Vacuum Cleaner (1986):
    Innovative cyclone technology with no loss of suction.

How Much Does a Patent Cost in India?

The total cost of obtaining a patent in India varies based on complexity, legal support, and the size of the entity. The cost includes:

  • Government Fees
  • Professional Charges
  • Examination Request Fee
  • Additional Costs: Translation, drawings, office actions, renewals

Patent protection lasts for 20 years, subject to annual renewal fees after grant.

Content of a Patent

A patent document includes several structured sections that describe and define the invention:

  1. Title of the Invention
  2. Bibliographic Details (applicant name, filing date, etc.)
  3. Background / Prior Art
  4. Detailed Description (technical specifications and working)
  5. Drawings or Diagrams
  6. Claims 

Unlike academic writing, patent specifications are precise, technical, and legal in tone. Many researchers prepare their own drafts, but expert assistance ensures compliance with formal requirements and claim strength.

Procedure for Getting a Patent in India

Here’s a step-by-step overview of the Indian patent filing process:

  1. Document the Invention: Maintain detailed records, diagrams, and experimental data.
  2. Conduct a Patent Search: To check if similar inventions exist.
  3. Draft a Provisional or Complete Specification.
  4. File the Application at the Indian Patent Office (offline or online).
  5. Publication: The application is published after 18 months unless early publication is requested.
  6. Request for Examination (RFE): Must be filed within 48 months.
  7. Examination Report & Objections: Respond to objections and make amendments, if needed.
  8. Grant of Patent: If approved, the patent is granted and published in the journal.
  9. Renewals: Pay annual renewal fees to maintain validity.

Difference Between Patents vs. Trademarks vs. Copyrights

Feature Patent Trademark Copyright
What it Protects Inventions (process, device, product) Brand identifiers (logos, names, symbols) Original creative works (books, music, art, software)
Duration 20 years 10 years (renewable indefinitely) Lifetime + 60 years
Example New engine technology Nike swoosh logo A novel or film script

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Frequently Asked Questions

What do you mean by patent?

A patent is a legal right granted by a government to an inventor or assignee, giving them exclusive rights to make, use, sell, or license an invention for a limited period—typically 20 years from the date of filing. In exchange, the inventor must publicly disclose the details of the invention, contributing to scientific and technological knowledge.

What is a patent example?

Here are a few well-known examples of patented inventions:

  • Apple’s Slide-to-Unlock Feature (U.S. Patent No. 8,046,721): A widely recognised software patent that changed the way users interact with touchscreens.

  • Pfizer’s Patent for Lipitor (U.S. Patent No. 4,681,893): Protected the formula for a cholesterol-lowering drug that became a blockbuster medication.

Which Act governs the patent system in India?

The Indian patent system is governed by the Patents Act, 1970, along with the Patent Rules, 2003 (as amended). The Act defines what is patentable, outlines the procedure for filing and examination, and specifies the rights and obligations of patent holders.

The Controller General of Patents, Designs & Trade Marks (CGPDTM) oversees the administration and granting of patents through the Indian Patent Office.

Who can apply for a patent?

A patent application can be filed by:

  1. The true and first inventor (the person who actually created the invention)
  2. An assignee of the inventor (such as a company, research institution, or employer)
  3. A legal representative of a deceased inventor

In India, individuals, startups, small entities, educational institutions, and large companies can all apply for patents. Joint applications by multiple inventors or co-assignees are also permitted.

Swagatika Mohapatra

Swagatika Mohapatra is a storyteller & content strategist. She currently leads content and community at Razorpay Rize, a founder-first initiative that supports early-stage & growth-stage startups in India across tech, D2C, and global export categories.

Over the last 4+ years, she’s built a stronghold in content strategy, UX writing, and startup storytelling. At Rize, she’s the mind behind everything from founder playbooks and company registration explainers to deep-dive blogs on brand-building, metrics, and product-market fit.

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