Buying a company buys its past as well as its present
People buy an existing private limited to skip the wait — incorporation, GST, a bank account, licences, and the
two or three years of filing history that a tender or a lender wants to see. All of that is real. What comes with
it is every liability the company already has, whether or not the seller mentioned them.
Listings are on buysellprivatelimited.com.
EaseValue does the diligence and the transfer.
What you are actually buying
On a share transfer you buy the company itself, not a list of assets. The CIN, PAN, GST registration, bank
account, contracts and filing history all continue — and so do the debts, the tax position and anything anyone
might sue over. That continuity is the point, and it is also the risk.
Read this twice. A company's liabilities do not reset when its shareholders change. An unpaid
GST demand, an income tax assessment still open, a loan with a charge on the MCA register, an employee claim,
a supplier dispute — all of it stays with the company and is now yours. The seller's assurance that "there is
nothing pending" is worth exactly as much as the indemnity you get in writing, backed by someone with money.
The diligence that actually matters
You can check a surprising amount yourself before spending anything. The MCA public record will tell you the
company's status, its directors and their DINs, its registered office, and — importantly — every charge
registered against it. Start there.
- Company status on MCA — active, dormant, under strike-off, or already struck off. Also check the directors' DIN status for disqualification.
- Charges — every loan secured against the company, and whether satisfaction has been filed for the ones supposedly repaid. An open charge from 2019 means the lender still has a claim on paper.
- ROC filing history — gaps in AOC-4 and MGT-7 mean additional fees you will end up paying, and a company that has not been looked after.
- Income tax — returns filed, demands outstanding, assessments open, TDS defaults.
- GST — returns up to date, input credit that actually reconciles, notices outstanding, and whether the registration is at risk of cancellation for non-filing.
- Statutory registers — register of members and minutes that actually exist and agree with the MCA record. If they do not, establishing clean title to the shares gets difficult.
- Litigation and employee claims — including anything settled recently, which tells you something about how the business was run.
- Contracts — whether the customer contracts and the lease survive a change of control, or terminate on it.
What a shell is worth, and what a business is worth
A clean, dormant company
You are buying saved time — incorporation, an aged CIN, registrations already in place. The value is the
months you skip and nothing more. If it has never traded, there is no goodwill to pay for, and you should
not be paying as though there is.
A running business
Now you are pricing sustainable profit, how concentrated the customers are, whether the business survives
the founder leaving, and what the working capital actually looks like. The accounts are a starting point,
not an answer.
In both cases, remember you are usually buying shares, not assets — so you pay for the equity, which is the
business less its debt. A company sold "for ten lakh" that carries fifteen lakh of loans is not a ten lakh purchase.
Getting it transferred properly
Paying the money is not the same as owning the company. Until these are done, the register may still show the
seller as a member and you do not have clean title.
- Share transfer deed in Form SH-4, properly stamped — stamp duty is payable and the rate is set by state.
- Board approval of the transfer and delivery of the original share certificates to you.
- Register of members updated and share certificates endorsed or reissued in your name.
- DIR-12 for the outgoing directors' resignations and your nominees' appointments.
- INC-22 if the registered office moves.
- Bank mandate, GST and other registrations updated to the new signatories.
- Indemnity in the agreement covering anything that surfaces from the period before you bought it.
Where we fit, and where the portal fits
buysellprivatelimited.com
Our marketplace — companies actually on the market, with what they are and what the owner wants for them.
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Diligence on the company you have found, the tax position, the agreement and indemnity, SH-4 and stamping,
DIR-12 and the post-completion filings.
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Common questions
Is buying an existing company cheaper than starting a new one?
Not usually in cash terms. A new private limited is inexpensive to incorporate. You buy an existing one to skip time and to get something you cannot buy quickly — an aged company, an existing GST registration, a licence, or a filing history that a tender or a lender requires. If none of those matter to you, incorporating fresh is cleaner and carries no inherited risk.
Do I inherit the company's old debts and tax problems?
On a share transfer, yes. The company is the same legal person and its liabilities travel with it, including tax demands and assessments relating to years before you bought it. That is why diligence and a written indemnity matter more here than in almost any other transaction. If you want the business without the history, buy the assets instead of the shares.
How do I check a company before I pay anything?
The MCA public record gives you status, directors, DINs, registered office and every charge registered against the company, and costs almost nothing. That alone rules out a lot of bad deals. Beyond that you want the audited accounts, the tax and GST position, and the statutory registers — which needs the seller's cooperation and is the point at which you should have someone check them properly.
What is an aged or ready-made company, and is it safe to buy?
It is a company incorporated a while ago and kept dormant, sold mainly for its incorporation date. It can be perfectly safe if it genuinely never traded, has filed its returns throughout and carries no charges. It is not safe if it traded, stopped, and was left unfiled — that history is now yours. Check the filing record, not the sales pitch.
How long does a transfer take?
Three to six weeks is normal for a clean company once terms are agreed. Diligence takes most of it. A company with ROC defaults, an unsatisfied charge or an open tax matter takes longer, because those should be closed before you complete rather than after.
Who pays the stamp duty on the share transfer?
It is payable on the transfer deed and the rate is set by state. Who bears it is a matter of agreement between buyer and seller, so settle it in the term sheet rather than discovering it at signing.
Found a company you like?
Have it checked before you pay a rupee. Most of what goes wrong in these deals is visible in advance to
somebody who knows where to look.
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Get a company checked
Also read: Selling a private limited company in India.
Stamp duty, tax rates and ROC fees change and several depend on your state — the position above is general, and
we will confirm the current numbers for your specific transaction.
EaseValue