Private limited Company or a private company is most popular way to incorporate or start a new business. In India, Private limited Company is most popular legal entities among of all types of business registration processes. As per Companies act, 2013 section 2(20) of the 2013 act defines the term company to mean a company incorporated under the companies act 2013 or any other previous company law. A private limited company is private ownership business used in many jurisdictions in contrast to public ownership, with some differences from country to country. It is perfect for small business entities who want to work as legal entity. In private limited company owners liabilities is limited to the number of shares held by the members. Number of members is restricted up to 200 members by the company law. A private limited company cannot trade their shares to general public. Private Limited Company established and runs as per the rules and regulation of Companies Act, 2013.
Characteristics of Private Limited Company:
To start a private limited Company minimum 2 members/ Directors are required. As per Companies Act, 2013 any private limited company cannot add members more than 200. In this type of organizations liabilities of member is limited. If company faces loses its own assets is sell for repayment. Members’ personal assets are not individually at risk. Private Limited companies are treated as artificial legal person’s means insolvency, death, bankruptcy of its members is not affect the business of private limited Company. No minimum paid up capital is required but limits prescribed by government time to time. Private limited company can issue shares to its members/family/friends etc not to general public. Compliances in private limited company is less as compare to public limited company.
ADVANTAGES OF PRIVATE LIMITED COMPANY:
- Separate legal entity.
- Minimum number of shareholders.
- Private limited companies have less legal formalities.
- Decision making is easy because number of members is less.
- Cost affective.
- Perpetual succession.
- Easy to wind up.
- Limited liability of members.
- Continuous Existence.
- High scope of expansion.
DISADVANTAGES OF PRIVATE LIMITED COMPANY:
- Costly registration process.
- Every private limited company has to comply with legal formalities.
- Dimension of Liability.
- Restriction on transferability of shares.
- In private limited company in any situation number of members cannot exceed 200.
- Company cannot issue any prospectus.
- Shares cannot trade in any stock exchange.
- Tax burden.
REQUIRED DOCUMENTS FOR PRIVATE LIMITED COMPANY:
- Copy of pan card of all members.
- Copy of Aadhar card.
- Copy of up to date bank statements of all embers.
- NOC from owner of office premises.
- Electricity bill/ gas bill/ Telephone Bill.
- Photographs of all members.
- Rent agreement
- Mobile number and email id of all members.