Private Limited Company |Incorporation | Registration | Price Start up biz
What is Private Limited company?
Private Limited Company registration is the most popular legal structure option for businesses in India. A private limited company can have a minimum of two members and a maximum of two hundred members. The directors of a private limited company have limited liability to creditors. In a case of default, banks/creditors can only sell company’s assets but not personal assets of directors.
The company, holding small businesses privately is a Private Limited Company. A private limited company has limited liability to the shares which are owned by the members. Also, the shares cannot be traded publically. In this article, we have discussed all the sides of a private limited company.
In India, for businesses, the most common legal structure option is the Private limited company. Due to lots of advantages, private limited company, amongst the small business or medium or large businesses, is one of the most common corporate entity. Also one can check the name of a private limited company against Ministry of Corporate Affairs or trademark database. Thus you can also see the list of private limited company in India. And most importantly, any individual or organization can be a member of a private limited group even when they are NRI or foreigners, all they have to be is 18 + above age and also should have to hold a valid Permanent Account Number card.
Eligibility for Private Limited Company Registration: The Companies Act, 2013 and the companies incorporation Rules, 2014 govern the registration of the private limited company. The requirements for the certification are listed below:
There are two different kinds of private limited companies.
A private limited company is a company that can either be limited by shares or by guarantee:
Private company limited by shares:
This means that the company is owned by shareholders. The liability of each shareholder is limited to the original value of the shares issued to them.
Private company limited by guarantee:
When a private company is limited by guarantee, it has members who act as its guarantors. These members contribute a previously agreed amount to support the company in times of trouble.
When setting up your business it’s a good idea to look well into the future to decide where you want to be and where you wish to take your business. If you’re looking to grow your business setting up as a private limited company will help you to share the load and eventually, as the company is a separate legal entity, you could even take a back seat.
Advantages of the private limited company:
Ownership: in the public company, the property can be sold on the open market to the public, but in case of the individual limited company, the owner can sell or transfer the shares to another people by their own choice. The founders, the management or a bunch of private investors own the shares of these companies also in this case shares cannot be sold in an open market. In this way, the number of the shareholders will be less which indicates less complexity and less confusion at the time of decision making and also management.
A minimum number of Share Capital: For a public company the minimum amount of share capital is around Rs. 5, 00,000, while as a private limited company it was Rs. 1,00,000 earlier but there is no such minimum number of compulsion now. So for public business, you need a lot of money where there is no such pressure on a private limited company about the fund requirements.
No demand by stock market: As long as the individual limited corporations are doing their work within the law, the shareholders do not interfere in the work also the private limited companies do not worry about the expectations of the shareholders. So they are no such pressure for the individual limited companies by the stock market.
Disclosing Information: as the financial situation of any public company affects the investment of the public, so they always have to publish the financial report of their business, but in case of the private limited company, they are not subjected to such compulsion.
Confidential: it is not suitable for a group that their competitors get to know about their secret information like legal settlements or executive compensation or other crucial information. In public company, you cannot keep reserved this information but in private limited company this information can be saved booked, so they are more secure.
Easy access to debt: for a private limited company it is easy to obtain bank loans and also debentures issuing and the convertible debentures are available always.
Easy transferability: in case of individual limited business it is straightforward to transfer the ownership.it can be quickly done by transferring shares. The agreement of the other shareholders is also required to move the stocks.
Hence, a private limited company is less expensive, less complicated and less time to consume compared to any public group.
Disadvantages of a private limited company:
A high setup cost is required for the individual limited company compared to others.
Without the agreement in a private limited company, you can’t transfer the shares, so this is a little restriction.
The constitutional compliance is quite high for a private limited company.
At the time of decision making, the involvements of all the directors is also a disadvantage.
So, to set up a private limited company, the time required is not more than 15 days if all the documents are in order. However, this also depends on the workload of the registrar.
We provide consistent services in Private Limited Company Formation in India. We follow well-defined service plan and are supported by professionals holding rich industry experience. Incorporation of Company in India includes Private Limited Company Incorporation, Company Registration India. Moreover, we also emphasize on every detail while maintaining close proximity with clients regarding best legal advice.
Private Limited Company is the most prevalent and popular type of corporate legal entity in India. Privately limited company registration is governed by the Companies Act, 2013 and the Companies Incorporation Rules, 2014. To register a private limited company, a minimum of two shareholders and two directors are required. A natural person can be both a director and shareholder, while a corporate legal entity can only be a shareholder. Further, foreign nationals, foreign corporate entities or NRIs are allowed to be Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.
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