Private Limited Company Registration
Rs. 12,995 only (Onwards)
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(Takes 10-20 days)
PRIVATE LIMITED REGISTRATION
A private limited company is a type of company that offers limited liability or legal protection for its shareholders but that places certain restrictions on its ownership. The word ‘Private’ denotes that a Private Limited Company cannot invite the Public to purchase its Shares and the word ‘Limited’ denotes that the Liability of the Shareholders and Directors is Limited.
The shareholders cannot sell or transfer their shares without offering them first to other shareholders for purchase and also the shareholders cannot offer their shares to the general public over a stock exchange.
Some features of the private limited company are as follows:
- NON-TRANSFERABILITY OF SHARES: Companies Act, 2013 expressly restricts the transfer of shares. This is done to prevent take over of small businesses by big public limited companies. It can also not purchase its own shares.
- CANNOT ACCEPT DEPOSITS: The Act prohibits private limited companies from asking the public for money in forms of loans or deposits. It cannot ask the public to make monetary deposits. If it needs to borrow money, it has to be done through financial institutions.
- NUMBER OF DIRECTORS: As per the Act of 2013, a Private Limited Company needs to have at least 2 directors. Although they are not required to appoint any independent directors.
- LIMITED LIABILITY: In a Company, a person holds liability to a number of shares he holds. Unlike the partnership, there will be no risk on the assets of a shareholder and he will not be required to pay anymore than the value of the shares he holds.
- SEPARATE LEGAL ENTITY: Unlike sole proprietorship and partnership, a company enjoys separate legal entity wherein even if the shareholders, directors or members of a company die, the company will still remain in existence. It can be taken over by other people who can then continue to run the business.
Key Advantages of Forming a Private Limited Company
- No unlimited liability for members or directors.
- Pooling of resources means greater availability of resources.
- Perpetual succession. Members may come and go but the business continues.
- Risk gets divided among a group of people.
- The Greater credibility of business.