About Private Limited Company
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Advantages of a Private Limited Company
A private limited company (pvt. ltd. company) is the most common vehicle to carry on business for an entity intending to make a profit and enjoy the benefits of an incorporated entity, particularly limited liability. Besides, limited liability and minimal statutory compliance, pvt ltd companies offer the following advantages:
- Separate Legal Entity
An entity means something which has a real existence; a thing with distinct existence. A company is a legal entity and a juristic person established under the Act. A juristic person is a person who is not a natural person or human being. Therefore a company form of organization has wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts. Hence, a pvt ltd company is a legal entity separate from that of its members.
- Uninterrupted existence
A company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership. Perpetual succession is one of the most important characteristics of a company.
- Limited Liability
Limited Liability means the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company’s debts is limited. In other words, the liability of the members of a company is limited only to the extent of the face value of shares taken up by them. Therefore, where a company is limited by shares, the liability of the members on a winding-up is limited to the amount unpaid on their shares.
- Free & Easy transferability of shares
Shares of a company limited by shares are transferable by a shareholder t any other person. The transfer is easy as compared to the transfer of interest in business run as a proprietary concern or a partnership. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.
- Owning Property
A company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern. The shareholders are not the owners of the company’s property. The company itself is the true owner.
- Capacity to sue and be sued
To sue means to institute legal proceedings against or to bring a suit in a court of law. Just as one person can bring a legal action in his/her own name against another in that person’s name, a company being an independent legal entity can sue and also be sued in its own name.
- Dual Relationship
In the company form of organization it is possible for a company to make a valid and effective contract with any of tis members. It is also possible for a person to be in control of a company and at the same time be in its employment. Thus, a person can at the same time be a shareholder, creditor, director and also an employee of the company.
- Borrowing Capacity
A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns.
Eligibility and Requirements for starting a Private Limited Company:-
- The Private Limited company should have a unique trademark and a unique name that is different from the other companies.
- Offensive names should be avoided to name a Private Limited Company.
- If you have a unique name for your Private Limited Company then the registration of the company can be quickly and easily persisted.
- For the initiation of the Private Limited Company, the investment should be a minimum of Rs 1 Lakh.
- The Digital Signature is a must for the members of the Private Limited Company as it becomes easier to register for Private Limited Company.
- The minimum two directors should exist in the Private Limited Company.
- Also, the minimum of two shareholders is mandatory for the Private Limited Company.
Characteristics of the private limited company
- Members– To start a company, a minimum number of 2 members are required and a maximum number of 200 members as per the provisions of the companies act 2013.
- Limited Liability– The liability of each member or shareholders is limited. It means that if a company faces loss under any circumstances then its shareholders are liable to sell their own assets for payment. The personal, individual assets of the shareholders are not at risk.
- Perpetual succession– The company keeps on existing in the eyes of law even in the case of death, insolvency, the bankruptcy of any of its members. This leads to the perpetual succession of the company. The life of the company keeps on existing forever.
- Index of members– A private company has a privilege over the public company as they don’t have to keep an index of its members whereas the public company is required to maintain an index of its members.
- A number of directors– When it comes to directors a private company needs to have only two directors. With the existence of 2 directors, a private company can come into operations.
- Paid up capital– It must have a minimum paid-up capital of Rs 1 lakh or such higher amount which may be prescribed from time to time.
- Prospectus– Prospectus is a detailed statement of the company affairs which is issued by a company for its public. However, in the case of a private limited company, there is no such need to issue a prospectus because in this public is not invited to subscribe for the shares of the company.
- Minimum subscription– It is the amount received by the company which is 90% of the shares issued within a certain period of time. If the company is not able to receive 90% of the amount then they cannot commence further business. In the case of a private limited company, shares can be allotted to the public without receiving the minimum subscription.
- Name– It is mandatory for all the private companies to use the word private limited after its name.
PROCESS OF PRIVATE LIMITED COMPANY REGISTRATION:
- Free Consultation
- E-Mail Documents
- Make Payment
- Get Your Certificate
DOCUMENT REQUIRED FOR ONE PERSON COMPANY
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IDENTITY PROOF AADHAR CARD/DRIVING LICENSE/ELECTION CARD
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ADDRESS PROOF OF BUSINESS/ELECTRICITY BILL/RENT AGREEMENT
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PAN CARD
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PASSPORT SIZE PHOTO