PRIVATE LIMITED COMPANY

A private limited company is a privately held business entity held by private stakeholders. The liability arrangement, in this case, is that of a limited partnership, wherein the liability of a shareholder extends only up to the number of shares held by them .

Formation of Private Companies

A minimum of 2 and a maximum of 200 members can form a private company by submitting an application to the Registrar of Companies (RoC) along with a signed copy of their Memorandum of Association (MoA) and Articles of Association (AoA) as well as other required documents and the payment of the stipulated fees. The Companies Act 2013 governs the formation process, ensuring that all private companies in India adhere to specific legal standards and procedures.

The Memorandum of Association must include:

• The company’s name must consist of “Private Limited” as a suffix.
• The registered office address of the company.
• The objectives and purposes of the company.
• Members’ liability to the organisation.
• Subscribers’ names are listed in the memorandum.

Additionally, the Articles of Association define the internal regulations and management of the company. Both the MoA and AoA must be submitted during the registration proccess.

Advantages of a Private Limited Company

A Private Limited Company Incorporation is one of India's most popular business structures. It offers several advantages and some disadvantages, let us explain.

• Limited Liability: Shareholders' responsibility is restricted to the extent of their capital contribution, safeguarding personal assets from the company's financial obligations and liabilities.
• Distinct Legal Identity: A Private Limited Company possesses an independent legal identity distinct from its proprietors. It has the capacity to own assets, engage in contractual agreements, and initiate or defend legal actions under its own name.
• Continuous Existence: The company's existence persists irrespective of shifts in shareholders or directors. Its existence is not contingent upon the lifespan of its associates.
• Ease of Funding: Raising capital by issuing shares to investors, venture capitalists, or angel investors is easier. This structure attracts external investment. This removes the capital worries when an entrepreneur start company.
• Tax Benefits: Private Limited Companies may qualify for various tax benefits and exemptions, making them tax-efficient entities.
• Credibility and Trust: Having "Pvt. Ltd." in your company name often instills more confidence and trust in customers, suppliers, and partners.