Private Limited Company

Introduction

As section 2(68) of Indian companies Act, 2013 following points define a private company,

It has a limit of members that is minimum member can be 2 and maximum limit of member which is 200 cannot be exceed in any case.

A private limited company can’t issue their authorized share to the general public.

Ban any call to the general public to subscribe for any securities of the firm.

Recognizance for any private limited company that is the name of company should be end with “PVT LTD”.

Restrict the rights to transfer its share i.e., suppose  you are the 199th member in a company holding 1000 share and want to transfer your share because of some reasons but no one want to purchase all share then you decide to transfer them to multiple people. Suppose 3 people named with A, B and C take your shares 200, 300, and 500 respectively. In that case the max limit of members is exceeding which is not allowed that’s why we are stopping the rights to transfer its shares.


MERITS OF PRIVATE LIMITED COMPANY

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  1. NO LEAST CAPITAL – Their no minimum capital required in private limited company it can be registered with merely with a gross amount of  ₹1,00,000 as authorized capital.
  2. SEPARATE LEGAL ENTITY – In the eye of court the identity of the owner of the company and the identity of the private limited company are separated. Means the assets and liabilities of the company and directors are different.
  3. LIMITED LIABILITY – The member of this company have limited liability which means they are not liable to sell their personal property for to pay company debts.
  4. FUNDING – Except public company private company is only who can raise funds from venture capitalist (investor, sponsor, stockholder etc.).

DEMERITS OF PRIVATE LIMITED COMPANY

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  1. RESTRICT OF TRANSFERABILITY- Restrict of transferability of its share because of max limit of members.
  2. NUMBER OF SHAREHOLDER- In any case number of shareholder cannot be more than 50.
  3. PROSPECTUS TO THE GENERAL PUBLIC- A private company is unable to issue prospectus to the general public.

PROCEDURE OF REGISTRATION FOR PRIVATE LIMITED COMPANY


ESSENTIAL DOCUMENTS FOR REGISTRATION

SUITABILITY