Private Limited Company

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1. PrivaTE LIMITED COMPANY By aapkaconsultant.com

2. PrivaTE LIMITED COMPANY Private Limited Companies are those companies which are privately held by the people. They are mostly preferred as a common business organization in India. Shareholders may operate the business themselves, or hire directors to manage the company on their behalf. Private Limited Company is the most popular legal structure for businesses. A private limited company has every benefit of partnership like flexibility, greater capital contribution and enhanced abilities, etc to offer combined with limited liability, greater stability and legal entity.

3. Charactersticks of private limited company In a Private Ltd. Company, minimum 2 and maximum 200 members are required. Minimum paid-up capital needed to start business is Rs. 1,00,000. Minimum 2 directors must be there. I t can take loan from shareholders, directors and relatives of directors but not from the public. Shares cannot be issued to public. Transfer of share can be restricted as per the Articles of the company. Reduced c omplaince burden as per Company Law. The words 'Private Limited' should be suffix or must come after the name of company. Many of the restrictive provisions of Companies Act are not applicable to Private Limited Company allowing flexibility and convenience unlike Public Limited Company.

4. ADVANTAGES OF PRIVATE LIMITED COMPANY Limited Liability: As business entity grows, the need for funds grows too. Hence, businesses have to borrow funds. In private ltd. company, the extent of liability is limited to the amount invested in starting the business. They are not personally liable to pay the debt. Debt-taking Capacity:   A private limited company can take funds from Banks, debentures and convertible debentures. Easy Exit:   Private limited companies can be sold or transferred, either partially or in full, to another individual or entity without any disruption to the current business.   Capital : More capital can be raised as there is no limit on number of shareholder. Brand Value:  Company’s brand value will get increased because people come to know about the company very well.   Greater Credibility: They have greater credibility as they have to inform about the structure, directors, members, Article and Memorandum of Association and necessary changes to the Ministry of Corporate Affairs. Tax Advantages: Private limited companies enjoy tax advantages.It opens the door to more tax-deductible costs and allowances redeemable against profits. Access to Funding :   Private limited companies easily accommodate equity funding through venture capitalist, angel investors as they are unlikely to invest in any other structure.

5. DISADVANTAGES OF PRIVATE LIMITED COMPANY The shares cannot be sold or transferred to anyone else without the agreement of other shareholders. In Private Ltd. Company no one is allowed to invite public to subscribe to its shares. The shares cannot be sold or transferred to anyone else without the agreement of other shareholders. The shares cannot be sold or transferred to anyone else without the agreement of other shareholders . The Growth may be limited because maximum shareholders in a Private Ltd. Company are only 50.

6. STEPS INVOLVED IN INCORPORATION OF PRIVATE LIMITED COMPANY

7. STEP-1 Obtaining Director Identification Number (DIN) & Digital Signature Certificate STEP-2 Applying for the name STEP-3 Drafting of MOA and AOA STEP-4 Filing for Incorporation of Private Limited Company STEP-5 Subscribing to the Private Limited Company STEP-6 Certificate of Incorporation of Private Limited Company

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