PRIVATE LIMITED COMPANY
What is a Private Limited Company?
For any growing business, the most sought after business structure is a company, which mostly is a Private Limited Company. This high demand is owing to its unique advantages in comparison to a partnership firm or a sole proprietorship.
A private limited company must have a minimum of two and a maximum of 200 shareholders, and a minimum of two and a maximum of fifteen directors. Private Limited Company enjoys an independent legal identity from its directors and shareholders, and thus, its shareholders and/or directors are not personally liable for its liabilities. Also, the management of a private limited company may be different from its owners. Although in India, a majority of the private limited companies represent family businesses.
A Private Limited Company is considered to be more stable, transparent and professionally managed in comparison to other form of businesses. Companies Act 2013 and the rules made by MCA are the governing laws for the incorporation and functioning of a private limited company.
For companies with Foreign Direct Investment - foreign nationals, NRIs and foreign corporate entities are also allowed to be directors and/or shareholders. Hence, this business structure is popular amongst foreign business owners as well. If the documents are in place and the government processing time is uninterrupted, the online company registration normally takes 7-10 working days.
Documents and Other requirements:
Identity and Address proof:
- PAN Card of first directors / subscribers.
- Identity Proof like passport, driver’s license, voter’s ID, etc.
- Address Proof like electricity bill, mobile or telephone bill, latest bank statement, etc.
Registered office proof:
- Rent Agreement.
- No-Objection Certificate from property owner or in case of self-owned property Sale/Property deed.
- Any Utility bill of the proposed registered office address.
- At least two persons as subscribers and two as directors
- Minimum 1 Lakh Rupees as Share Capital.
- At least one subscriber should be an Indian Resident.
Advantages of a Private Limited Company
- Limited liability: Unlike a sole proprietor ship or partnership, a private limited company doesn’t have an unlimited liability levied on its owners and they are responsible only to the extent of money infused by them as share capital in the company.
- Separate legal entity: As private limited company is a legal entity in law and thus can carry all affairs in its own name. In case of change in owners (shareholders) and/or directors then such change is not having any impact on the existence of a private limited company.
- Continual Existence: As mentioned above the existence of a company is not effected with any change related to its management and / or ownership and thus it always comply with going concern, irrespective of such changes.
- Ownership Transfer: The ownership of a private limited company is represented as its share capital; consisting shares of such value each as decided by the company. The shares of company are freely transferable to other persons by its owners.
- Owning property: Being a legal person a private limited company can own property, both moveable and immoveable, in its name.
- Borrowing capacity: A private limited company is comparatively considered as more stable, transparent and professionally managed and thus enjoys better borrowing capacity from bankers and / or other lenders.