Private Limited Company is registered in India under the companies act, 1956 with not less than 2 members and not more than 50 members as its subscriber. It’s less cumbersome to organize and operate as there are certain legal exemptions to follow. In India most of the family businesses are run in the name of a private limited company. It does not trade in a stock exchange and shares are not issued through initial public offering.
Advantage of Registering a Private Limited Company
- The liability of the members of pvt. ltd. company is limited to there share capital contribution i.e. if it faces financial distress because of some issue with its business then the personal assets of the promoter’s will not be at risk of being seized by the creditors or a bank.
- Shares held by the promoters are not freely transferable.
- Public are not substantially involved in a private limited company as such outsider intervention is very less compare to a public ltd.
- The continuity and its functioning is not affected by the death, disability or retirement of any of its members.
Disadvantage of registering a private limited company
Maximum numbers of shareholders are 50.
- The shares of the private limited company can not be sold to any outsiders without first offering it to an insider i.e. the existing shareholders.
A private limited company must use “private limited” or “PVT. Ltd” or “(p) ltd.” at the end of its name. Any company registered with these words at the end will be called a private limited company under the companies act, 1956.
Minimum requirements for registration of a pvt. ltd. company
To start a private limited you need to have following minimum requirements;
- Minimum 2 shareholders.
- Minimum 2 directors.
- Minimum authorised share capital shall be Rs. 1, 00,000.
- Director identification number (DIN) for all directors.
- Digital signature certificate (DSC) for one of the directors.
Authorized capital amount can be raised later on without any difficulty on payment of additional registration fee to the ROC.
