Private Limited Company Registration

A Private Limited Company has a distinct legal identity, separate from its owners and shareholders. This means:

• The company can own property, incur debts, sue, or be sued in its name.
• Shareholders and directors are not personally liable for the company's obligations.

The liability of shareholders is limited to the unpaid amount on their shares. Basically:

• Personal assets of shareholders are safeguarded from business losses or debts.
• In case of bankruptcy, shareholders only lose their invested capital.

A Private Limited Company must have a minimum of 2 and a maximum of 200 members (excluding employees and former employees holding shares).

• This makes it suitable for closely held businesses or family-owned enterprises.

The company must have a minimum authorized share capital of INR 1,00,000 (this can be increased as required). As for paid-up capital, the Companies Act, 2013 no longer mandates a minimum paid-up capital for Private Limited Companies.

• Shareholders contribute capital by purchasing shares, and their liability is capped to their investment amount.

Shares in a Private Limited Company are not transferable to prevent hostile takeovers. Shareholders need the approval of other members to transfer shares, ensuring control remains within a trusted group.

A Private Limited Company cannot invite the general public to subscribe to its shares, debentures, or deposits.

• It cannot raise funds through Initial Public Offerings (IPO) or public bonds.
• Funding is typically through private investments, loans, or internal accruals.

A Private Limited Company must have at least two directors (a maximum of 15 directors; this can be increased by passing a resolution).

• This helps ensure effective governance and compliance with corporate laws.

The company's existence is not affected by changes in its ownership or management, such as death, insolvency, or resignation of shareholders/directors.

• Provides stability and continuity.
• Suitable for long-term projects and businesses.

The ownership of the company is divided among shareholders, while the management is typically handled by directors.

• This separation of ownership and management allows professionals to run the company while shareholders enjoy limited liability.

A Private Limited Company can raise capital from private investors, venture capitalists, or angel investors.

• The structured nature and credibility of a Private Limited Company make it an attractive option for investments.
• Shareholders can issue equity or preference shares to raise funds.

Private Limited Companies enjoy specific tax benefits under Indian corporate tax laws, some of which are:

• Eligible for deductions on business expenses.
• Can avail of tax benefits under various government schemes.

A Private Limited Company operates under the provisions of the Companies Act, 2013.

• Provides a robust legal framework ensuring accountability and systematic operation.
• Non-compliance attracts penalties and legal action.

The company's details, including incorporation, directors, and financial records, are publicly available on the MCA website.

• The easy access to data increases trust and credibility among clients, investors, and other stakeholders.

While maintaining corporate governance standards, Private Limited Companies enjoy operational flexibility compared to public companies.

• Easier decision-making due to fewer regulatory restrictions.
• Better suited for businesses aiming for controlled growth.