Private Limited Company
A private Limited company is one of the most preferred legal structure in India for privately owned businesses specially the business looking for venture capital or private equity investment. Private limited companies are required to have minimum of 2 (two) and maximum of 200 (two-hundred) members. Moreover, minimum 2 (two) and Maximum of 15 (fifteen) directors can be appointed by any private limited company Private Limited Company offers many advantages including limited liability of members, greater stability, separate legal entity, continuity in existence, protection of personal assets etc.
Distinct features of Private limited company
Renowned Form of Business
Private Limited Company is the globally adopted form of business structure from the prospective of any sector. Any individual seeking interest to start their operations as a start-up structure in India can incorporate a Private Limited Company in lesser compliances with larger benefits.
No minimum capital requirement
Private company does not have to comply with any minimum capital requirement, although fee must be paid to the Government for issuing a minimum of shares worth Rs.1 lakh [Authorized Capital Fee] during the incorporation of the Company.
As a juristic legal person, both company and members have separate legal identity that is distinct from each other. Unlike members/shareholders, company is not a natural person but though it can purchase or sell properties in its own name, can sue or be sued by/from parties without any restrictions.
A company existence is uninterrupted, even the death or insolvency of shareholder(s) does not affect the continuity of business. A member may come or go but the company continues to exist for long, until it is legally dissolved.
Protection of Personal Assets
The liability of shareholders is limited to the proportion of unpaid portion on allotted shares and which can only be demanded from the shareholders in case where company’s assets are not sufficient to meet the outstanding liabilities at the time of winding up. So, the personal assets of the shareholders are fully protected with the above exception.
No of shareholders and directors
Private Limited Companies have minimum of 2 (two) shareholders and can be extended up to 200 (two hundred). Moreover, private limited company can have Minimum 2 (two) and Maximum 15 (fifteen) directors to run the operations of business,
Private Limited Companies are not allowed to borrow capital from public, however it is most preferred structure to attract finance from PE Investors, Venture capitalists, banks and other financial institutions.