There are many things we think about before starting a business. The most important is the question of whether or not to incorporate a Private Limited Company. What is the advantage of a Private Limited Enterprise?
What is a Private Limited Company (PLC)?
Private Limited Companies are legal entities that have limited liability or legal protection for their shareholders. However, they can be owned only with restrictions.
A Private Limited Company is a private corporation that is owned by small businesses. Private Limited Company members are only liable for the shares they have and its shares are not publicly tradeable.
Private Limited Company is the most popular and simple form of business registration in India. You can register it with at least two people. It is the best type of business entity to protect shareholders from liability, raise equity funds, and have separate legal status. This makes it ideal for small- to medium-sized family-owned businesses.
Private Limited Company: Minimum Requirement
- There must be at least two directors who are adults.
- A director of a private limited company must be an Indian citizen or resident.
- Foreign Nationals can serve as the other director.
- Two Shareholders are also necessary for a company.
- The Shareholders may be either natural persons or artificial legal entities.
Process: Private Limited 開有限公司流程 Registration
Registering a Pvt Ltd in India is easy online. The SPICe+ web form has been replaced by the MCA’s older SPICe form. It is now easier to incorporate a private limited company.
You can now Incorporate a Private Limited Enterprise with a single application.
SPICe+ can be divided into the following parts:
- Part A: Submit the Spice+ Part A Application for the Company Name Reservation. This can be used to approve the name of the proposed company and for filing Company Registration all at once.
- Part B: Apply for the following services in Part B of Form Spice+
- Incorporation
- Allotment of DIN (Director’s Identification number)
- PAN must be issued
- Mandatory issue of TAN
- EPFO registration is mandatory
- ESIC registration is mandatory
- Mandatory issue of Profession Tax Registration(Maharashtra)
- Mandatory opening of a bank account for the company
- GSTIN Allotment (if requested)
Private Limited Company Advantages
No Minimum Capital
Private Limited Enterprises do not require minimum capital. Private Limited Companies can be registered for as low as Rs. 10,000 for total authorized share capital.
Separate legal entity
Private Limited Companies are a distinct legal entity in the court. This means that the assets and liabilities for the business are different from the assets and liabilities for the directors. Both are considered to be different. Private Limited Companies are different because they separate Management and Ownership. Managers are responsible for the success of the company and can also be held accountable for its loss.
Limited Liability
The personal assets of employees will not be used by the Company to pay debts if the company is in financial distress for any reason.
For example, Private Limited Companies may take out loans and not be able to repay them. Members are responsible for paying only the amount they have towards their shareholding. The unpaid share value. If you do not have a balance due towards the shares you own, you will not be liable for any company debts, even if the debit/credit amount is still unpaid.
Fund Raising
India’s only private limited company, apart from Public Limited Companies, can raise funds from Venture Capitalists and Angel investors.
Transfer shares easily and free
A shareholder can transfer shares of a company that is limited by shares to another person. Transferring shares of a company limited by shares is much easier than transferring an interest in a partnership or proprietary concern. It is easy to transfer shares by signing and filing a transfer form.
Live a life uninterrupted
Private Limited Companies have ‘Perpetual Succession’. This means that they will continue to exist or be uninterrupted until their legal dissolution. Because a company is a separate legal entity, it is not affected by the death of any member. However, the company continues to exist regardless of changes in its membership. One of the most important features of a company is its ‘Perpetual Succession.
Allowed FDI
Private Limited Enterprises allow 100% Foreign Direct Investment. Foreign entities or persons can directly invest in a Private Limited company.
Credibility builds
The company’s details are publicly available in a database. This increases the company’s credibility as it is easy to verify the details.
Disadvantages of a Private Limited company
- Private Limited Enterprises have one major disadvantage: they limit the transferability of shares through their articles.
- Private Limited Company shareholders cannot exceed 50 in any given case.
- A Private Limited Company has another disadvantage: it cannot issue prospectus for the public.
- Stock exchange shares can’t be quoted.
This article is meant to help those who want to learn the advantages and disadvantages of Pvt Ltd Company registration. Hope this information is sufficient, else please comment if anything else can be added to it.