Private Limited Company India

A private limited company is a voluntary organization of a minimum of 2 and also not more than 50 individuals, whose obligation is restricted, the transfer of whose shares is restricted to its subscribers and also who is prohibited to ask the public to subscribe to its shares or debentures.

Key Features of Private Limited Company India

• It's got an independent lawful existence. The Indian Companies Act,1956 contains the provisions about the legal formalities regarding starting of a private limited company. Registrars of Companies (ROC) appointed within the Companies Act spanning the numerous States and also Union Territories are vested with the primary duty of incorporating companies started within the respective states and also the Union Territories.
• It's somewhat less cumbersome to organise and also run it as it's been exempted from many regulations as well as constraints to which a public limited company is subjected to. Some of them are :-
  • it does not need to submit a prospectus with the Registrar.
  • it need not get the Certificate for Commencement of business.
  • it need not hold the statutory general meeting nor require it file the statutory report.
  • limitations placed on the company directors of the public limited company do not pertain to its directors.
• The obligation of its members is limited.
• The stocks allotted to it's members are also not freely transferable between them. These companies are not allowed to invite public to subscribe to its shares and debentures.
• It has got continuity of existence i.e. it keeps on to exist regardless of whether all its subscribers die or wasteland it.

Therefore, a private company is liked by those who wish to take the advantage of limited liability but simultaneously prefer to retain control above the business within a constrained circle and maintain the privacy of their business.

Pros of Private Limited Company

• Continuity of existence
• Constrained liability
• Less lawful limitations

Cons of Private Limited Company

• Shares are not readily transferable
• Not permitted to compel general public to subscribe to its shares
• Opportunity with regard to marketing ripoffs
• Undemocratic control