What is a Private Limited Company (Pvt Ltd)?
A Private Limited Company is a privately held small business entity. The liability of members of a private limited company is limited to the number of shares held by that member. A private limited company is governed by Companies Act,2013. Minimum number of shareholders required to start a private limited company is two while the upper limit of members is 200 in accordance with the Companies Act,2013.
If a private limited company faces financial risk, its shareholders are not liable to sell their individual assets i.e. they have limited liability. There must be minimum two directors and maximum 15 directors for a private limited company and a director must be 18 years above in age. A foreign national can become a director of private limited company India.
It is compulsory to add private limited (pvt ltd) to the name of a private limited company India. Minimum paid up capital amount for a private limited company is Rs. 1 Lakh. A private limited company keeps on existing even in the case of death or bankruptcy of its Members.
Documents required for Private Limited Company Registration
Share capital amount and proposed ratio for holding share.
A short description of the company and the business.
Name of the city where the registered office of the company is located.
Ownership and sale deed (In case your own premise).
Identity proof of the Directors and Shareholders (PAN Card).
Address proof of the registered office (Electricity bill, telephone bill etc.)
Address proof of the Director or the Shareholder (Voter ID, Passport, Driving license etc.)
A duplicate copy of the latest electricity bill, telephone bill, or mobile bill for directors.
Occupation details of directors as well as shareholders.
Email address of the directors and shareholders.
Contact details of directors and shareholders.
Passport size photo of directors and shareholders.
In case the property is on rent then you need to submit a copy of rent agreement with No Objection Certificate (NOC) from the landlord.
Affidavits for non- acceptance.
NOC for a change in the original subscribers of MOA.
MoA and the AoA subscriber sheets.
PAN Card of the company.
In case you are a foreign national subscriber then you need to provide Nationality proof.
Private Limited Company Benefits
1. Limited liabilities
The liability of the members of private limited company is limited to their share only as the private limited company is separate legal entity. Limited liabilities means the individual do not have to spend their personal assets for the payment of the liabilities in the firm.
2. Legal entity are separate
One of the significant benefits that accompany private limited company is that the organization is a different lawful element according to the law. Because of this difference the individuals from private limited company are responsible just for the activity attempted by them and not by different individuals.
3. Easy to form
It is very easy procedure to form or start a Private limited company. As compared to the formation of public sectors the process is very simple.
Private limited company can borrow funds from the debentures as well as the shareholders. Banking and other financial organization provide assets on higher bases rather than other public sectors.
5. Several Tax advantages
A private limited company enjoys more tax benefits than public sectors. Here the company pays corporation tax and gets rid from paying higher taxes.
6. Get several opportunities
In public sectors you might not receive any such legal entity as compared to the private limited companies.
7. Go internationational
Private limited company are the only type of companies which allows for Foreign Direct Investment as other firms or sectors require appropriate licensing and approval from the government for foreign investments.
Private limited company has lifetime existence.
Private limited companies are tangible in terms of relation with the shareholders.
Requirements for initiating Private Limited Company
The Private Limited Company should have a unique name for it which will not be equivalent to any other registered trademark.
It is mandatory for a Private Limited Company to have a minimum two directors.
As well as it is necessary to keep in mind that the Private limited company should have a minimum of two shareholders.
All members of Private Limited Company should have a digital signature which will be utilized to register a Private Limited Company.
There should be 1 lakh rupees minimum capital done for initiating a Private Limited Company.
The process of registering a Private Limited Company is simple, make sure that you have a unique name for your company which will surely help you for quick registration.
You must avoid any offensive name for your Private Limited Company.
Features of Private Limited Company
A Private Limited Company does not hold any relation with the public, they are not allowed to ask for any sort of deposit from the public or public sectors.
In a Private Limited Company, people are not allowed to transfer shares, which can help to prevent the takeovers of small Private Limited firms from big Public companies.
It is mandatory for every Private Limited Company to use “pvt.ltd.” after their name.
A Private Limited Company can consist of 200 members at a time.
The private limited company is very easy to accommodate.
Mentioning everything in Memorandum.
Private Limited Company is a legal entity which is established under Companies Act 2013.
A Private Limited Company has a never ending existence mean they have no effect if partners changed or died or any such circumstance took place.
Private Limited Company has to pay corporate tax.