What Is Private Limited Company

A private limited company is a company that is privately owned by a small number of people and the liability of the owners is limited to the number of shares held by them. The shares of private limited companies are prohibited from being traded publicly. The owners of such companies are known as the shareholder and they invest money in the company.

Characteristics of Private limited company

What Is Private Limited Company
Private Limited Company

Limited liability : The liability of the shareholders is limited up to the shares held by them. In case of insolvency of company or any other circumstances of loss, the shareholders are not liable to sell their own assets to pay the debts of the company .

Members : As per the provision of Companies Act 2013 , minimum 2 members are required to start a PVT LTD Company and the maximum limit is 200 members

Name : It is mandatory for all the private limited company to use private limited as a suffix in the name of the company.

Perpetual succession : Unlike a natural person a company never dies. Even in the case of death , lunacy or insolvency of its members or transfer of shares to new entity , the existence of the company is unaffected.

It is created by law and can be put to an end only by law.

Separate legal entity : Unlike sole proprietorship and partnership firm , a Pvt Ltd Company enjoys separate legal entity from its shareholders.

Number of directors: As per the companies act 2013, a company needs to have a minimum of 2 directors.

So here are some charchterstics and feature of a Private Limited Firm. Here is the list of advantage and disadvantages of a Private Limited Company.

AdvantagesDis Advantages
Funding can be raisedHigh Cost in Formation
Life Time ExistanceCompulsory Audit
Owner might retain controlHigh Annual Compaliance
Limited Liability till sharesLess Secery of finance

Also, read What is P/E ratioNRI Tax BenefitWhat is Financial Management and Tax slabs in india

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