What is private Limited Company?

  • March 10, 2022
  • Dushyant Sharma
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What Is Private Limited Company?

Private limited companies are registered with the Ministry of Corporate Affairs and are the most common form of business in India. It has several advantages. Unlike a partnership, the owners of a private limited company have limited liability. This means that directors and shareholders of the company are not personally liable for its debts.

The management of the company is separate from the management of the owner. Any legal activity can be carried out under this format, such as starting a new business.

A private limited company usually has two directors. During meetings, two directors must attend. In the name of the company, the words "private limited" must appear as the last word. There are no other requirements to register a private limited company, though some countries require you to register at least one bank account.

If you are considering starting a business, this type of company is ideal for you. Here are some of the benefits of a private limited company.

For the private limited company registration, you must meet the minimum and maximum number of members. In India, there is a limit of two members and 200. The number of shareholders determines the amount of liability that each shareholder may face.

A private limited company's shareholders' liability is limited to the capital they have contributed to the company. In order to start a private limited business, you must have at least two shareholders. A private limited company can be owned by any two individuals who have a valid ID and proof of address.

The article of association is an important document for a private limited company. It outlines the internal operations of the company. It explains the roles of each member, the dividend policy, and the appointment of directors. Another important document is the certificate of incorporation, which is issued by the Registrar of Companies.

You can also choose to create an LLC or LLP for your business, as long as you have at least two shareholders.

When a private limited company is established, it is treated as a separate legal entity from its owners. It is responsible for all its debts, but separate from its owner. This helps protect the owner from lawsuits. Moreover, it is important to choose a name that has meaning and is legally unique.

The name of the company should not be offensive to other parties. If it is in a foreign country, it must be registered as a sole proprietorship.


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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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