Private Limited Company

OVERVIEW

In legal terms, Section 2 (68) of the Companies Act, 2013 defines a private company as:
“A Company having a minimum paid-up share capital as may be prescribed, and which by its articles,— (i) restricts the right to transfer its shares; (ii) except in case of One Person Company, limits the number of its members to two hundred; (iii) prohibits any invitation to the public to subscribe for any securities of the company.” In layman Terms A Private Limited Company is Form of Entity which is owned by non-governmental organizations or a relatively small number of shareholders or members of a company with their Liability being Limited to the Amount of Shares held by them and the company being restricted to publically deal in its share.

Types of Private Limited Company

  • 1. Company Limited by Shares In these companies, the members' liability is limited to the nominal share amount as mentioned in the Memorandum of Association. The shareholder cannot be held liable or asked to pay more than his/her share capital invested in the company.
  • 2. Company Limited by Guarantee In a private limited company limited by guarantee, the members' liability is limited to the amount of liability each member undertakes in the Memorandum of Association. Consequently, members of a Private Limited Company Limited by Guarantee can not be held accountable for a sum greater than the amount of guarantee performed by the member in the Association Memorandum. Furthermore, the shareholder's guarantee in a company Limited by Guarantee can be sought only in the case of the company winding-up. The guarantee of the members of a Company Limited by Guarantee can not be withdrawn when the company is a going concern.
  • 3. Unlimited Companies Unlimited corporations are those types of businesses that have no restrictions on their members' liability. Each member's liability extends over the entire amount of the company's debts and liabilities. Hence, an unlimited company's creditors have the right, if wound up, to impose the company's debt and liabilities on shareholders.

Advantages of Private Limited Companies

  • Limited liability
  • MINIMUM NUMBER OF SHAREHOLDERS
  • Separate Legal Entity

Documents required

  • Share capital amount and proposed ratio for holding shares.
  • 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 the 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.