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Private Limited

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What is a Private Limited Company?

Private limited company is a voluntary association of not less than two and not more than 200 members / shareholders, whose liability is limited, the transfer of whose shares is limited to its members and company is not allowed to invite the general public to subscribe to its shares or debentures.

Private Limited Companies are those types of companies where minimum number of members is two and maximum number is not more than 200. A private limited company has the limited liability of members but at the same time it has many characteristics as those of a partnership firm. A private limited company has all the advantages of partnership namely flexibility, greater capital combination of different and diversified abilities, etc., and at the same time it has advantages of limited liability, greater stability and legal entity. In this sense, a private limited company stands between partnership and widely owned public company. Identifying marks of a private limited company are name; number of members, shares, formation, management, directors and meetings, etc.,the maximum number of directors shall have to be mentioned in the Articles of Association.

Minimum requirements

  • Minimum 2 Shareholders
  • Minimum 2 Directors
  • Directors & shareholders can be same person
  • No Minimum Share Capital
  • DIN for all the Directors
  • Digital Signature of all the Directors

Documents Required

  • Two Colour Photograph of each Director
  • Self attested copy of Pan card & Address Proof
  • Signature on Subscriber sheet of MOA & AOA
  • Signature on Digital Signature Certificate (DSC) Form
  • Name application Through RUN( Reserve Unique Name ) form
  • 4 Name in preference order (2 name in first attempt and iif Re-submission another 2 name in second attempt)
  • Payment of Name Approval Application (RUN) of Rs-1000/- Govt. Fee
  • Spice Form-32 (Simplified Proforma for Incorporating Company Electronically (SPICe) - with mandatory PAN & TAN application included
  • eMemorandum of Association (SPICe MoA)
  • eArticles of Association (SPICe AoA)
  • All Documents of Promoters,Directors will be attached.
  • Incorporation Certificate

Separate Legal Entity:- A company is a legal entity and a juristic person established under the Act. Therefore a company form of organization has wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts.

  • Uninterrupted existence:- A company has 'perpetual succession', that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.
  • Borrowing Capacity:- A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns.
  • Free & Easy transferability of shares:- Shares of a company limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.-
  • Owning Property:- A company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern.
  • Limited Liability:- Limited Liability means the status of being legally responsible only to a limited amount for debts of a company. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company's debts is limited. In other words, the liability of the members of a company is limited only to the extent of the face value of shares taken up by them.
  • Capacity to sue and be sued:- To sue means to institute legal proceedings against or to bring a suit in a court of law. Just as one person can bring a legal action in his/her own name against another in that person's name, a company being an independent legal entity can sue and also be sued in its own name.
  • Dual Relationship:- In the company form of organization it is possible for a company to make a valid and effective contract with any of tis members. Thus, a person can at the same time be a shareholder, creditor, director and also an employee of the company.

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