A Private Limited Company is quite a proven and effective business model. It involves private ownership, with a limited number of shareholders(a maximum of 200).

1. LearnCommerce
Structures III: Private
LimitedCompany

2. Introduction

3. A Private Limited Company is quite a proven and effective business
model. It involves private ownership, with a limited number of
shareholders(a maximum of 200).These are small but successful
business entities and are comparatively easy to achieve targets, for
young entrepreneurs, after the BCom course.
Although it’s somewhat open to all options, individuals from
Commerce courses happen to make better jobs here, mostly due to
additional Educational orientations to similar subjects, something
other stream novices to this sector, are deprived of.

4. What Is A Private Limited
Company?

5. As the name suggests, a Private Limited Company is a privately held
business entity. It offers limited liability or legal protection to its
shareholders. It is an intermediate business stature, shareholders in
between a partnership and a collectively owned business company.
A maximum of 200 shareholders can be a part of this institution.
According to the definition, the shares of these companies are not
publicly sold in Stock Exchange markets and can only be sold to the
stakeholders in the business, implying a ground-level limitation in
the liquidation of such a company.

6. Who’sThe Owner Of A Private
Limited Company?

7. Private limited companies are owned by one or more individuals
(human or corporate), known as “members”.The company’s
“shareholders” are those, who’s memberships are limited by shares,
while “guarantors” are those limited by guarantees. Beyond the
technical terms, members of a company are often referred to as
partners.
The companies are majorly owned and managed by the same set of
people, where the ones managing the functioning of the system are
called Directors, and the ones assisting them are called Secretaries.
Together, the executive branch of a company is known as company
officers.

8. What AreThe Features Of A Private
Limited Company?

9. A private limited company has the following features:
Membership: As per the provisions of the CompaniesAct 2013, from
a minimum of two to a maximum of 200 members, is what a private
limited company is allowed to comprise of.
Limited liability: The liability of the members is limited to the
number of shares directly held in their name.
Perpetual succession: Even in case of death, insolvency or
bankruptcy of any of its members, the company continues to exist
in the eyes of the law, thereby offering ways of forever existence.
Register of members:This database is not mandatory for a private
limited company to maintain, unlike any public limited company.

10. A private limited company has the following features:
Directors requirement:The company is required to have a
minimum of two directors, and then it can remain operational.
Paid-up capital:A private limited company must hold a minimum
capital worth rupees one Lac, or such higher amounts, prescribed
from time to time.
Prospectus: A private limited company is not required to issue a
prospectus either, again, an absolute must in case of any public
limited company.
Minimum subscription:There are no such limits on this ground and
the company is free to start a business immediately after its
formation.
Name: The company must use the word private limited company at
the end of its name.

11. What AreThe Merits Of A Private
Limited Company?

12. A private limited company has the following advantages
Flexible Investment: No minimum capital threshold is required for
registration.
Separate legal identity: A private limited company is a separate
legal identity in the court of law and doesn’t hold overlapping assets
and liabilities with the directors.
Free and easy transfer of shares: Shares of the company are
transferable by a shareholder to any other person and it is
particularly hazel free.
FDI allowed: In a private limited company, 100% foreign direct
investment is permissible in certain segments.

13. What AreThe Demerits Of A Private
Limited Company?

14. A private limited company has the following disadvantages:
Publicity restrictions: It arrests the transferability of shares by its
articles.
No place in the stock market: Shares of these companies are not
entitled to be sold in the Stock Exchange markets.

15. IsThere Any Specific Employer
Requirement In A Private Limited
Company?

16. There is no such mandatory requirement, to appoint employees in a
private limited company.Though informal, graduates from
Commerce Courses, are likely to prioritize, in the selection
processes.

17. What AreThe Requirements For
Private Limited Company
Registration?

18. A private limited company has the following requirements for
registration::
 A minimum of two adult persons are required to act as Directors
of the company
 Minimum of 2 Directors and can have a maximum of 2015
directors.
 One of the directors of a private limited company has to be an
Indian Citizen and Indian Resident.
 The other director(s) can be a Foreign National.
 Two persons are required to act as a shareholder of a company

19. What AreThe Documents Required
For Registration?

20. The documents required for a private limited company are:
 ID proof: PAN card and passports of Indian and foreign directors,
respectively
 Address proofs: Ration card or Aadhar card or driver’s license or
voter ID
 Residence proofs: Bank Statement or electricity bill of the
premise
 Notarized rental agreement
 NOC from the property owner
 A copy of the sale deed or property deed (for an owned property)
 Digital signature of any one director

21. What IsThe Process Of Registering
A Private Limited Company?

22. Once a name for the company is finalized, the following steps have
to be carried out by the applicant:
Step 1: Apply for DSC (Digital Signature Certificate).
Step 2: Apply for the DIN (Director Identification Number)
Step 3: Apply for the name availability.
Step 4: File the EMoa and EAOA with registration form to register
the private limited company
Step 5: Apply for the PAN andTAN of the company
Step 6: Certificate of incorporation will be issued by RoC with PAN
andTAN
Step 7: Open a current bank account on the company name

23. Conclusion

24. Merits and Demerits are the two sides of the same coin, likewise, for
a private limited company. It is the most prevalent and recognized
business entity, in the current date.This is majorly due to the higher
degree of freedom, that it offers in setting it up and functioning.
There’s no time gap between these two, and that’s an incredible
opportunity to encourage start-ups.After BCom. Courses,
thousands of young minds sketch business plans, not always
relevant or effective in the public domain.Whereas the private
window offers a more homely than a professional working space,
warming up young interns to gear up quickly.
Massive Private Limited Companies have prospered beyond
extents, inspiring millions to execute their expertise. Some of these
include Flipkart, Ola, Snapdeal, etc. It’s important to have
directional thinking and appropriate strategies, to suit the ideas.

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