What is a private limited company? Features of Private Limited Company Benefits of opening a private limited company. How to start a private limited company? Private limited company can also be closed
Whenever we read about any company in the newspaper, on big hoardings on TV or on any website, one thing definitely passes our eyes and that is Pvt.Ltd. That is, Private Limited means that organization or company has been registered as Private Limited, it simply means that the company or that organization is someone’s personal property where private individual state holders are its owners.
The culture of startups has increased a lot across the world and in India too, this trend is in full swing. People across the country are thinking of doing something of their own. There is a boom in this new eco system of business and the existence of different types of business registrations such as Sole Proprietorship, Limited Liability Company and Private Limited Company is increasing.
What is a Private Limited Company?
Understand in simple language what is a private limited company? A private limited company is a joint stock company which is established under the Indian Company Act 2013 or under any other act. In this model, the founders of the company set up the company on their own will. Which has a minimum capital of ₹100000. A minimum of two people are required to open a private limited company, and there can be a maximum of 200 employees in a private limited company. A private limited company is not allowed to sell its shares publicly to the general public. If a company has all these specialties then it has to make the company a private limited company in its own name.
Features of Private Limited Company
In a private limited company, the liability of the members or shareholders of the company is limited, hence if there is any loss or damage then the members of the company can compensate the loss by selling their shares, because even if there is a loss, there is no liability on the personal shares. There is no risk. In the eyes of law, a private limited company has its own existence, due to which its identity remains intact even after the death of its founding members. The company will continue to exist forever even if its members die or the company gets bankrupted by the bank, and as we have said earlier, there can be a minimum of two directors and a maximum of 200 employees in a private limited company.
Benefits of opening a private limited company
The best thing about opening a private limited company is that it can be started by only two people together. Whereas to open a public limited company, 7 people are required, and in a private limited company, there is no need to index its members like email ID, phone number, address or value of shares and a private limited company does not have to index its member-directors. There is no need to take permission from the government to give a loan, but for giving a loan in a public limited company, the approval of the government is mandatory, that is, it is mandatory.
There are no restrictions of any kind on salary and appointment in a private limited company, and like a public limited company, a private limited company does not have to issue its prospectus, because a private limited company cannot send its shares to the public. It is not necessary to tell the public about yourself. For the sake of knowledge, you should know that prospectus is a document which contains all the information about the company like who are the directors of the company, what is the profile of the company, how much money has been invested in the company and so on. Rest all basic information.
How to Start a Private Limited Company
If you want to start a company to do business, then you can register your company as a private limited company. We are telling you in details the things that should be kept in mind while getting registered, so that whenever you get registered in future, there is no mistake because even a small mistake in registration and documentation can cause huge loss. If yes, then let us know what are the important rules of starting a private limited company.
- Directors run the company -: The first is that the directors run the company. Yes, whenever we hear about any high profile designation like CEO, Founder or Director, it is a very convenient thing for us, but if you are running your own business. This designation can also be added to your name in your own company. To run a private limited company, a minimum of two directors are required. One of which could be you yourself and the other person could be your family member or business partner. Now, as a director of a company, you must keep two things in mind, firstly, every director has a day i.e. Director Identification Number, which has to be obtained from the Ministry of Corporate Affairs, and secondly, one of the two directors must be a resident of India. Must be a citizen of.
- Name is also necessary for registration -: Name is also necessary for registration, it is very basic that the name of any thing is its identity, hence even while establishing the company, you will have to keep a name but think of the name of a private limited company. Time, three things are important like the main name of the company, what work or any kind of activity the company does, and the use of Private Limited Company. You will have to think carefully while thinking of the name of the company because the Registrar of Companies is responsible for the registration in ROC. You have to send 5 to 6 names at a time because no other company with the same name can be registered or the name of your company should not match with any other company.
- Full address of the registered office -: The company must also have a registered office. Yes, when you file an application for registration with the Registrar of Companies in the Ministry of Corporate Affairs, you will also have to provide a registered office address for your private limited company. It is important to provide the office address so that you can tell from where your company is operating. What is the location and where people will communicate with you, as well as a legal address to dispatch any document, courier or letter.
- Having a Digital Signature Certificate -: To form a Digital Signature Certificate Private Limited Company, you also have to take a Digital Signature Certificate. Digital Signature Certificate is equivalent to a paper certificate, which is the digital proof of identity of your company. With which you can prove your identity online or on the internet. Because we sign physical documents with our hands but digital signatures have to be put on any digital document or B-form. Digital Signature Certificate proves that the signature made by the company is genuine.
- Which documents will be required -: The documents required to register a private limited company include PAN card and passport. Apart from this, one will have to show Ration Card, Aadhar Card, Voter ID Card or Driving License. For residential proof, it is necessary to have a bank statement or electricity bill. Now wherever you are opening an office, it is mandatory to have a notarized rental agreement and NOC taken from the property owner along with sale deed or property deed.
- S.P.I.C.E. -: To register a private limited company, the Ministry of Corporate Affairs has issued S.P.I.C.E. Simplified Performer’s Incorporation of a Company electronic form has been introduced, about which you can read in details on www.mca.gov.in. By filing this one application, your four purposes will be solved like Director Identification Number, Reservation of Company Name, Incorporation of a New Company and Application for PAN and TAN. Till the year 2015, many different types of forms will be filled to register the company. Had to do. But now they have been merged together, which means the work has become easier.
- Registration Fee -: To register a private limited company, many different types of fees or charges have to be paid, which include ₹ 2000 for Digital Signature Certificate or ₹ 1000 for Direct Identification Number, Stamp duty of ₹ 2500, ₹ 500 to 1000. Notary fee is up to ₹ 1200, government fee and GST of 18%, and CA lawyers and other professionals charge ₹ 3 to ₹ 4000 to get all this work done, if totaled then the maximum expense comes to ₹ 15000. If all your documents are ready then it will take 10 days a week to get all this work done. Ever since the Ministry of Corporate Affairs has introduced a single application form to make things easier, things have become even easier.
- What are MoA and AoA -: It means that to run a private limited company, both Memorandum of Association and Articles of Association are very important. Talking about MoA, it has to be submitted while registering the company. In which it is told that what is the relationship of the company with its shareholders, and what is the objective of forming the company, the same Article of Association tells how the company will operate, and what will be its purpose. While making both these documents, It is important to consult a professional, and these have to be drafted very carefully. Once the Certificate of Incorporation is obtained, the company can start business in its own name. Remember that the paid up share capital is always deposited in the current account of the company.
Along with forming a company, some legal responsibilities also come, such as a chartered accountant has to be appointed within 1 month of the formation of the company, who can advise the company on the legal issues of the company. Apart from this, ITR of income tax is also filed every year. Six has to be filed along with Annual Return and KYC of Director Identification Number Application Number also has to be filled by the Board of Directors every year.
Can a private limited company also be closed?
Can a private limited company be closed? The answer is yes, but for this it is necessary for all the board of directors to agree. For this, the company has to issue a voluntary winding up resolution, which has many sets of rules. Apart from this, A private limited company can also be sold out by selling shares of a company.
Apart from this, if the company is found guilty in any fraud case, or its involvement in any illegal work is found, then the government can also shut down the company through juridiction. Anand Automotive Private Limited, Hindustan Coca-Cola Beverages Private Limited, Jaguar & Company Private Limited, Mother Dairy Fruits and Vegetables Private Limited, Parle Products Private Limited, these are the names of some popular private limited companies of India, which are successfully running their business. If you are also dreaming of leading the market with your unique business idea, then you can start with a private limited company.
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Question 1 -: What is a private limited company?
Answer -: Private Limited Company is a special type of company which is privately owned and has limited number of shareholders. The number of members in this is limited and their membership is through shares.
Question 2 -: What is the procedure to form a private limited company?
Answer -: To form a private limited company, one has to first apply to a concerned government authority. After this, information about the company’s permanent address, objects, and members has to be given.
Question 3 -: What is the permanent capital of the company?
Answer -: Permanent capital represents the panther leg of the company which consists of the capital stored and invested. This is also specifically called permanent capital.
Question 4 -: How many company members can there be?
Answer -: In a private limited company, the number of members is limited and there should be a minimum of two members while the maximum number of members can be limited.
Question 5 -: What do company shareholders mean?
Answer -: Company shareholders are individuals known as shareholders who hold shares in the company and through this have a share in the ownership of the company.
Question 6 -: How do people associated with the company benefit?
Answer -: People associated with the company can benefit as shareholders for which they can get dividends. These dividends are usually paid to shareholders at regular intervals.
Question 7 -: How can updated company information be obtained?
Answer -: Updated information about the company can be obtained through social media, official website, and government processes. Shareholders also receive regular updates.