What is Private Limited Company?
- A private limited company is a type of business structure designed for private ownership, with some key advantages like limited liability for its owners.
- Private Ownership: Shares of the company are not offered to the public on stock exchanges. Instead, ownership is restricted to a small group of shareholders, often the founders or investors.
- Limited Liability: A key benefit is limited liability protection for shareholders. Their liability is limited to the amount of investment they’ve made in the company’s shares. This means their personal assets like houses or cars are generally not at risk if the company faces debts.
- Separate Legal Entity: A private limited company has a separate legal existence from its shareholders. This means the company can own property, enter contracts, and be sued in its own name.
- Formation Process: While there are variations depending on the country, forming a private limited company typically involves more formalities than a sole proprietorship or partnership. This may include registering with the government, creating company documents like a Memorandum of Association and Articles of Association, and appointing directors.
- Management: The company is managed by a board of directors who are elected by the shareholders. Directors oversee the company’s operations and make major decisions.
- Private limited companies are a popular choice for startups and growing businesses due to the benefits of limited liability and a more structured organization compared to simpler structures. Here are some additional points to consider:
- Minimum Shareholders: The number of shareholders required to form a private limited company can vary by country. In India, for instance, a minimum of two shareholders is required.
- Taxation: Private limited companies are taxed as separate entities from their shareholders. The specific tax rate will depend on the company’s profits and the country’s tax laws.
Documents required for Private Limited Company Incorporation:
Requirement for Name approval :-
- Business Activity
- Company Name
After Name approval, below Documents are Required:-
- Pan Card For All Directors.
- Aadhar Card For All Directors.
- Identity Proof: Directors and shareholders can use Aadhaar card, Passport, Voter ID, or Driving License.
- Passport Size Photo for all.
- Address proof- Latest utility bills (not older than 2 months) or bank statements for directors and shareholders.
- Address proof of registered office- Rent agreement, Electricity bill, NOC from landlord
