Private Limited Company

What is a Private Limited Company

A Private Limited Company in India is a privately held business entity registered under the Companies Act, 2013. It is one of the most popular forms of business structure in India for startups and growing businesses due to its balance of limited liability, legal status, and flexibility.

Key Features of a Private Limited Company

1. Limited Liability
   Shareholders’ liability is limited to the amount unpaid on their shares. Personal assets of shareholders are protected.
   
   
2. Separate Legal Entity
   The company has a legal identity distinct from its owners (shareholders and directors). It can own assets, incur debts, and sue or be sued in its own name
   
   
3. Number of Members
   Minimum: 2 shareholders and 2 directors
   Maximum: 200 shareholders
   
   
4. Name Requirement
   The name of the company must end with "Private Limited"
   
   
5. Compliance & Filings
   
   1. Annual filings with the Ministry of Corporate Affairs (MCA)
   2. Statutory audit is mandatory
   3. Income tax and other regulatory compliances like GST, TDS, etc., depending on operations
   
   
6. Capital Requirement
   No minimum capital requirement post-2015 amendment. You can start with even ₹1 as paid-up capital.
   
   

Advantages of Private Limited Company

1. Limited Liability Protection
   Shareholders’ liability is limited to the amount unpaid on their shares. Personal assets are protected in case the company incurs losses or debts.
   
   
2. Separate Legal Entity
   A private limited company has its own legal identity, separate from its owners. It can:
   
   • Own property
   • Open a bank account
   • Sue or be sued
   • Enter into contracts in its own name
   
   
3. Perpetual Succession
   The company continues to exist even if shareholders or directors change or die. This ensures business continuity.
   
   
4. Credibility and Trust
   Registration with the Ministry of Corporate Affairs (MCA) lends credibility. It’s often preferred by:
   
   • Banks and financial institutions
   • Investors and venture capitalists
   • Government departments and vendors
   
   
5. Attracting Investment
   Private Limited Companies can issue shares and are a preferred structure for:
   
   • Angel investors
   • Venture capitalists
   • Equity funding
   
   
6. Tax Planning Opportunities
   Corporate tax rates and deductions under the Income Tax Act (like Section 80-IAC for startups) offer better tax planning and savings than some other business structures.
   
   
7. Easy Share Transfer (Internally)
   Though external share transfer is restricted, internal transfer among members is easier and helps in smooth restructuring.
   
   
8. Employee Stock Options (ESOPs)
   The company can issue ESOPs to attract and retain talent — something not available in partnerships or proprietorships.
   
   
9. Professional Image
   Being a structured and regulated entity, it improves the company’s image when dealing with clients, vendors, government agencies, and partners.
   
   
10. Ease of Expansion
    Easier to open branches, attract partners, or grow operations across India and globally.
    Foreign Direct Investment (FDI) is allowed under the automatic route in most sectors.
    
    

Documents/Details Required for Registration of Private Limited Company

1. Unique name for the proposed Company
2. Self-attested Aadhar Card of all the Directors
3. Self-attested PAN Card of all the Directors
4. Latest Photograph of all the Directors
5. Self-attested Bank Statement of all the Directors (not older than three months)
6. Email Id of all the Directors
7. Mobile No. of all the Directors
8. Occupation of all the Directors
9. Official Email Id of the proposed Company
10. Contact No. of the proposed Company
11. Utility bill (Telephone Bill / Electricity Bill/ Gas Bill /Water bill/ Mobile Bill not older than Two months) of the registered office address to be signed by the owner of the premises.
12. NOC signed by the owner of the property (Format will be shared by us)