PRIVATE LIMITED COMPANY REGISTRATION

Ownership: The shareholders are the real and true owner of the company. They hold shares and invest their funds in the company. In the public limited company, there is no limit on the number of shareholders, but in a private limited company, the limit of the shareholders is restricted to 200 persons during the whole life of the company. In the public limited company, anyone can become the shareholder of the company and the same concepts lies in the private limited company but the number of people shall be under the limit of 200.

Easy to maintain: As compared to the public limited company it is effortless to manage the private limited company as there is no interference of the general public. The decision making power lies on a small group of a person due to which it becomes easy to run the operations of the company.

Limited liability: Limited liabilities means the obligation of the shareholders restricted to a certain point. It says that the shareholders of the company shall not be personally liable for any debt or loss incurred by the company during its life. The shareholders are responsible for providing only such amount which they agreed to contribute as mentioned in the memorandum of association. No other liability shall arise during the life of the company which the shareholders need to fulfill

Perpetual succession: There is no lifeline of the registered company. The company cannot die the members come and go, but the company goes until it gets wind up as per law. The validity of the company cannot get affected by the death of the member or the directors as some other person can replace their positions, but the company remains the same.

Confidentiality: As there is a restriction on public involvement there is very less chance for the leakage of confidential information in the market. The confidential information like the internal information, executive management details, market strategy, and the other details can be preserved as a small group of persons operates it, so it is effortless to keep all these information confidential.

Fewer compliances: As compared to the public limited company the private limited company has to comply with fewer government norms and procedure. The primary objective of the government is to protect the public interest and in private limited company. There is a restriction on public involvement, so there are so many rules under which the private limited company gets an exemption, and few are:

• Don’t need to comply with SEBI guidelines
• Don’t need to register itself with the stock exchange
• Don’t require to adhere to the provision of section 188 of the companies act, 2013 for related party transaction
• There are many other provisions under companies act, 2013 and other law where the private limited company get exemptions

Easy to raise fund: Due to legal identity it enjoys many advantages. The company can raise funds by issuing preference shares or debentures or can take deposits, etc., from its members and banks or financial institutions. The company has to follow all the guidelines or regulations framed by the government regarding issuing funds. That’s why there is very less chance of default.  The reliability of a private limited company is always more than a proprietorship firm or any firm

Sue or to be sued: The company is a legal entity so it is having full right to sue any person and a company also can be sued by any other person on its name.

Restriction on transfer of share: The shareholder of the company cannot transfer their shares to anyone without the prior consent of the shareholders of the company as the first right to get the shares of the company lies with the existing shareholders of the company.

Restriction on trading of shares: The company cannot trade its shares like a public limited company. The public participation is restricted under the private limited company hence the shares of the private limited company is not available in the market for trading.

Compliances: The private limited company also have to follow the procedure of certain compliances whether post incorporation compliances or other compliances mandatorily whether the company is in profit or not or whether it is operating or not. The company needs to hold the Annual General Meeting once every year and also have to mandatorily file the annual return and financial statement to the registrar every year. The company also needs to maintain its books and register and also have to preserve them. The company needs to intimate about each, and every change happened in the company to the registrar after obtaining proper consent of shareholder and board of the company.

Taxable liability: There is no slab rate concept for the company and the company has to pay a flat 30% of its profit as an income tax. It is mandatory for every type of company to pay 30% tax every year whether the annual profit is Rs. 10,000/- or Rs. 1,00,000/-.

The closing of the company: No one can directly close the company once it gets registered. There is a proper procedure prescribed under the law for closing the company. Before settling the company, there is a particular requirement which has to comply. It is not easy to close the company without professional guidance, so it is better to consent with the professional regarding the closure of the company.