A Private Limited company may also be defined as an entity which offers limited liability as well as legal protection for its shareholders but places certain limitations on its ownership . These restrictions are laid down in the company's bylaws or regulations and are meant to avoid any antagonistic takeover endeavor .
The chief ownership restrictions are as follows –
• These restrictions are laid down in the company's bylaws or regulations and are predestined to avoid any antagonistic takeover endeavor , as shareholders cannot sell or transfer their shares without presenting them first to other shareholders for acquisition .
• The shareholders are prohibited from offering their shares to the general public over a stock exchange .
• the total compostion of shareholders must be below a fixed figure which is commonly of fifty members .
Advantages Of Private LTD Registration –
A private ltd company enjoys various benefits , some of the benefits are enlisted over here –
i. Limited legal responsibility: The Company in the business environment operates as an separate legal entity as from its members. The liability of the company is different as from its members of a company. Liability for settlement of debts and lawsuits sustained by the Company, instead of lying on its owner lies on it .
ii. Everlasting Progression: A company which is registered enjoys everlasting progression . Everlasting Progression means that the company shall continue to exist even if the member dies or ceases, etc. Any changes within the management of the company does not bring any influence onto the distinctiveness of the company, the Company will remain as the same with same rights, immunities, estates and assets. The Company shall continue to exist till the event of its winding up in accordance with the provisions of the relevant law.
iii. Effortless Transferability Of Ownership: The shares and any other interest of any member in the Company shall be apt to be a variable property and can be transferable in the manner so provided by the Articles of such company. Therefore, it is much easier to subscribe or leave the membership of the Company and as well as it is easier to transfer the ownership of the company .
iv. Detached Property: A Company is a legal entity which is proficient in procuring funds and other assets . The Company is the authentic person in whose hands all the property is invested and such company also has the exclusive right to direct, administer and marshal off the property so invested in the domain of the company .The assets owned by company is not treated as the assets owned by the company members .
v. Taxation: As everybody wants to diminish their tax burden likewise the company would also love to do so. The company as per the income tax act 1961 has enjoys a key merit of incorporation towards taxation. As per this act the Companies are charged lower rate of taxes and are provided with better taxable benefits as compared to other kinds of business organization.
vi. Fund Raising : small business and a sole proprietorship or partnership often find difficulty in raising funds but not in the case of companies . As big companies as per Companies act 2013 can easily sell it shares to the public or can accept deposits from public and can therefore raise money easier than other type of business structure. There are various methods used by the company for financing business . Furthermore , since the companies are directed by a specific law and have to obey with severe disclosure norms, as a result they enjoy good credit praiseworthiness with various financial institutions .
vii. Effortless Process of selling the Business: For a company it is much easier to sell their business than any other business form . The business Corporation value will be based on the business rather than the owner, therefore it will make easy to sell the Company. Ability to take a legal action as a juristic legal person, a Company can sue in its name and be sued by others.
viii. Improved Administrating : Companies are directed by The Companies Act, 2013 and are required to follow various other rigid trials during the track of its governance, moreover they have to obey with the stringent disclosure norms so forced by the authority, which will let to better governed organizations and creating a better worth for owners .
Features Of Private LTD Registration –
The features of Private LTD registration are as follows –
• Limited liability.
• Minimum of two members.
• Maximum of two hundred members.
• Constrained rights relating transfering shares.
• A minimum of two directors.
• No minimum capital requirement even though (earlier it was Rs. 1,00,000).
• Obligatory usage of words private limited.
• Mentioning the above words in the Memorandum is also obligatory