Private Limited Company (Pvt. Ltd.)

The Private Limited Company (Pvt Ltd) is a business entity whose shareholders’ liabilities are limited. It is a popular business structure in India. 

 

What are the Key Characteristics of a Private Limited Company?

The Companies Act of India, 2013 allows companies to register as privately owned and operated business entities. This makes the private limited companies legally recognized, with the shares not public for sale. 

The key characteristics of a Private limited company are: 

• In times of financial distress the personal assets of the company are secure 
• The company possess its own legal identity, separate from its shareholders
• The private ownership is maintained as the shares are not publicly listed
• The minimum number of members is ,two and the maximum number of members is 200 
• Examples of private limited companies are Flipkart Private Limited, Ola Cabs Private Limited, and Paytm Private Limited companies.

 

What are the advantages of a Private Limited Company?

• The limited liability security 
• Private investors can easily offer funds 
• A structured hierarchy 
• Efficient credibility and better recognition 

What are the disadvantages of a Private Limited Company?

• Complexities in legal and financial regulations 
• High maintenance costs 
• The share transfers have complex restrictions 

How to Register a Private Limited Company in India 

The steps of registering a private limited company are:

• Acquire a Digital Signature Certificate to apply through the certifying authorities 
• Apply for a Director Identification Number through the Ministry of Corporate Affairs portal
• Apply for name approval using the Reserve Unique name portal 
• File for the incorporation form with the necessary documents like PAN
• Draft the Memorandum of Association and Articles of Association
• After complete verification, the MCA will issue the Certificate of Incorporation, and your company will be officially registered. 

 

Read More 

• Large Scale Industries 
• Business Environment
• What is Commerce?
• Amalgamation

 

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Frequently Asked Questions (FAQs)

What is the key purpose of a private limited company?

The private limited company offers a limited liability security, and the private investors can easily offer funds to the company.

Will a private limited company be able to raise funds from the public?

No, a private limited company cannot raise funds from the public because its shares are not listed. 

Is this a rule to end the name of the company with Pvt. Ltd. or private limited?

Yes, according to the Companies Act 2013, in India, it is a must to end the name of the company with Pvt. Ltd. or private limited.