A private limited company is a business entity owned by a small group of individuals, typically family members or close friends. The company’s shares are privately held and not available for purchase by the public, unlike publicly traded companies.
The owners of a private limited company enjoy limited liability, which means their assets are protected in the event of the company’s bankruptcy or other financial difficulties. Additionally, private limited companies can raise capital by issuing shares, taking on debt, or receiving investments from private investors.
Private limited companies typically have more flexibility in their operations than public companies, as they are not subject to the same regulatory requirements and disclosure obligations. However, they are still required to follow certain legal and financial regulations set by the government, such as filing annual accounts and returns with the Companies House.
Characteristics of A Private Limited Company?
Some of the key characteristics of a private limited company include:
Limited liability: The owners of a private limited company enjoy limited liability, which means their assets are separate from the company’s assets. This protects their assets in the event of the company’s bankruptcy or other financial difficulties.
Restricted ownership: The shares of a private limited company are privately held and not available for purchase by the general public. The ownership is typically limited to a small group of individuals, such as family members or close friends.
Capital raising: Private limited companies can raise capital by issuing shares, taking on debt, or receiving investments from private investors. However, unlike publicly traded companies, they cannot issue shares to the general public.
Legal status: Private limited companies are considered separate legal entities from their owners. They can enter into contracts, own property, and sue or be sued in their name.
Management structure: Private limited companies typically have a board of directors and shareholders who elect the directors. The directors are responsible for managing the day-to-day operations of the company.
Regulatory requirements: Private limited companies must follow certain legal and financial regulations set by the government, such as filing annual accounts and returns with the Companies House.
Privacy: Private limited companies are generally more private than public companies. They are not required to disclose as much information to the public, which can be an advantage for businesses that want to keep their operations and financial information confidential.
Requirements for Private Limited Company Registration?
Suppose you want to start your own business legitimately but do not know how to register a company in India. In that case, the registration requirements for a private limited company are as follows:
- Obtaining a Digital Signature Certificate (DSC) and Director Identification Number (DIN) for all directors.
- Choosing a unique name for the company that is not registered or trademarked.
- Applying for incorporation (Form SPICe) with the Registrar of Companies (ROC) along with the necessary documents, such as a Memorandum of Association (MoA) and Articles of Association (AoA).
- Payment of incorporation fees.
- Providing details of the company’s directors, shareholders, and registered office address.
- Obtaining a Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) for the company.
- Registering for Goods and Services Tax (GST) if applicable.
- Registering for Employees Provident Fund (EPF) and Employees’ State Insurance (ESI) if the company employs more than a certain number of employees.
- Obtaining any other necessary licenses or permits for the company’s business activities.
It is important to note that the company registration process in India can take several weeks. Hiring a team of legal consultants is absolutely necessary if you need to get a company registered. A team of legal experts can carry out the registration process of your company efficiently. Not only that, but a team of legal experts can also help your business grow through their credible legal advice.
If you want to register a company in India and start your business without worrying about its legal formalities, JustStart might be the best option for you. Let JustStart’s team of legal experts help your business grow consistently. Our team of legal consultants can assist you through your company registration process and empower you to run your business operations smoothly.