Private Limited Company

Private Limited Company Registration

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Private Limited Company

A Private Limited Company is a business entity held by small group of people. It is registered for pre-defined objects and owned by a group of members called shareholders. Startups and businesses with higher growth aspiration popularly choose Private Company as suitable business structure.

The business entity gets recognised as a Company through its registration under Companies Act of 2013 in India. The governing body is Ministry of Corporate Affairs, widely known as MCA. 

Private Limited Company is preferred structure by startups because of stability and growth opportunities offered by this structure. Further, it assures separate legal existence from its members. So, it can involve into contracts and legal proceedings in its own name. Moreover, a company’s status is unaffected from any change in members and management.

Separate managerial board i.e. Board of Directors is beneficial for members interested in investment purpose. Where Board works on remuneration, the members receive profit sharing in form of Dividend.

It also offers various funding options in form of private equity, ESOP and more. This makes it more suitable for external funding options. And thus, it is more preferred by VCs, Angel Investors, and other outside funding agencies compared to any other business structures. It also is rather preferred by banks and lending agencies because of the credibility that it holds as a corporate structure.

A private company is eligible to take benefit of registration under Startup India Scheme of Government of India. This scheme avails multiple benefits including tax exemptions for the recognised startups.

Because of these reasons, it is the priority for both family-based businesses and start-ups. Where service-based businesses tend to choose LLP, Pvt Ltd is suitable for product based and growth-oriented businesses. There are various types of Private Company, classified based on liability and capital:

  • Based on Capital: A Private Company can be registered with or without share capital. The type of company based on capital is provided in the capital clause of the memorandum of the company.
  • Based on Liability: The members’ liability can be limited or unlimited. Usually, companies are registered with Limited Liability in India. In case of companies with shareholding, members’ liability is limited to unpaid capital on subscribed shares. In case of companies without shareholding, the agreed amount of liability in form of capital is provided in memorandum of the company.

One Person Company: One Person Company, popularly known as OPC is a type of Private Limited Company. It is a company registered with only one shareholder. This structure benefits such promoter, who does not want to share the ownership rights.

The promoters quite often face some myths and dilemmas, while considering Private Limited Company Registration. Talk to our expert if you are desirous to start your venture and needed support and guidance.

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