 Private Limited Companies are those companies which are

privately held by the people. They are mostly preferred as a

common business organization in India. Shareholders may operate
the business themselves, or hire directors to manage the company
on their behalf. Private Limited Company is the most popular
legal structure for businesses.

 A private limited company has every benefit of partnership like

flexibility, greater capital contribution and enhanced abilities, etc
to offer combined with limited liability, greater stability and legal
entity.
In a Private Ltd. Company, minimum 2
and maximum 200 members are required.
Minimum paid-up capital needed to start
business is Rs. 1,00,000.
Minimum 2 directors must be there.
Transfer of share can be restricted as per
the Articles of the company.
Reduced complaince burden as per
Company Law.
It can take loan from shareholders, directors and
relatives of directors but not from the public.
Shares cannot be issued to public.
The words 'Private Limited' should be suffix or must come
after the name of company. Many of the restrictive
provisions of Companies Act are not applicable to Private
Limited Company allowing flexibility and convenience
unlike Public Limited Company.
Limited Liability:
As business entity grows, the need for funds grows too. Brand Value:
Hence, businesses have to borrow funds. In private ltd.
Company’s brand value will get increased because people
company, the extent of liability is limited to the amount
come to know about the company very well.
invested in starting the business. They are not personally
liable to pay the debt.

Access to Funding: Greater Credibility:

Private limited companies easily accommodate equity They have greater credibility as they have to inform
funding through venture capitalist, angel investors as about the structure, directors, members, Article and
they are unlikely to invest in any other structure. Memorandum of Association and necessary changes to
the Ministry of Corporate Affairs.

Debt-taking Capacity: Capital:

A private limited company can take funds from Banks, More capital can be raised as there is no limit on
debentures and convertible debentures. number of shareholder.

Easy Exit:
Private limited companies can be sold or transferred,
Tax Advantages:
Private limited companies enjoy tax advantages.It opens
either partially or in full, to another individual or
the door to more tax-deductible costs and allowances
entity without any disruption to the current business. redeemable against profits.
 Theshares
The sharescannot
cannotbebe sold
sold or
or transferred
transferred to anyone
to anyone else
else without
without the the agreement
agreement of
ofshareholders.
other other shareholders.

In Private Ltd. Company no

one is allowed to invite public
to subscribe to its shares.

The Growth may be limited

because maximum
shareholders in a Private Ltd.
Company are only 50.
 STEPS INVOLVED IN
INCORPORATION OF PRIVATE
LIMITED COMPANY
STEP-1
Obtaining Director Identification Number (DIN) &
Digital Signature Certificate

STEP-2
Applying for the name

STEP-3
Drafting of MOA and AOA

STEP-4
Filing for Incorporation of Private Limited Company

STEP-5
Subscribing to the Private Limited Company

STEP-6
Certificate of Incorporation of Private Limited Company