Private Limited Company is the most favoured form of business entity in India having perpetual succession with minimum two directors & shareholders, the maximum being 15 and 50 respectively. It is very convenient to organize and operate a private limited company as a business and can be commenced immediately. There is no minimum paid-up capital required to start a company. It also increases the credibility of the business thus, enhancing the future growth of the company.
Many start-ups and companies consider this form of a business entity as it permits capital funding to be raised easily; it also limits the liability protection to its shareholders and enables them to offer employee stock options to motivate their employees. Availability through a bank loan, equity or debt funding makes a private limited company the most recommended legal structure of many small and medium-sized business entities that are family-owned or professionally run in India.
After establishing a private limited company registration in Mumbai, if debts are not repaid then only the invested capital in commencing the business would be lost, the personal properties of the directors would be safe unlike in a Partnership firm, where partners are personally liable for all their debts and would also have to sell their personal assets. A private limited company has a separate legal identity with restricted liability.
A Private Limited Company is a business entity having perpetual succession that means continued existence until it is legally dissolved or wound up. After getting a PVT LTD company registration, it has a separate legal identity. It is unaffected by the death or removal of any Director. Thus, a Private Limited Company continues to exist irrespective of the changes made in ownership.
The ownership in a Private Limited Company can be easily transferred to another person by shares. The signing and filing of the share transfer form and share certificates are sufficient to transfer ownership of the company. The consent of other shareholders is required to affect the share transfers in a private limited company.
After getting a Pvt ltd company registration in Mumbai companies can raise equity funds. With the permission of RBI, it can also issue equity shares, preference shares, debentures and accept deposits. Banks and Financial Institutions prefer providing funding to a company than partnership firms or proprietary concerns. A private limited partnership restricts its ownership but offers legal protection to its shareholders. It is relatively convenient to manage and run the company with a possibility of expansion for growing companies. It is also easier to dissolve and wind up the company.