The word Private Limited Company is a combination of 3 words i.e Private, Limited and Company. Each of these words has its own meaning and significance. The word Private denotes the status of the Company. It means that the interference of general public is prohibited in decision making of the Company. Therefore, the shareholder/director can easily manage the business as per their needs and desires. The word Limited reflects the liability of the shareholders which is limited to the value of the shares acquired/subscribed. The Company denotes the association of person to achieve common goals. The Company is an artificial person and a separate legal entity having its own identity formed to achieve the Common goals of the Promoter.
Therefore, a Private Limited Company is a separate legal entity formed as an association of person to achieve common goals without interference by outsiders. It is the most trusted form of business as compared with sole proprietorship and partnership. The benefits of forming a Private Limited Company are:
- Artificial Person: A Company is an artificial legal person created by law having its own identity.
- Separate Legal Entity: The Company is an artificial legal person having its own identity separate from its members. Therefore, it can acquire and transfers assets in its own name and enter into a contractual relationship with any other person.
- Perpetual Succession: A Company is formed by law and can be dissolved only through a legal process. Therefore, it is said that Members may come and members may go, but a Company goes on forever.
- Limited Liability: The liability of members is limited to the extent of shares subscribed. Therefore the members are not personally liable.
- Transfer of shares: Ownership of Company can be transferred merely by transferring shares of the Company.
- Easy access to loan: A Company can easily avail loans from banks and financial institutions as compared to sole proprietorship and partnership.
The incorporation of a Company has been eased in order to boost entrepreneurship in India. One just needs to comply the minimum requirements and file the following documents with the ROC in order to incorporate a Private Limited Company:
- Members: At least 2 members are required to form a Private Limited Company
- Capital requirement: In order to boost business, minimum capital requirement concept has been eliminated. Hence, minimum capital is not required.
- Director: Minimum 2 directors are required to manage the business of the Company. At least one director should be a resident director.
- File the following documents along with the application form with the ROC:
MOA and AOA of the Company
DIN, ID, Address Proof and 2 colour photograph of the Directors of the Company
Declaration and Affidavit by Directors
Consent of all director
Utility bill of the registered office
NOC/ Lease agreement from the owner
Declaration by the professional engaged in incorporation
DSC of the applicant and professional in the attached form
The process of incorporation of Company has been eased and minimum requirements to manage the business has been relaxed. Many provision of the Companies Act creating obstacles in running the private limited has been relaxed. Incorporating and running of Private Limited Company has become much smoother and easier. For professional assistance, feel free to contact us at 8882580580