What Is Private Limited Company?

Private Limited company is a type of company that offers limited liability, or legal protection for its shareholders but that places certain restrictions on its ownership. These restrictions are meant to prevent hostile takeover attempts. This type of company has lesser number of compliances to be fulfilled and lighter disclosure to be made. The ownership & operation of the private limited company is privately & closely held by its limited number of members, owners & shareholders. More than ninety percent of companies registered in India are private limited company.

Why Private limited Company ?

  1. Separate Legal Entity
  2. Ease to Raise Funds
  3. Uninterrupted Existence
  4. Limited Liability

Frequently asked questions

+ How to Choose the Name of the Company?

First ensure that company name is not similar to any other Private Limited, OPC, LLP or Public limited company. Also, do check If your first is not a registered trademark taken by anybody under the IP Act.

Also, make sure the name is not too generic to be accepted by the ROC land also, try not to use abbreviations, adjectives.

While choosing the name make sure that name should contain the objective of the business like if the objective is Forex Money changer then name should be like ABC Forex Private Limited.

+ Why Private Company is the Choice for Start – Ups ?

For the proper execution of the idea choosing the right form of business is important and for start-ups Private Limited is the best option for the following reasons:

  • Legal Compliances
  • Number of people required are low
  • Funding requirements can be fulfilled with the help of shareholders and financial bodies
  • Limited liability of the members
  • Growth of Business can be done by converting a Private Limited to a Public Limited but a LLP cannot be converted to a Private Limited hence it restricts the growth
  • Even though Private Limited Company is expensive but to execute the Big idea into a successful long term business Private Limited Company is the best choice for start-ups