Private Limited Company
⚡ ALL INFORMATION CLICK HERE 👈🏻👈🏻👈🏻
Private Limited Company
Home
Knowledge Base
Legal
What is a Private Limited Company?
Home
Knowledge Base
FAQs
What is a Private Limited Company?
Categories Categories
Select Category
businessnews (49)
Case Studies (5)
Running your Business (76)
Starting a business (63)
Uncategorized (109)
Copyright © 2022 TheFormationsCompany.com Ltd | Registered in England. Registered No. 06924361 | Registered Office: 20 St Thomas St, London, SE1 9BF
Site Map
If you have a great business idea and have started researching how to bring it to life, you might have come across this phrase. But what is a private limited company and why might you choose to form one? Let’s take a look.
Even if you are 100% confident about your business idea, you may decide it’s best to limit your personal liability for any debt if your company ever gets into financial trouble. This is why most people chose this legal structure.
The Definition of a private limited company according to the oxford dictionary is: ‘(in Britain) a type of company, usually small, that does not issue shares to the public. The company’s name is usually followed by ‘Ltd’, short for ‘Limited’.
A private limited company is a company that can either be limited by shares or by guarantee :
This means that the company is owned by shareholders. The liability of each shareholder is limited to the original value of the shares issued to them.
When a company is limited by guarantee, it has members who act as its guarantors. These members contribute a previously agreed amount to support the company in times of trouble.
When setting up your business it’s a good idea to look well into the future to decide where you want to be and where you wish to take your business. If you’re looking to grow your business, this legal structure will help you to share the load and eventually, as the company is a separate legal entity, you could even take a back seat.
But there’s much more to gain from setting up as a private limited company, and while there’s more administration to set up, opting for the help of a formations agent can make it quick, easy and cheaper than you think.
You business will become a separate legal entity. This means that if something goes wrong, for example, you get sued or you cant pay your debts, you won’t be personally liable – financially or legally. The debt is tied to the company so you all your personal assets, such as saving, home and car will be safe.
With the ability to bring many more people into the mix you’ll be able to benefit from others’ expertise and skills, helping you to keep a clear head for business. Setting up as a limited company also makes it less personal when it comes to running your company, as you can share the responsibilities with others much more easily.
As well as limiting your personal liability, you’ll also find there are tax benefits. With the company paying Corporation Tax on taxable profits, you may be protected from higher income tax rates yourself. You can also pay yourself in dividends if the company is in profit, which has a lower tax rate than income tax.
A private limited company also has the advantage of more tax-deductible allowances and costs, which are redeemable against profit.
Let’s say you’re a business owner, you’re working as a sole trader and you wish to take time off. If you become unwell or if you simply wish to retire, your business will also need to go on hold or close. This means you can choose other people to take control when you’re not there.
Many see the paperwork involved with setting up and running a private limited company as a barrier to getting started. There’s certainly a lot to consider when setting up, However, much of the hassle can be removed when you use a formations agent to help. Considerations include:
Registering a limited company with Companies House means you’ll need to pay a fee of £12. However, if you use us as your formation agent, you’ll find that our formation packages start from just £9.99! Plus you get so much more than just a company formation!
The financial information you need to file is more complex when you’re registered as a limited company. However, this information can also help you to keep a keen eye on your company’s productivity and profitability. And your accounts don’t need to cost the earth to get right.
The profits of a limited company are distributed among shareholders or channelled back into the business. Many companies benefit from this and with investment from profits may grow more successfully.
Let’s say a construction business called ‘Gold Star Construction’ becomes a private limited company, the new name would be ‘Gold Start Construction LTD (or LIMITED)’. All the company, officer and filing details would be stored on the Companies House database, which can viewed online.
An example of a private limited company that you may have heard of is Dyson Limited. You can see the details of this company and it’s officers online here .
Setting up a private limited company is a simple process and you could be the owner of your own company in a matter of hours. take the first step by checking to see if your company name is available to register .
If you’re not ready just yet, continue to browse the knowledge base for more advice on some of the key terms associated with setting up a business.
Can't find the answer you're looking for? Don't worry we're here to help!
Management
Economics
Finance
Search this website Search
By Ahmad Nasrudin · Updated on July 4, 2020
What’s it: A private limited company is a company whose shares are not listed on a stock exchange, have limited liability, and have a separate legal identity from the owners. Because they are not listed on a stock exchange, their shares are not traded to the general public.
A private limited company is common for a new company. They range from small to large-scale companies. Their initial capital may come from the owner’s money, the family, or from private equity.
When companies need additional capital to finance expansion, they can sell their shares to the public through the stock exchange. When done, the company turns into a public limited company. In addition, they can also raise funds by issuing debt securities such as bonds and medium-term notes.
Formally registered. Businesses are registered as formal legal entities and must have important documents such as articles of association and taxation.
Separate legal entity. This business organization has a separate legal identity from its owner. The company’s finances are separate from the owner’s personal finances. Likewise, legal disputes or corporate debt problems are not the responsibility of the owner as a person.
Owner. They are known as shareholders. The company has at least one shareholder. They may be individuals, trusts, associations, or other companies.
Limited liability. Shareholders have limited liability. The company’s debt is not their personal responsibility. Thus, when a company goes bankrupt or fails to pay its debts, shareholders have limited liability. Shareholders’ personal assets cannot be taken to pay off debts. They simply lost the capital they had invested in the business .
Ownership . The owner’s interest in the company is equal to the number of shares they own. If companies distribute dividends, they receive a percentage of their shareholding.
Operation. Shareholders appoint the Board of Directors to operate the business and act in their best interests. The Board of Directors is responsible for business operations and makes all business decisions. And, sometimes, shareholders also serve as directors.
Double tax. Shareholders pay taxes on their income. And, businesses also pay corporate taxes. So, there is double taxation.
Liability . Business organizations have limited liability. It allows protecting the owner’s wealth. In addition, the company’s debt is not their obligation as a person. So, they don’t have to sell their assets just to pay off the company’s debts.
Separate legal entity. Lawsuits against the company do not lead to lawsuits against shareholders because they are a separate legal entity from its owners.
Resource . Companies usually have a more organized business structure than a sole proprietorship.
Capital . In addition to capital injections from existing shareholders, companies can also sell shares or issue debt securities in the capital market. Thus, it is easier for companies to raise funds to support future growth. When a company sells its shares for the first time (called an initial public offering), it turns into a public limited company .
Continuity . The company continues to exist even when the shareholders change. Likewise, when a shareholder or director dies, it does not cause the company to die.
Control . The original owner can retain control. And their ownership is not diluted because the company does not sell its shares to the public through the stock exchange.
Confidentiality . The company has control over strategic and critical information such as financial statements. On the other hand, a public limited company must publish some such documents required by the regulator.
Establishment . These business organizations are more difficult to set up and require more paperwork and requirements. Thus, regulatory costs (legal and administrative) are also expensive. In addition, in some countries, obtaining legal formalities can be time-consuming due to acute bureaucratic problems.
Dividend . Shareholders may not earn income from dividends. The company may not distribute dividends and reinvest them into the business (known as retained earnings). So, no money goes to the owner.
Complexity . Business operations are more complex and involve a lot of documents, including standard financial statements and taxation.
Transparency. The public or regulators find it more difficult to obtain information about companies, such as their financial statements. Unlike a public limited company, a private limited company is not bound by rules to publish such information.
Conflict of interest. Directors may pursue their own interests and profits, ignoring the interests of the owners. That’s because the business decisions are under the directors, not the owners, in contrast to a sole proprietorship where the business decisions are in the owners’ hands. That can then give rise to agency problems.
Transfer of ownership . Old shareholders find it difficult to sell their shares because they are not publicly traded through the stock exchange. They can only sell their shares with the approval of other shareholders. Likewise, new shares issued cannot be sold on the open market.
What's it: A short-run macroeconomic equilibrium occurs when the aggregate demand curve and the short-run aggregate supply curve intersect. It
What it's: A competitive market refers to a market characterized by intense competition in which no player has a dominant power. It is identified
Several factors affect consumption expenditure. Disposable income comes first. Without it, there is no income to buy the product. Other factors
What's it: A supply shock is a sudden and unexpected event causing a dramatic change in output. It can be positive or negative. It is positive if
What's it: Long-run aggregate supply (LRAS) refers to the total output produced in the economy when all inputs are variable. Wages and other
What's it: Consumer spending patterns are changes over time in the total money individuals spend on goods and services for personal use. It also
Exchange rates affect aggregate demand through their effects on exports and imports. Specifically, it affects the relative prices of imported or
Monetary policy affects aggregate demand and the economy through the money supply. For example, an increase in the money supply
This field is for validation purposes and should be left unchanged.
Copyright@companyregistrationonline.in | All Rights Reserved | Powered by LegalRaasta
A Company is an association of persons who share common goals. Moreover, the owners of the company pool their resources to achieve their common goals. A private limited company is a closely held company with restrictions to issue shares to the public. Thus that it cannot go for an IPO or list their shares on the stock exchange for public trading of their shares.
Registration of a Pvt Ltd Company in India is regulated by the Companies Act, 2013, and administered by the Ministry of Corporate Affairs.
Private Limited Company has a minimum paid-up share capital of Rs. 100 thousand or such higher capital as may be prescribed under section 2 (68) of Companies Act, 2013; and by its Articles,-
1) restricts the right of transfer of its share;
2) except in the case of One Person Company , limits the number of its members to 200 not including:
a) persons who are employees of the company; and
b) persons, who have formerly been in the employment of the company, were members of the company and have continued to be members after the employment ceased
3) prohibits any invitation to the public to subscribe for any securities of the company.
A Private company becomes a “ small company “ in the following circumstances:
Note: None of the above is applied to a holding or subsidiary company.
A Private Company becomes a “small company” if the paid-up share capital does not exceed fifty lakh rupees and its average annual turnover during the relevant period does not exceed two crore rupees.
The main steps of incorporation are discussed below:
There must be at least two Promoters and at least two Directors . Promoters may be individual or body corporate who will promote/incorporate a company and Directors should be individuals. The individuals need to apply for DIN i.e. Director Identification Number in Form DIN 1 along with the prescribed documents.
Digital Signature is a must for any of the two Directors. There are a total of seven Certification Agencies authorized by the Controller of Certification Agencies to issue the Digital Signature Certificate.
The next step involves an application to the concerned Registrar of Companies (ROC) along with the prescribed documents and fees. The promoter can apply for six company names amongst which the ROC will approve only one. If the ROC rejects all the names, the applicant has another two chances to apply the name again with the same fees he has incurred.
After the name approval, the drafting of Memorandum of Association and Article of Association are drafted by the Directors/Promoters.
After the drafting of MoA and AoA , the Director will take the Professional Service i.e. from CA/ CS/ CWA to incorporate the company . E Forms 1, 18, and 32 are to be filed, Digitally signed by any One Director followed by Digital Signatures of Professional who certify that all the documents and information is correct one. Certificate of Incorporation will be generated, once the ROC approves the documents and Forms submitted. The Directors are to get the MOA and AOA printed and to comply with all the compliance after the company registration
Following are the documents that are generally required for Private Limited Company Registration
Passport size photograph of directors
Copy of Aadhaar Card/ Voter identity card of directors
Copy of Rent agreement (If rented property)
Electricity/ Water bill (Business Place)
Copy of Property papers(If owned property)
Landlord NOC (Format will be provided)
There are numerous benefits of a Private Limited Company Registration as compared to other forms of companies. A private limited company is the most preferred form of business entity for startups
Many start-ups register as a ‘Private Limited Company’ as it is the most preferred form of entity for seed funding by Vc’s and investors. It is thus the most popular form of business entity in India. Read why is a Private Limited company more suitable for Startups who want to go for seed funding .
One can start the Pvt Ltd company, with a minimum of 2 members and a maximum of 200 members as per the Companies Act, 2013.
Minimum 2 directors are required for Pvt Ltd Company. Directors and the shareholders can be the same person. No mandatory qualifications are required for the appointment of directors.
For Pvt Ltd Company, share capital of only Rs 1,00,000 is needed.
The prospectus is a detailed document issued by the company which invites the public for the subscription of shares, debentures of a company. The issue of a prospectus is not required in Pvt. Ltd. Company.
Statutory meeting of the members or filling of Report to the Register of Companies is not required.
It is important to ensure timely fulfillment of legal compliances to avoid any levy of interest or penalty. Some of the common compliances of a private limited company are elaborated below:
For more information and consultation get in touch with our experts. Just fill a simple format Company Registration Online .
Companyregistrationonline.in is an online portal to help people register LLP and Private Limited Companies in India. We have 7+ years of experience in application of LLP and Private Limited Companies. We have helped more than 450+ clients for LLP and Private Limited Company registration. Company Registration Online is an initiative by LegalRaasta – India’s topmost CA,CS & Legal platform.
The auditor will be appointed for the 5 years and form ADT-1 will be filed for a 5-year appointment. The first Auditor shall be appointed within expiry of one month from the date of incorporation of a private limited company as given in the incorporation certificate.
Every Company shall maintain its books of accounts and get the same mandatorily audited by a Chartered Accountant in Practice holding a COP at the end of every FY. The Auditor shall prepare an Audit Report annexed with Financial Statements audited by him to present it in the AGM and file it with the Registrar of Companies.
Filing of Annual Return (Form MGT-7 )
Every Private Limited Company is required to file its Annual Return within 60 days from the date of holding the Annual General Meeting. Annual Return will be period beginning 1st April and ending 31st March i.e Financial year.
Every Private Limited Company shall file the financial statements namely Balance Sheet, Profit, and Loss Account annexed with Director’s Report after they are adopted by shareholders in the AGM. Filing of adopted financial statements must be done along with form AOC-4 and prescribed fees within 30 days of holding of Annual General Meeting.
Every Private Limited Company must hold an AGM and lay down its financial statement along with the Director’s Report before the members. Every company registered under the Companies Act, 2013 is compulsorily required to hold an AGM before the expiry of 6 months from the end of that FY.
Directors’ Report will be prepared with a mention of all the information required under Section 134.
Increase in Authorized Share capital
Increase in Paid-up share capital (Issue of security)
Change in secured borrowing (Creation, modification, and satisfaction of charge)
Filing of resolution and agreements
Rocket L
Nudist Beach Porn
Ass Vk
Mature Lingerie Women