A Private Limited Company is the most preferred business structure for Start-ups and small businesses in India. It is relatively easier to register a private limited company. Ministry of Corporate Affairs is the registering authority & if registered, gives you rights for doing business anywhere in India & outside India. The hallmark features of a private limited company are that it allows outside funding to be raised easily, allows it to grow big & expand, limits the liabilities of its shareholders, and enables them to offer employee stock options to pull in top talent.
As per company law, a Private Limited company is a limited liability company with a minimum of two and a maximum of 200 members. Although a Private limited company has limited liability and a separate legal entity, at the same time it has all the advantages of a partnership namely flexibility, the greater capital combination of different and diversified abilities, etc. Before opting for a private limited company, one must keep in mind:
• That Private limited company’s shares are not listed on stock exchanges & hence, cannot be freely traded.
• That the scope is limited due to restrictions in several shareholders but enjoys fewer legal restrictions.
• That the word “Pvt. Ltd.” must be suffixed in the name.
• That at least one designated partner should be an Indian Citizen.
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