{"id":16259,"date":"2020-09-12T11:30:33","date_gmt":"2020-09-12T06:00:33","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=16259"},"modified":"2024-12-31T18:02:37","modified_gmt":"2024-12-31T12:32:37","slug":"pvt-ltd-company-things-you-must-know","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/pvt-ltd-company-things-you-must-know\/","title":{"rendered":"Pvt. Ltd. Company: Things You Must Know"},"content":{"rendered":"\n<p class=\"has-drop-cap\">A private limited company is often recognized as a privately-held business entity. It is managed by private stockholders. The notion of liability arrangement in a private company is quite similar to a limited partnership, wherein the shareholder&#8217;s liability is equivalent to the number of shares held by them. With new businesses emerging rapidly across the country, there is a need to get familiar with different business forms i.e., limited liability, <a href=\"https:\/\/corpbiz.io\/sole-proprietorship-registration\"><strong>sole proprietorship<\/strong><\/a>, and private limited company. In this article, we will look into a detailed aspect of a Pvt Ltd Company. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"580\" height=\"482\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-53.png\" alt=\"Private Limited Company: Things You Must Know\" class=\"wp-image-16260\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-53.png 580w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/09\/image-53-300x249.png 300w\" sizes=\"(max-width: 580px) 100vw, 580px\" \/><\/figure><\/div>\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/pvt-ltd-company-things-you-must-know\/#What_is_Pvt_Ltd_Company\" >What is Pvt Ltd Company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/pvt-ltd-company-things-you-must-know\/#What_Are_The_Traits_Of_A_Pvt_Ltd_Company\" >What Are The Traits Of A Pvt. Ltd.\nCompany?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/pvt-ltd-company-things-you-must-know\/#Requirements_to_start_a_Pvt_Ltd_Company\" >Requirements to start a Pvt Ltd Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/pvt-ltd-company-things-you-must-know\/#Benefits_offered_by_the_private_limited_company\" >Benefits offered by the\nprivate limited company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/pvt-ltd-company-things-you-must-know\/#Documentation_required_for_Pvt_Ltd_Company_registration\" >Documentation required for Pvt Ltd Company registration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/pvt-ltd-company-things-you-must-know\/#Instructions_for_registering_Pvt_Ltd_Company\" >Instructions for registering\nPvt Ltd. Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/pvt-ltd-company-things-you-must-know\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Pvt_Ltd_Company\"><\/span>What is Pvt Ltd Company?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In general, a Private Limited Company is regarded as a privately-held business entity. Such entities are managed by private stakeholders. The liability arrangement in a Pvt. Ltd. company is not as stringent as LLP or sole proprietorship business model wherein business assets are at risk in case of a fiscal crisis. Indeed, stakeholders in a Pvt. Ltd. company are accountable for the business loss, but there is an exception to that.&nbsp;The shareholders can confront such losses up to the extent of the number of shares held by them. Meaning \u2013 member\u2019s accountability for compensating the business loss is only limited to the number of shares held by them. Also, the stakeholders cannot be held accountable for losses beyond the share&#8217;s value. The privately-held business entities in India are governed by the Ministry of Corporate Affairs (MCA). <\/p>\n\n\n\n<p><strong><em>As per Section\n2 (68) of the Companies Act, 2013, the Pvt. Ltd. company is defined as <\/em><\/strong><\/p>\n\n\n\n<p><em><strong>&#8220;A Company having a minimum paid-up share capital as may be prescribed, and which by its articles,\u2014 <\/strong><\/em><\/p>\n\n\n\n<p>(i) restricts the right to transfer its shares;<\/p>\n\n\n\n<p>(ii) except in the case of One Person Company, limits the number of its members to two hundred; <\/p>\n\n\n\n<p>(iii) prohibits any invitation to the public to subscribe for any securities of the company.&#8221;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Are_The_Traits_Of_A_Pvt_Ltd_Company\"><\/span>What Are The Traits Of A Pvt. Ltd.\nCompany? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Now that you become\nfamiliar with the definition of a private limited company, the next step is to\nexplore the traits of such a company:-<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Membership<\/h3>\n\n\n\n<p>A minimum of two\nmembers is required to incorporate a Pvt. Ltd. company. The maximum number of a\nshareholder that can exist in such a company is 200. Such entities are liable\nto appoint a minimum of two directors for managing the day to day operation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Limited liability structure<\/h3>\n\n\n\n<p>In a private company,\nthe member&#8217;s liability is limited as per the bylaws. Thus, in the financial\ncrisis, the shareholders are accountable for putting their own assets upfront\nfor repayment. However, they are not liable to compensate for the losses with\ntheir personal assets. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Separate legal entity<\/h3>\n\n\n\n<p>The Pvt. Ltd. company is often regarded as an autonomous legal entity. Since such an entity follows the notion of perpetual succession, its existence would not be compromised even in financial setbacks or bankruptcy. Also, the company remains unaffected by the lives of its members unless its stakeholder decided to dissolve it through resolution. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">No Minimum paid-up capital<\/h3>\n\n\n\n<p>Previously, the\nprivate limited company was under the legal obligation to procure the minimum\npaid up capital of 1 lakh Rs. But that provision has been amended in the Act,\nwhich makes it not mandatory. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Requirements_to_start_a_Pvt_Ltd_Company\"><\/span>Requirements to start a Pvt Ltd Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The requirements for starting a private limited company are given below:- <\/em><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Members and directors<\/h3>\n\n\n\n<p>To get legally\nregistered, a privately-held business entity should meet the criteria of\nholding minimum and maximum shareholders. As per the Company Act, 2013, to set\nup a private limited company in India, a minimum of two stakeholders is\nrequired. The maximum limit is capped at 200. <\/p>\n\n\n\n<p><strong><em>Below are the stipulates\noutlined by the Company Act for the director<\/em><\/strong><\/p>\n\n\n\n<p>The director of a private company must have a <strong><a href=\"https:\/\/corpbiz.io\/din-under-mca\" title=\"Director Identification Number\">Director Identification number<\/a><\/strong>, aka DIN. It has to be obtained via MCA&#8217;s portal after the filling up the prescribed form. <\/p>\n\n\n\n<p>At least one director of the Pvt. Ltd. Company should be an Indian national. Moreover, such candidates should have spent not less than 182 days in the country in the previous calendar year. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Name of the company<\/h3>\n\n\n\n<p>Choosing a company&#8217;s\nname is a complicated tasks altogether, generally speaking. Privately-held\nfirms in India require looking into the following aspect to serve such a\npurpose.&nbsp; <\/p>\n\n\n\n<ul>\n<li>Main Name<\/li>\n\n\n\n<li>List of tasks\nand responsibilities to be carried out within the firm. <\/li>\n\n\n\n<li>Inclusion\nof &#8216;Private Limited Company&#8217; at the end. <\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Pro Tip: No offensive elements<\/h3>\n\n\n\n<p>The entities are not\nliable to opt for business names that already exist in the authority&#8217;s database\nor have some offensive elements. To ease out such complications, we suggest you\nsend 5-6 names to the authority i.e. ROC for the approval. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Registered office address<\/h3>\n\n\n\n<p>Once your company\ngets registered, the next step is to file the permanent address of the\nregistered office with the ROC.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Obtaining important documents<\/h3>\n\n\n\n<p>To submit the document electronically, every firm must avail of a DSC for the authentication of the documents. The Pvt. Ltd. Company must also possess the certificates of qualification of every employee currently serving the organization. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/private-limited-company-incorporation-in-india\/\">Steps for Private Limited Company Incorporation In India<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits_offered_by_the_private_limited_company\"><\/span>Benefits offered by the\nprivate limited company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The following are the advantages rendered by the private company.<\/em><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Limited liability<\/h3>\n\n\n\n<p>In a privately-held business entity, stakeholders are not at the risk of losing personal assets due to the scope of limited liability. If the Pvt. Ltd. Company encounters a fiscal crisis, the members are only accountable for selling their assets to compensate for the loss, as per the bylaws. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Minimum shareholders<\/h3>\n\n\n\n<p>Unlike a public\ncompany, a privately-held business entity can be formed with two stakeholders. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Ownership<\/h3>\n\n\n\n<p>As the company&#8217;s\nshares are under the possession of its founders, investors, and management, the\nowner can easily transfer and sell their shares to others. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Uncompromised Existence<\/h3>\n\n\n\n<p>As we cited earlier, the business stays a statutory entity until it shut down by its member via the <strong><em>legal procedure<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Category:Legal_procedure\"><strong><em>[1]<\/em><\/strong><\/a><\/sup>. The Pvt. Ltd. Company continues to operate even after the demise of any of its stakeholders. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Documentation_required_for_Pvt_Ltd_Company_registration\"><\/span>Documentation required for Pvt Ltd Company registration<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The following are the documents required for private company registration.<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>Identification\nproof: PAN card of the directors as well as their passport<\/li>\n\n\n\n<li>Address\nproofs: Aadhar card, ration card, Voter ID, or DL. <\/li>\n\n\n\n<li>Residence\nproofs: Utility bill of the business place or bank passbook. <\/li>\n\n\n\n<li>Rent\nagreement (notarized)<\/li>\n\n\n\n<li>No\nobjection certification from the owner of the property. <\/li>\n\n\n\n<li>Copy of\nproperty deed<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Instructions_for_registering_Pvt_Ltd_Company\"><\/span>Instructions for registering\nPvt Ltd. Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>After you finalize the company&#8217;s name, follow the given instructions. <\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>Apply for <a href=\"https:\/\/corpbiz.io\/dsc-registration\" title=\"Digital Signature Certificate\"><strong>Digital Signature Certificate<\/strong><\/a> on the MCA website. <\/li>\n\n\n\n<li>Apply for the Director Identification Number on the MCA portal. <\/li>\n\n\n\n<li>Apply for the availability of business names. <\/li>\n\n\n\n<li>File the e-Moa and e-AOA for the <a href=\"https:\/\/corpbiz.io\/company-registration\" title=\"Private Limited Company Registration\"><strong>private limited company registration<\/strong><\/a>.<\/li>\n\n\n\n<li>Obtain TAN and PAN of the business entity. <\/li>\n\n\n\n<li>Submit the Incorporation certificate issued by ROC. <\/li>\n\n\n\n<li>Approach to the bank to open a current account on the name of the company. <\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As soon as you are done with the above instructions, you are all set to commence the business operation. Private companies render plenty of legal benefits as well as tax advantages as compared to other business models. If you are looking to register your business entity to a private limited firm without a hassle, connect with <a href=\"https:\/\/corpbiz.io\/\"><strong>CorpBiz&#8217;s<\/strong><\/a> experts today. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/procedure-for-registration-of-private-limited-company-india\/\">Private Limited Company Registration Procedure in India<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A private limited company is often recognized as a privately-held business entity. It is managed by private stockholders. The notion of liability arrangement in a private company is quite similar to a limited partnership, wherein the shareholder&#8217;s liability is equivalent to the number of shares held by them. With new businesses emerging rapidly across the [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":16274,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[154],"tags":[993],"acf":{"service_id":"1"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":25373,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/16259"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=16259"}],"version-history":[{"count":16,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/16259\/revisions"}],"predecessor-version":[{"id":68099,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/16259\/revisions\/68099"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/16274"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=16259"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=16259"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=16259"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}