A private limited company is a limited liability entity incorporated under Companies Act, 2013. It has a minimum of two directors (with a maximum of 15). A natural person can be a director and as well as shareholder, where a corporate legal entity can only be a shareholder. In addition to that, foreign nationals, foreign corporate entities or NRI’s are also allowed to be the Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.
Start-ups and growing companies prefer private limited company as it allows outside funding to be raised easily, limits the liabilities of its shareholders and enables them to offer employee stock options to pull in top talent.
Advantages
- LIMITED LIABILITY:A private limited company provides limited liability protection to its shareholders. In case of any unforeseen liabilities, it would be limited to the company and not impact the shareholders.
- Separation of Mangement & Shareholders:Management & shareholders can be separated. A shareholder can invest the fund in fruitful business without managing & Management can operate their business without frequent interruption of investors
- Easy Transferable : it is easier to subscribe or leave the membership of the Company. Also it is easier to transfer the ownership.
- Separate Legal Entity:A private limited company is recognised as a separate entity legally with perpetual existence
- Raising fund:Startups businesses can easily raise funds from investors on an equity basis
- Taxation:Companies are often taxed at a lower rate and are provided with better taxable benefits as compared to other forms of business organization.
Documents Required
- Copy of Aadhaar Card/ Voter identity card
- Copy of PAN Card of partners
- Passport size photo of partners
- Proof of business address(Electricity/ Water bill of Business Place)
- Copy of Sale/Property Deed (If owned property)
Process
- Document submission
- Obtain a unique Digital Signature Certificate
- Reserve a Name for the Company
- Apply for Director Identification Number(DIN)
- MOA , AOA & corporate documents submission
- Get Certificate of Incorporation
- Apply for PAN, TAN and Bank account