Overview of Private Limited Company

A private limited company is the most popular type of company and it providing the entrepreneur to limited liability and ownership restrictions and legal protection for the shareholders of that company. A ownership restrictions fully based on the rules and regulations mentioned in Companies Act, 2013. The number of shareholders of a private limited company is not exceeding 50 members. The shareholders do not sell their shares without getting permission of other shareholders. And also the shareholder does not provide his shares to the general public over a stock exchange. It perfectly suits the small level of business and especially for the entrepreneur who starts his business in somewhat big level. Generally a private limited company is formed, if the paid up capital amount is higher than 50 lakh rupees and its annual turnover is more than two crore rupees. The One person company must convert itself into a private limited company, if it reaches the above requirements. A private limited must carry the shareholders and the liability of the shareholders is also wider than the One Person Company. The Private limited company must mention pvt.Ltd in its back of its name. The conversion of OPC to private limited is a simple step. No objection certificate is taken from its shareholders and creditors. Then the special resolution passed by the members of the company in the general meeting of the company.


Requirement directors

To incorporate a private limited company, you need minimum two members as directors. It limits exceeds up to maximum of fifteen directors. The directors of the private limited company must be a natural person. He does not hold another company as a director. He must complete 18 years and there is no bar on citizenship and residency. A foreign citizen also holds a private limited company in India as a director. A director must carry the Director Identification Number and Digital Signature Certificate to incorporate a private limited company in India. Director Identification Number is nothing but a unique number which is provided by the Ministry of Corporate Affairs (MCA). The DIN number is never expired. A natural person, is eligible for get only one DIN for his life time. To get a DIN number, you have to file a SPICE form in MCA portal with all your identity and residential proofs. Digital Signature is nothing but your electronic form of your physical hand written signature. For the purposes of MCA documents, you should get the DSC. The lifetime of Digital signature certificate is one or two years. It may be used for all online e-filing processes like banking sectors, income tax filing, GST filing, Railways, Government sectors. The foreign national may be a director of India, but he should get a DIN. Any of the board directors must be an Indian citizen for a private limited company.

Requirement of Shareholders


Ti incorporate a private limited company, you should need minimum of two shareholders. The limitation exceeds up to maximum of 200 shareholders. The shareholders must be a natural person and he may be foreign nationals. The shareholders must lie for the rules and regulations provided by the MCA. Once you register the private limited company, it may be valid until you maintain the company as active. The active private limited company must pay the income tax, GST, and active form, KYC, and all the annual compliances met the regularity.  If any company found absence of its annual compliances, it may be strike off and the director must close the company as per the rules and regulations mentioned by the MCA. In this situation, MCA considers this kind of company as Dormant Company.  A NRI or foreign nationals can hold the shares of the private limited company in India with respect to the Foreign Direct Investment (FDI) Guidelines. The Foreign companies also hold the shares of the private company.

Name selection

For speedy registration process, you have to select the company name as unique. First and foremost thing is check the availability of your selected company name. If you select company name as unique, you may get company registration in 2 to 6 weeks. The required documents given by the Client and the speed government approvals, will lead to the easy and fast registration processes. The time period of company registration, fully depends on the client and the government processes. If you select the similar names which are similar to the already existing company name or LLP name, or Trademark, the MCA will reject your application and ask you to re-submission of your company name. The re-submission will take some time and the process of registration may delay. A private limited company must fix the registered office location for company registration purposes. Why because, it is required for the MCA for communication purposes. It may be commercial or industrial or residential location of the director of the company. The minimum paid up capital of a private limited company is not less than 1,00,000 of Indian rupees and it has no limitation.  

Statutory compliances


The statutory compliances of a private limited company are to conduct a board meeting and annual general meeting among the directors and shareholders of the particular company. For this the private limited company, must maintain the minute book for entering any compliances held in board and annual general meetings. The board meeting must be conducted for once in three months and it should be noted in minute book for future references of MCA. The Annual general meeting (AGM) must be conducted at once in every year and every actions must be noted in minute’s book. If add or remove any director in the private limited company must be entered in the minute’s book. The private limited company must be appoint an auditor for maintaining his company as active and file income tax and tax returns of the company. This appointment also mention in the minute book.

Advantages of Private limited company

Limited liability: The private limited company has the characteristics of limited liability. The liabilities of the shareholders are limited and it will not make any one loss his shares of the company. The other forms of entities like Partnership firm and One Person Company do not have this kind of liability. But it is less good than the LLP. Why because if any losses occurs the assets of the company will give for compensation. By giving the company’s assets, the loss did not satisfy, the personal assets of the shareholders will pay. So it is one step forward than the One Person Company. As simply said, the financial liability of the shareholders is limited by their shares. If any critical losses occur, the shareholders will not loss their personal assets.

Restriction on shares: The shares of the shareholders are restricted among their company itself. The shareholders cannot sell their shares to the outside. From this, the shareholders risk will be reduced. This characteristic of private limited company is carrying both advantages and disadvantages in it. Why because, the shareholders have limited options for liquidation of his shares.

Continued existence: It is the most important advantages of private limited company. Why because the company’s action will not be stopped after the death or in-ability of the owner of the company. It has next director to perform the director role. It is more beneficial than the sole-proprietorship concern. Basically, the private limited company is an independent legal entity.  

Tax benefits: A private limited concerns enjoys most tax benefits than other forms of companies. They pay the taxes less than the actual tax rates.

Dual relationships: In company’s format, the directors made the contract between the members of the company. It is possible for a person can act as a controller and employer of the company. Not only the employer, has he also acted as a shareholder, creditor, and director and so on. From this, the company can achieve more effective targets at limited period of time.


Borrowing capacity: A company enjoys better liability of borrowing capacity. It can accept deposits from the people. It able to secure its debentures by not selling their shares into outside. Also it has the characteristic of perpetual succession. It is more important character for a successful company. Shares are easily transferable by a shareholder to any other person unlike the partnership firm and sole proprietorship concern. As my point of view, private limited company is the best tool to secure your personal assets and protecting you from the big level of business troubles. For Company Registration in Bangalore, kindly visit our site and feel free to contact us. Thanks for reading!!!

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