A private limited company is a company privately held for small businesses. This type of business entity limits owner liability to their shareholdings and based on the number of shareholders funder Companies Act, 2013. This means that as a shareholder you will be liable to pay for company’s liability only to the extent of the contribution made by you.
What are the advantages of incorporation of Private Limited Company in India?
1. The limited risk to personal assets
The shareholders of a private limited company have limited liability. This means that as a shareholder you will be liable to pay for company’s liability only to the extent of the contribution made by you.
2. Legal Entity
A PLC has a separate legal entity different from you. This means that the Company is responsible for the management of its assets and liabilities, debtors and creditors. And you are not responsible for it. So, the creditors cannot proceed against you to recover the money.
3. Raising Capital
Even though registering a PLC comes with compliance requirements, it is preferred by entrepreneurs as it helps them raise funds through equity, expand and at the same time limits the liability.
Companies in India are registered with the Registrar of companies(ROC) under Companies Act 2013. Anyone can check the details of the company through Ministry of Corporate Affairs (MCA). Also, details of all the directors are provided while the formation of the company. Hence a PLC form of business structure is trusted more.
5. Continue Existence
A company has ‘perpetual succession’, that continues or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or cessation of any member but continues to be in existence irrespective of the changes in membership.
Different forms of company registration:
There are other forms of company registration such as
A) Partnership Firm Registration
B) Proprietorship Firm Registration
C) Limited Liability Partnership (LLP) Registration
D) One Person Company (OPC) Registration
E) NGO Registration (Section 8 Company Registration)