Private Limited Company

A private company is a separate legal entity having perpetual succession, with limited liability only up to the share of capital. The shareholders liability is up to the limit of shares subscribed by them.
A Private Limited Company is the most common and recommended type of business entity which is managed, controlled and owned by a small group of persons.
Most of the startups in India are registered as a Private Limited company.

There should be a minimum 2 directors and 2 shareholders, a registered office address and a company name to form a private limited company. Atleast 1 director should be an Indian resident and Indian citizen.

Yes. An existing proprietorship firm can be converted in to a private limited company.

Yes. You can form a One Person Company (OPC). OPC is a company that has only one person as its member.

  • It is a separate legal entity different from its directors and shareholders. The company continues to exist even after the death of directors or shareholders.
  • The liability of the members is limited up to the amount of shares subscribed by them. In case of loss faced by the company, the personal assets of the members will not be used for repayment of debts.
  • Raising of funds is easier in Private Limited companies. Angel investors, venture capitalists and financial institutions invest in Pvt Ltd or Public Ltd companies only.
  • It builds transparency and credibility among the investors, employees, banks and even clients of the company as the basic details of a Pvt Ltd company are available in the public domain for its verification.

No. There is no minimum paid up capital requirement to form a private company.

No. A private limited company cannot list its shares on stock exchange. First it should get itself converted into a Public Limited company and then list its shares on stock exchange for trading.

No. A Private limited company cannot take loans from outsiders. It can take loans from its directors, relatives of directors and banks and financial institutions. It can also take loans from its shareholders up to a certain limit.

 

A Private Limited company is required to file following forms annually:

  • Form AOC-4 (Filing of financial statements)
  • Form MGT 7/7A (Filing of annual returns)
  • Form DPT-3 (filing of return of exempted deposits)
  • Form MSME half yearly return (for reporting the delayed payments to MSME vendors)
  • DIR-3 KYC (for annual kyc of directors)

Apart from above other forms may be required to be filed depending on the transactions carried out by the company.