Importance of a Private limited company

Importance of a Private limited company

This corporate legal body is governed by the Companies Act, 2013. A private limited company is a business entity held in private. This unit of the company puts a restraint on the owner’s liability to his shares. The “importance of Private Limited Company” in India can be shown in numerous ways. It is one of the most rampant types of business structures found in India.

Features of a Private Limited Company

• It provides shareholders with limited liability.
• Shareholders may raise equity funds from this liability.
• Due to its unique feature, its existence and status as a separate legal unit, minor and intermediate-sized businesses ‘ bodies decide on Private Limited Company.

Documents Required for Private Limited Company Registration

• All the documents that are to be submitted by Directors and Shareholders who are a resident in India include:
• Scanned PAN Card copy
• Scanned Voter’s ID, Passport or Driver’s License photocopy
• All updated bank statement and/or Mobile Bill or Electricity Bill and other mentioned documents with the photocopy.
• A photograph that should be passport-sized and scanned.
• A blank document containing signature solely of the directors. Also, either one of the directors is required to self-attest the documents as mentioned above.

Procedure to follow while registering for Private Limited Company

• To register for a private limited company, it is necessary to have a minimum of two shareholders along with two directors. An individual can be a director as well as a shareholder.
• Digital Signature of any of the directors should be present.
• Shareholders are required to register for a Private Limited Company.
• A minimum amount Rs. 100,000 should be the authorized share capital.
• Digital Signature Certificate or DSC is mandatory for all the Directors.
• Similarly, Director Identification Number or DIN is also mandatory for all the Directors.

Advantages of a Private Limited Company

• Separate Legal Entity
• Perpetual succession
• Free & Easy transferability of shares
• Owning Property
• Capacity to sue and be sued
• Dual Relationship
• Borrowing Capacity – large financial assistance

Prevention is better than cure! All these things might sound like Greek or Latin to you but it will be a good idea to check the Ministry of Corporate Affair’s website once in a while to know the latest updates. Companies should be aware of the basic compliances and take necessary action to the restructuring of the Board of Directors, allotment of shares, acceptance of deposits, reporting major activities to ROC, etc.