Private Limited Company Incorporation

Understanding the process of a Private Limited Company Incorporation. How to enroll for DSC & DIN. Process flow for ROC incorporation. 

Private Limited Company Incorporation

  • A Private Limited Company (Pvt Ltd or Ltd) is a type of business structure that is privately held and operates as a separate legal entity from its owners. It is one of the most common and popular forms of business incorporation around the world, especially in countries like India, the UK, Singapore, and others.
  • A Private Limited Company is a privately-owned corporate entity registered under the Companies Act of the respective country. It is limited by shares, which means the liability of its shareholders is limited to the amount unpaid on their shares. Unlike public companies, private limited companies cannot offer their shares to the general public.

When two or more than two persons are interested to share their profit and liability and registered their entity under Companies Act 2013. As per Sec 2(68) of Companies Act 2013.A private Company means a company, which has such minimum paid-up share capital as may be prescribed and which by its articles provides the following.

  • Restricts the right to transfer its shares
  • Except in the case of one-person company (OPC), limits the number of its members to two hundred excluding present and past employees who continue to be the members of the company.
  • Prohibits any invitation to the public to subscribe any securities of the company.

Structure of a Private Limited Company

1. Shareholders (Owners):

  • Invest capital in exchange for shares.
  • Own the company proportionally based on shareholding.

2. Directors (Management):

  • Appointed by shareholders to manage the company.
  • Responsible for day-to-day operations and compliance.

3. Company Secretary (Optional in some jurisdictions):

  • Ensures statutory compliance and corporate governance.

4. Registered Office:

  • Official address for legal correspondence.

Nature and Characteristics of a Private Limited Company

  • Corporate Personality- A company incorporated under this act is vested with corporate personality, having its own name, seal and assets and distinct from its members.
  • Member- Private company is required at-least two members for registration under the Companies Act, 2013, which may extend to two hundred excluding present and past employees who continue to be members of the company
  • Directors- to run a private company need at-least two directors
  • Perpetual succession- A company has perpetual succession, i.e. the death or insolvency of a shareholder or all of them does not affect the life of the company.
  • Limited Liability-Liability of members is extended to amount of share he purchased or guarantee given to the company. Apart from above, shareholders are not liable to pay any extra amount. Any losses occurred by company does not create any liability for its members.

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