Benefits of Pvt. Ltd. Company Registration 

limited company

Benefits of Pvt. Ltd. Company Registration 

 

Private Limited Company is a very popular and old way to start small scale businesses in India. More than 90% of companies registered in India are private limited companies. Pvt. Ltd. The Companies Act, 2013, governs company registration and can be done on the government’s online official portal with very few compliances and complications.

Overview of Pvt. Ltd. Company Registration 

 

A Pvt. Ltd. company is a clandestinely maintained small business entity that is one of the most recommended ways to commence a business in India. Pvt. Ltd. The Companies Act, 2013 govern company registration, and it can be done on the government’s online official portal with very few compliances and complications. As per the Companies Act, 2013, a minimum of two shareholders are required for Pvt. Ltd. Company registration, while the maximum limit of shareholders is 200. Pvt. Ltd. company registration offers limited liability to the shareholders if the private limited company faces any financial difficulties. 

As per the Companies Act 2013, a minimum of two directors is required for Pvt. Ltd. Company registration, while the maximum limit of directors is 15. The proposed directors must be adults at the time of registration. A foreign national can also be appointed as the director of a private limited company, for Pvt. Ltd. Company registration there is no requirement of minimum paid-up capital. A private limited company must use ‘Pvt. Ltd.’ at the end of their name.

A private limited company cannot ask for any collateral from the public sectors or from the public. For protecting overtakes from prominent organizations, the people are not entitled to transfer shares freely. 

Advantages of Pvt. Ltd. Company Registration 

 

A Pvt. Ltd. Company registration offers several benefits to a company. There are various characteristics of a private limited company that a person who wants to start a business must know so that he/she chose the right way to commence a business in India.

The following are the advantages of Pvt. Ltd. Company Registration:

Separate Legal Entity 

 

A Pvt. Ltd. company is regarded as a separate legal entity. A private limited company is capable of owning funds and properties. As per the provisions of the Companies Act, 2013, a private company acts as a separate legal entity when it comes to investing funds and owning properties. The property owned by the company is not the property of the shareholders. A private limited company has the right to sue as a separate legal entity, and it can also be sued as per this feature. This benefit is not available in One Person Company and various other forms where the company’s profits are considered as the profits of the owner. Still, the same losses are also of the owners alone.

 

Perpetual Succession (limited company)

 

A Pvt. Ltd. Company registration has perpetual succession. The meaning of perpetual succession is that in the eyes of the law, the company is a separate legal entity. Even if the member of a company dies or becomes insolvent or bankrupt, the private limited company will continue to exist. For a better understanding of perpetual succession if we compare with proprietorship or partnership business where the business and the owner are one and same so the profit of the business is profit of the owner and same with the loss, so if the owner is insolvent or bankrupt, then the same will happen with the business but in case of a private limited company the Founder, Member or Director are separate from the company so if the owner insolvent or bankrupt it will not affect the working of a private limited company.

Pvt. Ltd. Company registration means that the life of the company is dependent on the life of Founders, Owners, or Directors. Even if all the private limited company members are insolvent or bankrupt, the company remains unaffected.

 

Limited Liability (limited company)

 

Pvt. Ltd. Company registration provides separate legal entity to the members, which mean that the members of the private limited company are only liable to the extent to the face value of their shares in the company.  The repayment liability of bank loans and debts in case the private company is going through a rough financial phase lies on the company, not on the owner, director or founder of the company, the only liability on the members of a private limited company is on the unpaid amount on their shares. 

Limited liability is an essential benefit offered by Pvt. Ltd. company registration. Limited liability makes the members of a private company less worried about their personal assets, and they can take calculated risks for the growth.

Enhanced Value in Market ( limited company )

 

As we all know, a registered company is always considered more reliable and responsible as compared to the companies that are not registered. The information regarding the Pvt. Ltd. company registration is available on the official portal of the Ministry of Corporate Affairs (MCA). A registered private limited company is trusted more by the investors, vendors, and suppliers over the other business structures; as a result, the brand value will be enhanced among the customers, investors, and suppliers.

 

Credit Availability

 

A private limited company can acquire funds from the stockholders as well as debentures. A registered private limited company is deemed a corporate establishment that attracts several venture capitalists and angel investors that help a company acquire growth by raising their funds. Investors and venture capitalists look often look for companies to invest that have a small business and do not have a lot of complications in the management as the private limited companies have simple management and fewer members. Hence, it is easy for investors to convey their message to the company’s members regarding the investment.

 

Conclusion 

 

Pvt. Ltd. Company registration avails certain benefits for the owner as well as the company as we discussed above regarding the benefits of private company registration and highlighted the importance of registration for every form of company. A Pvt. Ltd. company is a clandestinely maintained small business entity that is one of the most recommended ways to commence a business in India. Pvt. Ltd. The Companies Act, 2013 govern company registration, and it can be done on the government’s online official portal with very few compliances and complications.

 

Recommended Articles