Private Limited Company is the most favorable business in the Indian Market and it is governed by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013. Private Limited Company is a Company having the word "Pvt. Ltd." at the end of its business name.
A Private Limited Company can be started with at least 2 Persons, who can be Directors & Shareholders of the Company. However, Directors & Shareholders can be different persons, let us understand with a given example---
Mr. X and Mr. Y want to start a Company and out of whom Mr. X does not want to become a Director but want to take a shareholding of 50% in the Company and wants to appoint a director to Mr. Z, not having any shareholding and Mr. Y wants to become a Director and also wants to take a shareholding of Company of 50%.
Here in the above example, Mr. X is only a Shareholder of 50 %, Mr. Z is a Director(without shareholding, which means he is only a Director, not a Shareholder in the Company) and Mr. Z is a Director and Shareholder with 50 % of Company.
Therefore, a person in a Company can only be a director or can only be a shareholder of the Company
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- Two or More Persons are better than Single – Private limited company has two or more directors buy limited to 15, therefore the burden of management is distributed among them and the resulting business grows accordingly.
- More Capital is available to do the business –Private Limited registered with at least 2 members and a maximum number of members can be up to 200 and when we think about the expansion of our business, capital plays a bigger role, under private limited business can be registered with its Authorized Capital which should be divided into shares to take the money form the members.
- Easy to Convert into other legal entities – Private limited has the option to convert any time under any legal entities like One Person Company, Limited Liability Partnership, Limited Company, etc.
- More Skills of Directors comparatively Single – Private Limited has the more skills and ideas comparatively sole proprietorship firm due to multiple directors or members.
- Special Legal Status – Private limited has a special legal status as it is registered under the Ministry of Corporate Affairs (MCA) and having a special registration certificate, having separate PAN, TAN, etc. in the name of private limited unlike under sole proprietorship firm.
- MOA (Memorandum of Association)
- AOA (Articles of Association)
- GST Certificate
- Certificate of Incorporation
- PAN of Company
- TAN of Company
- DIN of Directors
- Digital Signatures
- ESI & EPF
- Bank Account Opening
- Customized Master Data File
- Two or More Persons are better than Single
- More Capital is available to do the business
- Easy to Convert in to other legal entities
- More Skills of Directors comparatively Single
- Special Legal Status
- Investor Approach & Trustworthy
- Limited Liability (means personal property of owner will not affect, if losses occurred in business)
- KYC of at least 2 Persons (Aadhaar, PAN, Photo, Mobile No., Email ID, Bank Statement)
- Company Name
- Company Office Address Proof ( Rent Agreement/Property Papers with electricity bill)
Private Limited Company is a Company which is Registered under Companies Act, 2013 and having the word “PVT. LTD.” at the end of its business name and it limits its members up to 100 and shareholding of such members can’t be traded publically. It is idle for small businesses.
No! at least two persons are required to register a private limited Company, who shall be Directors & Shareholders(members) of Company. Single Person can form a One Person Company (OPC) which is the unique feature of Private Limited.
Yes! a person can become a director as well as shareholder in the Company.
Yes! as we know Company is governed under the Company laws, as per the provisions of Companies Act, Audit of Companies are compulsory, even there is no sales during the year.
Yes! any time by passing a resolution and adopting the legal procedure, a private limited company be converted in to a One Person Company or in to Public Company.
Yes! Registrar of Companies (ROC) is the authority of Companies and every company registered in India has to mandatorily file the Annual Returns in Form No. MGT-7 with Financial Statements in Form No. AOC-4.
There are various types of meetings e.g. Board Meeting, Annual General Meeting (AGM), Extra-Ordinary General Meeting (EGM), Class Meeting etc. Board Meeting conducted by the Directors any time to discuss the business operations. Annual General Meeting as the name suggests is Conducted in a Year of shareholders and EGM can be conducted any time in company to discuss the Special Businesses by shareholders. Class Meeting is related to the special types of shareholders.
Section 173 of Companies Act,2013 states the provisions of Board Meeting that The board of directors is the supreme authority in a company and they have the powers to take all major actions and decisions for the company. The board is also responsible for managing the affairs of the whole company. Board Meeting can be conducted any time but a minimum of 4 board meetings must be held in a span of one year. Also, there cannot be a gap of more than 120 days between two meetings. In the case of a Public Limited Company, the first board meeting has to be held within the first 30 days, since the incorporation date. In the case of small companies or one person company, at least two meetings must be conducted, one in each half of the financial year. Additionally, the gap between the two meetings must be at least 90 days. In a situation where the meeting is held at a short notice, at least one independent director must be attending the meeting.
Annual General Meeting is the meeting where members of Company discuss the Ordinary business like Discussion about Financial Statements, Appointment / Re-appointment of Auditors, Dividend Declarations etc. As per Companies Act, an annual general meeting must be held by every company once a year without fail. There cannot be a gap of more than 15 months between two AGMs. However, the first AGM of a company can be held at any date, within a period of 18 months, since the date of incorporation of the company. Annual general meetings help members understand the company’s rate of growth and potential for improvement.
No! Limit of Employees are the matter of Labour Laws e.g. EPF ACT, ESI ACT etc. Company law does not demand of employees or limits of employees. Therefore, you can form a Company even you have no any employees.