What is a Private limited Company | Full Details

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What is a Private limited Company? Fully Explain

A private limited company is a business organization held by a small group.  It is registered for pre-determined objects and is owned by members known as shareholders.  Startups and businesses with a desire for higher growth are popularly selecting the private company as the appropriate business structure.

The business entity is recognized as an entity by registration under the Companies Act, 2013.  The governing body is the Ministry of Corporate Affairs, widely known as the MCA.  The definition of a private company under the law is given here in order to understand its basics.  A private company under section 2 (68) of the Act defines:

From the basic lessons, we understand that the transfer of shares of a private company is limited by certain conditions.  If the shares of that company exceed 200, it prevents it from becoming a private company.  That company then obtained a ban on inviting the public.  In the absence of any of these conditions, the company will lose its identity as a private entity.

What Are Its Advantages If It Is A Private Limited Company

The biggest advantage of a private limited company is the word limited.  Because if it was a Normal Registration Company, then if that company took a loan from a bank and could not repay for any other reason, then the bank can withdraw its own money by selling the personal assets of the shareholders of that company.  But if there is a limited in the registration of a company, it means that the company took a loan from a bank and could not repay it for any other reason.  If the bank does not raise the full amount by selling the property of that company, then the bank will raise its full amount by selling the own assets of the shareholders of that company.

Example: Suppose A and B are the shareholders of a company. A's share is 70% and B's share is 30%. This company has no registration like PVT or LLP.  At this time if any loan is taken for the company in the name of the company and the loan cannot be repaid to the bank.  Then the bank has the right to sell its own things to the shareholders unless the full money is raised by selling the company's things.


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