Learn Commerce Structures III: Private Limited Company

1
Learn Commerce Structures III Private Limited
Company
2

• Introduction

3

• A Private Limited Company is quite a proven and
  effective business model. It involves private
  ownership, with a limited number of
  shareholders(a maximum of 200). These are small
  but successful business entities and are
  comparatively easy to achieve targets, for young
  entrepreneurs, after the BCom course.
• Although its somewhat open to all options,
  individuals from Commerce courses happen to make
  better jobs here, mostly due to additional
  Educational orientations to similar subjects,
  something other stream novices to this sector,
  are deprived of.

4

• What Is A Private Limited Company?

5

• As the name suggests, a Private Limited Company
  is a privately held business entity. It offers
  limited liability or legal protection to its
  shareholders. It is an intermediate business
  stature, shareholders in between a partnership
  and a collectively owned business company.
• A maximum of 200 shareholders can be a part of
  this institution. According to the definition,
  the shares of these companies are not publicly
  sold in Stock Exchange markets and can only be
  sold to the stakeholders in the business,
  implying a ground-level limitation in the
  liquidation of such a company.

6

• Whos The Owner Of A Private Limited Company?

7

• Private limited companies are owned by one or
  more individuals (human or corporate), known as
  members. The companys shareholders are
  those, whos memberships are limited by shares,
  while guarantors are those limited by
  guarantees. Beyond the technical terms, members
  of a company are often referred to as partners.
• The companies are majorly owned and managed by
  the same set of people, where the ones managing
  the functioning of the system are called
  Directors, and the ones assisting them are called
  Secretaries. Together, the executive branch of a
  company is known as company officers.

8

• What Are The Features Of A Private Limited
  Company?

9

• A private limited company has the following
  features
• Membership As per the provisions of the
  Companies Act 2013, from a minimum of two to a
  maximum of 200 members, is what a private limited
  company is allowed to comprise of.
• Limited liability The liability of the members
  is limited to the number of shares directly held
  in their name.
• Perpetual succession Even in case of death,
  insolvency or bankruptcy of any of its members,
  the company continues to exist in the eyes of the
  law, thereby offering ways of forever existence.
• Register of members This database is not
  mandatory for a private limited company to
  maintain, unlike any public limited company.

10

• A private limited company has the following
  features
• Directors requirement The company is required to
  have a minimum of two directors, and then it can
  remain operational.
• Paid-up capital A private limited company must
  hold a minimum capital worth rupees one Lac, or
  such higher amounts, prescribed from time to
  time.
• Prospectus A private limited company is not
  required to issue a prospectus either, again, an
  absolute must in case of any public limited
  company.
• Minimum subscription There are no such limits on
  this ground and the company is free to start a
  business immediately after its formation.
• Name The company must use the word private
  limited company at the end of its name.

11

• What Are The Merits Of A Private Limited Company?

12

• A private limited company has the following
  advantages
• Flexible Investment No minimum capital threshold
  is required for registration.
• Separate legal identity A private limited
  company is a separate legal identity in the court
  of law and doesnt hold overlapping assets and
  liabilities with the directors.
• Free and easy transfer of shares Shares of the
  company are transferable by a shareholder to any
  other person and it is particularly hazel free.
• FDI allowed In a private limited company, 100
  foreign direct investment is permissible in
  certain segments.

13

• What Are The Demerits Of A Private Limited
  Company?

14

• A private limited company has the following
  disadvantages
• Publicity restrictions It arrests the
  transferability of shares by its articles.
• No place in the stock market Shares of these
  companies are not entitled to be sold in the
  Stock Exchange markets.

15

• Is There Any Specific Employer Requirement In A
  Private Limited Company?

16

• There is no such mandatory requirement, to
  appoint employees in a private limited company.
  Though informal, graduates from Commerce Courses,
  are likely to prioritize, in the selection
  processes.

17

• What Are The Requirements For Private Limited
  Company Registration?

18

• A private limited company has the following
  requirements for registration
• A minimum of two adult persons are required to
  act as Directors of the company
• Minimum of 2 Directors and can have a maximum of
  2015 directors.
• One of the directors of a private limited company
  has to be an Indian Citizen and Indian Resident.
• The other director(s) can be a Foreign National.
• Two persons are required to act as a shareholder
  of a company

19

• What Are The Documents Required For Registration?

20

• The documents required for a private limited
  company are
• ID proof PAN card and passports of Indian and
  foreign directors, respectively
• Address proofs Ration card or Aadhar card or
  drivers license or voter ID
• Residence proofs Bank Statement or electricity
  bill of the premise
• Notarized rental agreement
• NOC from the property owner
• A copy of the sale deed or property deed (for an
  owned property)
• Digital signature of any one director

21

• What Is The Process Of Registering A Private
  Limited Company?

22

• Once a name for the company is finalized, the
  following steps have to be carried out by the
  applicant
• Step 1 Apply for DSC (Digital Signature
  Certificate).
• Step 2 Apply for the DIN (Director
  Identification Number)
• Step 3 Apply for the name availability.
• Step 4 File the EMoa and EAOA with registration
  form to register the private limited company
• Step 5 Apply for the PAN and TAN of the company
• Step 6 Certificate of incorporation will be
  issued by RoC with PAN and TAN
• Step 7 Open a current bank account on the
  company name

23

• Conclusion

24

• Merits and Demerits are the two sides of the same
  coin, likewise, for a private limited company. It
  is the most prevalent and recognized business
  entity, in the current date. This is majorly due
  to the higher degree of freedom, that it offers
  in setting it up and functioning.
• Theres no time gap between these two, and thats
  an incredible opportunity to encourage start-ups.
  After BCom. Courses, thousands of young minds
  sketch business plans, not always relevant or
  effective in the public domain. Whereas the
  private window offers a more homely than a
  professional working space, warming up young
  interns to gear up quickly.
• Massive Private Limited Companies have prospered
  beyond extents, inspiring millions to execute
  their expertise. Some of these include Flipkart,
  Ola, Snapdeal, etc. Its important to have
  directional thinking and appropriate strategies,
  to suit the ideas.

25

• Super 20 Training Institute
• www.s20.in
• 91 7069 646028
• Address
• 205, Narayankrupa Square,
• Opp. H K Commerce College,
• Gandhigram Railway Crossing,
• Ashram Road,
• Ahmedabad 380009