PRIVATE LIMITED COMPANY
REGISTER YOUR PRIVATE LIMITED COMPANY
WHAT IS PRIVATE LIMITED COMPANY ?
A private limited company is a company which is privately held for Small and medium business.The liability of the members of Private limited company is limited to the amount of shares respectively held by them. Shares of Private limited company cannot be publically traded .A minimum of two members are required and a maximum of 200 Members as per the provision of companies ACT 2013.
The liability of members of private Limited company is limited to the Number of shares held by them. A Private limited can start its business after getting certificate of incorporation . It can be incorporated within 15 Working days.
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Advantages of Private Limited Company
In a public company, regulation and ownership of shares can be sold to the public on an open market. On the other hand, in a private company, shares can be sold or transferred to other people by the choice of the owner. Shares of such company are owned by founders, management or a group of private investors. Shares here are not sold in open market. Thus there will be less number of shareholders. This means less complexity and confusion in decision making and management.
MINIMUM NUMBER OF SHAREHOLDERS
For a private company, a minimum number of required shareholders is 2, whereas, for a public company, you require a minimum of 7 shareholders..
Legal formalities are sometimes very expensive and time-consuming, aren’t they? If you’re planning to start a public company, you better be prepared because there is a long list of legal formalities for forming a public company. Private companies have comparatively shorter list.
A public company is required to disclose their financial reports to public every quarter, as it will affect public investment; private companies are not subjected to any such compulsion.
MANAGEMENT AND DECISION MAKING
Management and decision making becomes more complex and confusing in public companies as more number of shareholders are to be consulted. This complex procedure is eliminated in private company as the number of shareholders is less.
FOCUS OF MANAGEMENT
Managers of Public Company are focused on increasing the value of shares, whereas managers of the private company are more flexible in the short term and long term business decisions.
STOCK MARKET PRESSURE
Private companies are not pressurized by the stock market and you don’t have to worry about shareholder expectations and interference as long as they work within the law. Shareholders in public companies are focused on current earnings and they exert pressure on the company to increase earnings.
LONG TERM PLANNING
Managers of public companies are pressurized to increase earnings in the short term in order to increase the value of their stock. Private companies can focus on long-term earnings as such pressure is eliminated.
MINIMUM SHARE CAPITAL
You will be needing a lot of money for a public company. A public company requires minimum share capital of Rs. 5,00,000. For a private company, the earlier minimum number of share capital was Rs. 1,00,000, but now there is no such minimum compulsion. Therefore there is no pressure of fund requirements.
It is obviously not appropriate, for competitors to know about your business secrets. Confidential information such as executive compensation, legal settlements, and other essential information cannot be kept reserved in public companies. Such information is more secure in a private company. Therefore, a Private Limited Company is less complicated compared to a Public company. It is comparatively less expensive and less time-consuming.