Private Company
A private company provided legal protection of limited liability and perpetual succession to its members. Private Company can have minimum of two members and maximum 200, minimum two directors and no minimum paid up capital requirement with a restriction that its shares are not freely transferable and can never be issued to public.
Key Attributes
| Limited Liability | Personal liability of the members is limited |
|---|---|
| Separate Legal Entity | A private company is a separate legal entity from its shareholders and directors. |
| Duration/ Uninterrupted existence | A company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved |
| Capital Raising | A private limited company attract investors into the business more due to their credibility |
| FDI Allowed | 100% Foreign Direct Investment is allowed that means any foreign entity or foreign person can directly invest in a Private Limited Company. |
| Professional Image | A private company gives a professional image to businesses and more assurance about its stability. This attracts new customers or investors. |
Advantages of private limited:
- Personal liability of the members is limited
- separate legal entity from its shareholders and directors.
- continued or uninterrupted existence until it is legally dissolved
- 100% Foreign Direct Investment is allowed that means any foreign entity or foreign person can directly invest in a Private Limited Company.
- can be formed with no minimum capital and two members and directors
Disadvantages of private limited:
- suitable only for small business
- shares cannot be issued to public
- restricts the transferability of shares by its articles.
- Number of members cannot be more than 200
