Established under the Companies Act, 2013, Private Limited Company is a privately-owned legal entity that is separate from its owner in the eyes of the law. It limits the liability of its owner to the share holdings only. A minimum of 2 Directors and 2 Shareholders are required to set up a Pvt. Ltd Company wherein the maximum number of Directors can be up to 15 and the maximum number of Shareholders can be up to 200. It is important to keep in mind that while naming a Private Limited Company, the company name must always be followed by Pvt. Ltd. or Private Limited as a suffix. All PLCs are registered with the Registrar of Companies (ROC) at the Ministry of Corporate Affairs (MCA).
Incorporating a PLC comes with various benefits for the individual owning the business.
- As mentioned earlier, a Pvt. Ltd. Company is a separate legal entity that has different set of rules and regulations for its functioning.
- When an individual incorporates a Private Limited Company, he has very limited liability to his personal assets. For instance, if the company incurs a loss, the individual running is not liable to pay for the losses with his personal assets.
- If a PLC is established as a start-up, it is beneficiary for entrepreneurs to raise funds through equity and expand their business.
- All companies including Private Limited Companies are incorporated with the Ministry of Corporate Affairs, therefore, all details of the company is accessible for public viewing on the MCA web portal after paying a suggested fee.
Any existing business or start-up looking to expand or small businesses planning to convert to a PLC can know all about Private Limited Companies on our guide.