Description Of A Private Limited Company In India

 Description Of A Private Limited Company in India



Private Limited companies are those companies that are privately held by people. From local businesses to corporates, Private limited Company is one of the most preferred business entities.

Shareholders of a Private Ltd company may operate the business themselves, or hire directors to manage the company. A private limited company follows a legal Structure For Businesses.

Angel Investors, Banks, Venture Capitalists, and other budgetary organizations prefer investing in a private limited company.

Do you want to set up a Private Limited Company in India? Aavana is the right choice. When you choose us, you’ll surely get quality and budget-friendly business services.

The Types Of Private Limited Companies

The types of companies include:

  •  Companies limited by shares
  •  Companies limited by guarantee
  •  Unlimited companies

  • Companies limited by shares: The shares of the company are owned by at least two or more shareholders or members. A company limited by shares is a company that has the liability of its members limited to an amount that is unpaid on the shares held by them respectively. The company can enact its liabilities either on its existence or on its ending. Companies limited by shares end with the word limited which gives us the information that this company has limited liabilities. This simply means that the liability of the shareholders is limited by the shares they hold. All the companies that are limited by shares must be legally registered under the Companies Act 2013.

  • Companies limited by guarantee: It is a business structure that is viewed as a legal person and is responsible for its own debts. A company limited by guarantee has members and not shareholders. It is a company that does not have a share capital. Such companies have a separate legal entity which means activities like buying and selling of property, employment of people, and borrowing money can be carried out in the name of the company. This structure is legally preferred for most non-profit organizations, charity societies, clubs, and other similar organizations. These companies are non-profit companies because the profits are not distributed to the members but retained in the company.

  • Unlimited shares: A company that is unlimited by shares does not have any limit on the liability of its members. Such a type of company is a hybrid company incorporated with or without share capital. There is no limitation on the legal liability of the shareholders or members. The liability of the shareholders for the debts of the company is unlimited. In the case of debts, there is no separation between the personal and company resources of the shareholders. There is also maximum exposure to risks.

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