What Is A Private Limited Company

by Shivam Kumar ODINT

A private limited company (PLC) is a business that has some of the benefits of a larger corporation but with less regulation and greater flexibility.

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Review on What Is A Private Limited Company

A private limited company (PLC) is a business that has some of the benefits of a larger corporation but with less regulation and greater flexibility. Private limited firms, unlike public limited corporations, are unable to sell their stock on the open market.
For the majority of business individuals, forming a private limited company is the best option.
It's a sort of corporate entity with restricted liability and a maximum shareholder count of 50. It is simple to set up and provides greater operational flexibility than other types of business.

What Is A Private Limited Company (PLC)?
According to the Companies Act of 2013, a private limited company is a corporate structure that is not publicly traded, has limited share transferability, does not offer shares to the public, and has a maximum of 50 shareholders.
There are three different types of private limited companies:
1. Limited-by-shares company- In a limited-by-shares company, a shareholder's responsibility is limited to the unpaid amount on their shares or as specified in the memorandum of Association. No shareholder will be asked to pay more than the unpaid amount in the future course of business. They are solely liable for calls that they have not paid for.

2. Company limited by guarantee- A company limited by guarantee is a type of private limited company that restricts the responsibility of its members to the amount they will contribute at the time of winding up, as stated in the Memorandum of Association.

This type of business is sometimes set up as a NON-PROFIT ORGANIZATION or for charitable purposes. More information on businesses limited by shares can be found here (link).

3. Unlimited Liability Firm- This is a type of corporation in which members' liability is restricted to the debts and liabilities of the company. If the company fails to pay its debts, creditors can seek repayment from the shareholders.

You may be questioning why the infinite company is even considered a company, despite the fact that it lacks the characteristics of a firm. Isn't that a SEPARATE LEGAL ENTITY?

Even if the unlimited corporation is referred to as a separate legal entity, no shareholder is accountable for the actions of others and cannot sue them.

Now we'll look at the characteristics of a private limited corporation.

A Private Limited Company's Characteristics
The number of members and shareholders according to the Companies Act, a private limited company must have at least two members and a maximum of 200 stockholders. In terms of stockholders, there are a maximum of 50.
Limited responsibility The members' obligation is limited to what they've committed to or the amount of shares they own and the money owed to them. The firm and its shareholders/members are two different legal entities.
Perpetual succession- Because the corporation is created by law, it can only be dissolved by legislation. As a result, even if its members die or retire, the company continues to exist.