Services

Home / Services

Private Limited Company

A Private Limited Company (Pvt. Ltd.) is a voluntary association of at least two person that is registered under the Companies Act. It is the most popular structure for startups and businesses with high growth ambitions because it creates a separate legal entity—meaning the company is a "person" in the eyes of the law, distinct from its owners.

Registration Process

The registration process is more formal and rigorous than other structures

  • DSC & DIN: Directors must obtain a Digital Signature Certificate (DSC) and a Director Identification Number (DIN).
  • Name Reservation: A unique name must be approved (ending in "Private Limited").
  • MoA and AoA: You must draft the Memorandum of Association (the company's goals) and Articles of Association (the internal rules).
  • Certificate of Incorporation: Issued by the Registrar of Companies (RoC) once all documents are verified.
  • PAN/TAN: The company gets its own tax identity immediately upon incorporation.

Advantages

  • Limited Liability: Shareholders are only liable for the amount unpaid on their shares. Your personal house, car, and savings are 100% safe from business creditors.
  • Fundraising Ease: This is the "gold standard" for investors. Venture Capitalists (VCs) and Angel Investors almost exclusively invest in Private Limited companies because they can easily issue shares.
  • Perpetual Succession: The company "never dies." It continues to exist regardless of the death, bankruptcy, or resignation of directors or shareholders.
  • Borrowing Capacity: Banks prefer lending to Private Limited companies over proprietorships because of the transparency and structured nature of the business.
  • Brand Credibility: Having "Pvt. Ltd." after your name adds an immediate layer of trust and professionalism for international clients and large vendors.

Disadvantages

  • High Compliance Cost: This is the "price" of limited liability. You must conduct annual audits, hold board meetings, and file annual returns with the Registrar, regardless of whether you made a profit.
  • Strict Penalties: Missing a filing deadline can lead to heavy fines and, in extreme cases, the disqualification of directors.
  • Difficult Exit: Closing a Private Limited company is a slow and legally complex process that can take several months or even years.
  • Restricted Share Transfer: Unlike a Public Company, you cannot freely sell your shares to the general public; transfers are restricted by the company's Articles
 
     
281 Times Visited