Private Limited Companies are those types of companies where minimum number of members is two and maximum number is two hundred. A private limited company has the limited liability of members but at the same time it has many characteristics as those of a partnership firm. A private limited company has all the advantages of partnership namely flexibility, greater capital combination of different and diversified abilities, etc., and at the same time it has advantages of limited liability, greater stability and legal entity. In this sense, a private limited company stands between partnership and widely owned public company. Identifying marks of a private limited company are name, number of members, shares, formation, management, directors and meetings, etc., The maximum number of directors shall have to be mentioned in the Articles of Association. In the grand of privileges and exemptions, the Companies Act has drawn a distinction between an independent private company and other private company which is a subsidiary to the other public company.
Separate Legal Entity
A corporation is an official entity and a legal person recognized underneath the Act. So a corporation appearance of association has broad legal ability and can possess property and also acquire amount overdue. The member of a corporation has no legal responsibility to the creditors of a business for such amount overdue.
Uninterrupted Existence
A corporation has continuous progression, that is continued or nonstop survival until it is officially dissolved. An organization, being a split authorized person, is unaltered by the death or other disappearance of any associate but continues to be in existence irrespective of the changes in relationship.
Borrowing Capacity
A company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns.
Easy Transferability
Shares of a company limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.
Owning Property
A company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern.
Limited Liability
Limited Liability means the status of being legally responsible only to a limited quantity for debts of a company. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company’s debts is limited.