Private Limited Company

4 Points You Must Know About Private Limited Company

1. Alternative Business Forms :

Before deciding to register a private limited company, you must evaluate other business forms such as proprietorship, partnership, LLP etc. Every business form has its own merits and demerits. So, you must take an informed decision after consultation with an expert.

2. Cost and Compliances :

You must know the cost of carrying the company and compliances before the formation.

3. Cheating Ways:

Are you aware of how another shareholder or director may cheat you? Please do not take me wrong. But business involves risk, and one must know ways to minimize the risks.

4. Selection of Right Consultant:

The formation of the company is the beginning of compliances. You must carefully select the right consultant. Once a company is formed, it is tough to correct any mistake.

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FAQ`s Regarding Pvt. Ltd. Co.

A Pvt. Ltd. Co. company is a company which

  1. restricts the right of members to transfer shares,
  2. can have a maximum of 100 members only,
  3. can not give an invitation to the public for the subscription of its securities,
  4. cannot accept any deposits from persons other than its members, directors or their relatives.

A Pvt. Ltd. Co.must use the word “private” in its name. The minimum paid-up capital of the private limited company can be Rs. one lac only.

Ltd is not an acronym. It is a short form of the word “limited”. It is usually used in the sense of a liability of a company.

The minimum number of members to form a private company is 2.

Brn number stands for “business registration Number. This registration number is issued in the state of Rajasthan. This registration is required for the businesses operating in Rajasthan, whether dealing in goods or services.

The profits are shared by way of payment of “dividends” in a private limited company.

How to close a private limited company?

The private limited company can be closed in the following four ways:

1. By selling the company:
Technically speaking, it is not the closure of the company but the transfer of complete ownership of the company.

2. Compulsory winding up:
This winding-up is done as per the provisions of the companies act and is generally due to the company’s default in certain specified conditions.

3. Voluntary Winding Up:
This voluntary winding up requires complex procedures to be followed and takes a lot of time.

4. Winding up of defunct company:
There is a fast-track procedure to close a dormant company. However, it applies to companies that fulfil certain specified conditions.

The maximum number of members in a private company can be 200.

The documents required related to the directors are as follows:

  1. PAN card
  2. Identity Proof (Aadhaar card/Driving license/passport)
  3. Address Proof (Telephone Bill /Electricity Bill/ Bank Account Statement)
  4. Photograph
  5. Director Identification Number (DIN)
  6. Passport for NRIs (if DIN is already issued)

The documents related to the company proposed to be incorporated are as follows:

  1. Declaration by all the subscribers of the company to state their willingness to become the shareholders of the company
  2. Business Address Proof (Electricity bill or telephone bill)
  3. Rent agreement and NOC from the owner of the rental property (if applicable)
  4. Memorandum of Association (MoA)
  5. Articles of Association (AOA)
  6. Digital Signature Certificate (DSC)

The government fee varies from state to state. The fee is minimum in Sikkim and maximum in Punjab.

The difference between the Pvt. ltd. and ltd. company is as follows:
Points of DifferencePvt. Ltd. Co.                Ltd. Co.
1. Number of MembersMin – 2Max – 200Min- 7Max- No Limit
2. NameIt must include the words “Private Limited.”The name must include the word “Limited.”
3. ProspectusNo need to issue or file the prospectus.Must issue and file a prospectus or a statement in lieu of a prospectus.
4. Allotment of sharesNo restrictionMinimum subscription  is a must for allotment of shares
5. Share warrantsNot possible to issue share warrants.Can issue share warrants per bearer.
6. Statutory Meeting and reportNot requireCompulsory
7. Listing on a stock exchangeIt cannot be listed.Can be listed.
9. FilingNo Need to send the list of Directors and their consent to the Registrar.Compulsory to send a list of directors and their consent to the Registrar.
10. Quorum at AGMTwo members personally present.At least five members personally present.

When you form or register a company as per the companies act, the incorporation certificate is issued by the Registrar of companies. This incorporation certificate is conclusive proof of the registration of the company.

It is the conclusive proof and a legal document issued by the Registrar of companies regarding the formation of a company. This provides the legal identity of the company.

The Ministry of Corporate Affairs (MCA) website is also called the mca21 portal. The official MCA website address is

The date of incorporation is the date mentioned on the incorporation certificate of the company.

The company comes into existence from the date of the certificate, and its existence can not be challenged after that.

A new or existing company that wishes to change its name can reserve the new name subject to availability. The MCA portal provides a web-based service through a form known as “Reserve Unique Name(RUN)”. However, if a new company is proposed to be incorporated, the name can be reserved for 20 days. In the case of an existing company, the name can be reserved for 60 days from the date of approval. It is straightforward to fill “RUN” form, and the fields to fill are self-explanatory. This “RUN” form can be filled only after logging in to the MCA portal. The prescribed government fee to reserve the name through the “RUN” form is Rs.1000.