Introduction

A private limited company is controlled by a few persons privately having an independent legal entity. In this matter, the shareholders cannot trade openly shares. It confines its number of shares to 50. Shareholders or investors can’t sell their shares without the confirmation of other shareholders. It’s an organization that limits the right of its members to exchange its shares and it doesn’t send the solicitation to the public for the subscription of its shares. The qualities of a private limited company are specified below.

Characteristics of the private limited company

  1. Members– To start a company, the least number of 2 individuals are needed and a maximum number of 200 individuals according to the arrangements of the companies act 2013.
  2. Limited Liability– The obligation of every part or investor is constrained. It implies that in the event the company faces misfortune under any condition then its investors are accountable to sell their assets for payment. The personal, individual assets of the investors are not at risk.
  3. Perpetual succession– The company continues existing according to the law even on account of death, insolvency, the bankruptcy of any of its individuals. This prompts the perpetual progression of the company. The life of the company continues to exist forever.
  4. Index of members– A private company has an advantage over the public company as they don’t need to keep an index of its members whereas the public company is needed to maintain an index of its individuals.
  5. Several directors– When it comes to directors a private company requires to have only two directors. With the presence of 2 directors, a private company can come into tasks.
  6. Paid-up capital– It must have a minimum paid-up capital of Rs 1 lakh or such higher sum which might be recommended from time to time.
  7. Prospectus– Prospectus is a brief statement of the company affairs that is given by a company for its public. However, in the case of a private limited company, there is no such need to issue a catalog because in this public is not invited to subscribe for the shares of the company.
  8. Minimum subscription– It is the amount accepted by the company which is 90% of the shares issued within a specific period. If the company is not able to get 90% of the amount then they can,t initiate further business. In the case of a private limited company, shares can be appointed to the public without getting the least possible subscription.
  9. Name– All the private companies must utilize the word private limited after its name.

Private Limited Companies are also designate too many exemptions that other kinds of organizations are not commonly designated to.

In the event, if any private limited organization doesn’t follow any of the previously mentioned attributes, it stops to be a private company.