Advantages & Benefits of Private Limited Company Why to Register Private Limited Company

Private Limited Company is the most prevalent and popular type of corporate legal entity in India. Private limited company registration is governed by the Ministry of Corporate Affairs, Companies Act, 2013 and the Companies Incorporation Rules, 2014. To register a private limited company, a minimum of two shareholders and two directors are required. A natural person can be both a director and shareholder, while a corporate legal entity can only be a shareholder. Further, foreign nationals, foreign corporate entities or NRIs are allowed to be Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.

Unique features of a private limited company like limited liability protection to shareholders, ability to raise equity funds, separate legal entity status and perpetual existence make it the most recommended type of business entity for millions of small and medium sized businesses that are family owned or professionally managed.

ADVANTAGES & BENEFITS

Limited Liability Protection to Directors personal assets

Many times startups need to borrow money and take things on credit. In case of normal Partnerships, Partners personal savings and property would be at risk incase business is not able to repay its loans. In a private limited company, only investment in business is lost, personal assets of the directors are safe.

Easy to raise funds and loans

Pvt. Ltd. company enjoys wide options to raise funds through bank loans, Angel Investors, Venture Capitalists, in comparison to LLPs and OPCs.

Easy to attract Employees

For startups putting together a team and keeping them for long time is a challenge, due to confidence attached to private limited structure, it is easy to hire people as well motivate them with corporate designations and stock options.

Better image and credibility in Market

Private limited company is popular and well known business structure. Corporate Customers, Vendors and Govt. Agencies prefer to deal with Private Limited Company instead of proprietorship or normal partnerships.

Favorite Business structure for Investors

Investors love to invest in Private Limited companies as it is well structured and less strings attached. Most important it is very easy to exit from a private limited company.

Easy to Sell

Private Ltd. is easy to sell, very less documentation and cost is involved in selling a Pvt. Ltd. company.