{"id":2258,"date":"2019-10-17T13:08:34","date_gmt":"2019-10-17T07:38:34","guid":{"rendered":"https:\/\/aktassociates.com\/blog\/?p=2258"},"modified":"2019-10-17T13:09:21","modified_gmt":"2019-10-17T07:39:21","slug":"advantage-and-disadvantage-of-private-company","status":"publish","type":"post","link":"https:\/\/aktassociates.com\/blog\/advantage-and-disadvantage-of-private-company\/","title":{"rendered":"Advantage and Disadvantage of Private Company"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">what is a private company, what are the private company features, what benefits from a private company, what are the Advantages and Disadvantages of Private LTD company, What are features for Transferability of share and perpetuity features<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-2256 size-full\" src=\"https:\/\/aktassociates.com\/blog\/wp-content\/uploads\/2019\/10\/private-limited-company.png\" alt=\"private limited company\" width=\"700\" height=\"400\" srcset=\"https:\/\/aktassociates.com\/blog\/wp-content\/uploads\/2019\/10\/private-limited-company.png 700w, https:\/\/aktassociates.com\/blog\/wp-content\/uploads\/2019\/10\/private-limited-company-300x171.png 300w, https:\/\/aktassociates.com\/blog\/wp-content\/uploads\/2019\/10\/private-limited-company-20x11.png 20w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >In this article, we will discuss about...<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #1e73be;color:#1e73be\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #1e73be;color:#1e73be\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/aktassociates.com\/blog\/advantage-and-disadvantage-of-private-company\/#What_Is_a_Private_Limited_Company\" title=\"What Is a Private Limited Company?\">What Is a Private Limited Company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/aktassociates.com\/blog\/advantage-and-disadvantage-of-private-company\/#Advantages_of_Private_Ltd_Company\" title=\"Advantages of\u00a0 Private Ltd Company:-\u00a0\">Advantages of\u00a0 Private Ltd Company:-\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/aktassociates.com\/blog\/advantage-and-disadvantage-of-private-company\/#Disadvantages_of_a_Private_Limited_Company\" title=\"Disadvantages of a Private Limited Company:-\">Disadvantages of a Private Limited Company:-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/aktassociates.com\/blog\/advantage-and-disadvantage-of-private-company\/#Other_Disadvantages_for_Private_Company\" title=\"Other Disadvantages for Private Company:-\">Other Disadvantages for Private Company:-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/aktassociates.com\/blog\/advantage-and-disadvantage-of-private-company\/#Conclusion\" title=\"Conclusion:-\">Conclusion:-<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What_Is_a_Private_Limited_Company\"><\/span><b>What Is a Private Limited Company?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A private limited company is another form of business structure. A<a href=\"https:\/\/aktassociates.com\/blog\/private-limited-company-registration\/\">\u00a0<\/a><\/span><a href=\"https:\/\/aktassociates.com\/blog\/private-limited-company-registration\/\">private limited company<\/a><span style=\"font-weight: 400;\">\u00a0is a kind of privately held small business entity. In this form of business entity limits owner liability to their shares.,Moreover\u00a0 <\/span><span style=\"font-weight: 400;\">Maximum<\/span><span style=\"font-weight: 400;\"> limits the number of shareholders to <\/span><b>200,<\/b><span style=\"font-weight: 400;\"> and it has restrictions over shareholders from publicly trading shares.<\/span><\/p>\n<p><b>Features of <\/b><b>a Private Limited Company along with the difference between private and public company:-<\/b><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Features<\/b><\/td>\n<td><b>Public \u00a0limited company<\/b><\/td>\n<td><b>Private limited company<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Minimum members<\/span><\/td>\n<td><span style=\"font-weight: 400;\">7<\/span><\/td>\n<td><span style=\"font-weight: 400;\">2<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Minimum directors<\/span><\/td>\n<td><span style=\"font-weight: 400;\">3<\/span><\/td>\n<td><span style=\"font-weight: 400;\">2<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Maximum members<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Unlimited<\/span><\/td>\n<td><span style=\"font-weight: 400;\">200<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Minimum capital<\/span><\/td>\n<td><span style=\"font-weight: 400;\">500000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">100000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Invitation to public<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">No<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Issue of prospectus<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">No<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Quorum at AGM<\/span><\/td>\n<td><span style=\"font-weight: 400;\">5 Members<\/span><\/td>\n<td><span style=\"font-weight: 400;\">2 Members<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Certificate for commencement of Business ( Mandatory)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">A term used at the end of the name<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Limited<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Private Limited<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Managerial remuneration<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Can not exceed more than 11% of Net Profits (as prescribed in section 197)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">No Restriction\u00a0<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Statutory meeting (Mandatory)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Yes<\/span><\/td>\n<td><span style=\"font-weight: 400;\">No<\/span><\/td>\n<\/tr>\n<tr>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"Advantages_of_Private_Ltd_Company\"><\/span><b>Advantages of\u00a0 Private Ltd Company:-\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The <a href=\"https:\/\/aktassociates.com\/blog\/public-limited-company-registration\/\">private company<\/a> has a core advantage that is mentioned below:-<\/span><\/p>\n<p><b>Members:<\/b><span style=\"font-weight: 400;\">\u00a0You can\u00a0<\/span><span style=\"font-weight: 400;\">start a private limited company<\/span><span style=\"font-weight: 400;\">\u00a0with a minimum of only 2 members (maximum of 200), as per the<\/span><span style=\"font-weight: 400;\"> provisions of the Companies Act 2013.<\/span><\/p>\n<p><b>Limited liability:\u00a0<\/b><span style=\"font-weight: 400;\">In the private company, the liability of each shareholder or member becomes limited. This means that if the company runs into a loss, the company shareholders are liable to sell their company shares to clear the debt or liability. The individual assets of shareholders or members are not at risk as a member are not themselves responsible.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><b>Perpetual<\/b><b> succession:<\/b><span style=\"font-weight: 400;\">\u00a0 Perpetual succession means that the company will be continued even if any owner or member dies or goes <\/span><span style=\"font-weight: 400;\">bankrupt<\/span><span style=\"font-weight: 400;\">, or even exits from the business or transfers his shares to another person.<\/span><\/p>\n<p><b>Prospectus:<\/b><span style=\"font-weight: 400;\"> Prospectus is a written detailed statement is\u00a0 issued by a company that goes public which means Public Company. However, there is no need for private limited companies to issue a prospectus because the general public is not invited to subscribe for the shares of the private company.<\/span><\/p>\n<p><b>A number of directors: <\/b><span style=\"font-weight: 400;\">In the case of the private limited company there is a need for only a minimum number of only 2 directors. At least one director on the board of directors must have stayed in India for a total period of not less than 182 days in the previous calendar year. The directors and the shareholders can be the same people.<\/span><\/p>\n<p><b>Capital:\u00a0<\/b><span style=\"font-weight: 400;\">Although, under the<a href=\"https:\/\/aktassociates.com\/blog\/incorporation-of-company\/\"> companies act, 2013<\/a>, there is a minimum paid-up share capital requirement of Rs.100000 however, this requirement has been deleted in the Companies amendment act, 2015.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So, currently, there is no minimum paid-up share capital requirement in the case of a private company. However, Private company must have minimum Authorized share capital of Rs.1,00,000.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Disadvantages_of_a_Private_Limited_Company\"><\/span><b>Disadvantages of a Private Limited Company:-<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The following are the disadvantages are as mentioned in brief that is:-<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Private limited company restricts transferability of its shares by its articles as per prescribed rules of company act, 2013<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The number of members, in any case, cannot exceed 50 in the private ltd company.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u00a0Moreover, it cannot issue prospectus to the general public as it is restricted to issue shares in the General Public.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">So Concludingly, In stock exchange shares cannot be quoted.<\/span><\/li>\n<\/ol>\n<h2><span class=\"ez-toc-section\" id=\"Other_Disadvantages_for_Private_Company\"><\/span><b>Other Disadvantages for Private Company:-<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ol>\n<li><b><\/b>Smaller resources<\/li>\n<li>Lack of transferability of shares<\/li>\n<li>Poor protection to members<\/li>\n<li>No valuation of investment<\/li>\n<li>Lack of public confidence<\/li>\n<\/ol>\n<h2><a href=\"https:\/\/aktassociates.com\/start-a-business\/private-limited-company-registration\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-2113 size-full\" src=\"https:\/\/aktassociates.com\/blog\/wp-content\/uploads\/2019\/10\/Private-Limited-Company-Registration.png\" alt=\"Private Limited Company Registration\" width=\"700\" height=\"150\" srcset=\"https:\/\/aktassociates.com\/blog\/wp-content\/uploads\/2019\/10\/Private-Limited-Company-Registration.png 700w, https:\/\/aktassociates.com\/blog\/wp-content\/uploads\/2019\/10\/Private-Limited-Company-Registration-300x64.png 300w, https:\/\/aktassociates.com\/blog\/wp-content\/uploads\/2019\/10\/Private-Limited-Company-Registration-20x4.png 20w\" sizes=\"(max-width: 700px) 100vw, 700px\" \/><\/a><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><b>Conclusion:-<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A Private company has its own Benefit depending upon the scale of business it is traded upon. One should ponder upon the rules and restrictions that have been inculcated in the Company Act,2013 for the Establishment of Private Companies.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>what is a private company, what are the private company features, what benefits from a private company, what are the &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"Advantage and Disadvantage of Private Company\" class=\"read-more button\" href=\"https:\/\/aktassociates.com\/blog\/advantage-and-disadvantage-of-private-company\/#more-2258\">Read more<span class=\"screen-reader-text\">Advantage and Disadvantage of Private Company<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":2259,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.8 - 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