The best thing about a Pvt. Ltd. Company is Limited Liability. A Pvt. Ltd. company has an identity of its own. In case of any financial burden, the liability of the owners is limited only to their shareholding in the company. The owner's personal wealth remains unaffected. Companies Act 2013 is applicable for a Pvt. Ltd. Company.
Any recovery is made from the company's assets only. The maximum number of shareholders in a Pvt. Ltd. company cannot exceed 200.
Advantages
- Professional Structure of the business
- Easier to raise investments
- Defined responsibilities of owners and shareholders.
- Management and Ownership can be distinguished.
- Memorandum of Association (MoA), article of Association (AoA), and Share Holders Agreement are the governing document of a Pvt. Ltd. Company.
Who should start a Pvt. Ltd. Company
- If you want a formal structure for your company.
- If you wish to have stock options for your employees.
- If you're going to list your company on the stock exchange in the future.
- If you want to raise equity investment in the future.
- The distinction between Ownership and management.
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