What are the Rules for Private Limited Company?

A private limited company is a company which is a privately held small business entity. The liability of the owner is limited to their share, restricts shareholders from publicly trading shares and limits the number of shareholders to 50. The private limited company has to file GSTR 3B, TDS, file GSTR 6 and other forms whenever needed. 

Rules of Private Limited Company

·         Members- As per the provision of the Companies Act, 2013, to start a private company a minimum the number of members is 2 and the maximum number of members can go up to 200.

·         Perpetual Succession- the Company exists in the eyes of the law even if any of its members face insolvency, bankruptcy or death. The life of the company keeps on existing and this leads to the perpetual succession of the company.

·         Limited Liability- Shareholder liability is limited that means if the company faces loss of the individual assets of the shareholders is not at risk.

·         Index of members- Private Company doesn’t have to keep an index of its members whereas the public company has to maintain the index of its members.

·         Number of Director- The minimum requirement of directors is 2 for the existence of a private limited company.

·         Paid-up capital- The minimum requirement of paid-up capital is Rs 1 lakh to form a private company.

·         Prospectus- A prospectus is issued in a public company and contains a detailed statement of the company affair. In the case of a private limited company, the public is not invited to subscribe for the shares of the company, hence there is no need to issue prospectus.

·         Name- It is compulsory to use privately limited after their name for all the private companies.

·         Registered Office Address- While registering the company it is compulsory to provide the address of the company. The registered office is where all the main work of the company will take place.

·         Digital Signature Certificate- Every Company must obtain a digital signature certificate that is used to verify the authenticity of the documents. And in today’s world, everything is going online and documents can be submitted online, so it is necessary for the company to obtain a digital signature certificate.

Conclusion

A private limited company is less expensive, less time-consuming and is less complicated if we compare it with Public Company. Hope this article helped you to understand all the features of Private Limited Company and if you have any further questions you can ask in the comment section.

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