What is private limited company means?

A private limited company is a type of business entity that is privately held by a limited number of shareholders. It is one of the most common forms of business structures in India and is governed by the Companies Act, 2013. Here are some key characteristics of a private limited company:

1.       Limited Liability: The liability of the shareholders is limited to the extent of their unpaid shares. In case the company faces financial difficulties or legal issues, the personal assets of the shareholders are generally protected.

2.       Number of Shareholders: A private limited company must have a minimum of two shareholders and can have a maximum of 200 shareholders. Shareholders can be individuals or corporate entities. The shares of the company are not freely transferable, and there are restrictions on transferring shares to non-shareholders.

3.       Directors: A private limited company must have a minimum of two directors, and at least one of them must be a resident of India. The directors are responsible for managing the affairs of the company and making strategic decisions.

4.       Separate Legal Entity: A private limited company is a separate legal entity distinct from its shareholders. It can own assets, enter into contracts, and sue or be sued in its own name.

5.       Name and Structure: The name of a private limited company in India must end with "Private Limited" or "Pvt. Ltd." The company is structured with a share capital divided into shares of fixed amounts.

6.       Financial Reporting: Private limited companies are required to maintain proper books of accounts, prepare financial statements, and get them audited by a qualified Chartered Accountant.

7.       Regulatory Compliance: Private limited companies are subject to various compliance requirements, such as filing annual returns, conducting annual general meetings, and maintaining statutory registers.

8.       Capital and Ownership: Private limited companies can raise funds by issuing shares to shareholders. The ownership and control of the company are typically closely held among a limited number of shareholders.

Private limited companies are commonly preferred by entrepreneurs due to their limited liability protection, flexibility in ownership and management, and credibility in the business community.