A Private Limited Company is a type of business that is owned and operated by a small group of people. Private stakeholders are in charge of such entities. A Pvt. Ltd. company’s liability arrangement is less severe than that of an LLP or a sole proprietorship, which puts firm assets at risk in the event of a financial crisis. Although all partners in a Pvt. Ltd. corporation are responsible for the company’s loss, there is one exception. Shareholders can be subjected to such losses up to the number of shares held by them. Meaning, a member’s liability for recouping a business loss is limited to the number of shares they own.

What Characteristics Do Pvt. Ltd. Companies Possess?

Limited Liability Structure

Each member or shareholder’s responsibility is limited in a private limited corporation. As a result, even in the event of a loss, the shareholders are obligated to sell their own assets to satisfy the debt. The shareholders’ personal and individual assets, on the other hand, are not in jeopardy.

Minimum Paid-Up Capital

A minimum paid-up capital of INR 1 lakh is required for a private limited company. It could go even higher, as MCA may prescribe from time to time.

Membership

To establish a firm, you will need at least two shareholders, just like any other business. However, because it is still a small organization, the maximum number of members is capped at 200. A minimum of two directors is required to govern the business.

Separate Legal Entity

This is a separate legal entity that will exist in perpetuity. This means that the corporation will continue to exist in the eyes of the law even if all of the members die or the company becomes insolvent or bankrupt. Unless terminated by resolution, the company’s life will be eternal, unaffected by the lives of its shareholders or members.