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5 Reasons to Register a Private Limited Company in India

5 Reasons to Register a Private Limited Company in India

by Sanjeev Archak

Previously we spoke about the fundamental differences between a Pvt Ltd company and an LLP and the factors one needs to take before choosing the right entity for your business. Today we go 2in depth about the important reasons why one should register a Private Limited Company in India.

The most popular choice of corporate legal entity in the country, a private limited company is registered under the governance of the Companies Act, 2013 and the Companies Incorporation Rules, 2014. A minimum of 2 directors and 2 shareholders are needed to register a company under a private limited entity. A corporate legal entity can be a shareholder only while a natural person can be both a shareholder and a director.

Some of the important and unique features of a private limited company are its limited liability protection towards shareholders, the status of a separate legal entity and a continuous existence, and the ability to raise funds whenever required. These features make it a common choice among Entrepreneurs wanting to raise Seed or Venture Capital.

5 Reasons to Register a Private Limited Company in India

1) No Personal Liability

A private limited company is a separate legal entity and a juristic person registered under the Companies Act, 2013. It has a broad range of legal capacity of its own. The members of the company such as its directors and shareholders have no personal liabilities for the company’s debts to the creditors of the company.

2) Perpetual Succession

A private limited company enjoys a perpetual succession that means it has continuous existence until the company is dissolved legally. The company being a juristic person remains unaffected by the sudden demise or departure of any of its members and remains in uninterrupted existence irrespective of the ownership changes.

3)  Ease of Ownership Transfer

By the transferring of shares, the business property in a company can be moved with ease. The ownership can be transferred by just signing, filing and transfer of the share transfer form along with the relevant share certificates. In addition to this, the consent of the shareholders would be required to further facilitate the transfer process.

4) Raising Equity Funds

Any company registered as a Pvt Ltd entity can raise equity funds from investors whenever needed. By taking the necessary permissions of the Reserve Bank of India, a company can issue equity shares, preference shares, debentures and can also accept deposits. Banks, VC’s and Financial Institutions are the ones that usually prefer to invest in a private limited company.

5) Right to Own and Acquire

A juristic person means an artificial person with a legal capacity. Since a company is recognized as a juristic person by law, it has the right to own, acquire and even alienate any property under its name. The property could be a land, a residential property, machinery, factory or intangible assets of corporate intellectual nature such as trademarks, patents, business methodologies and copyrights.

Need a modern and effective way of getting your business registered in India? Talk to our specialists at IntegraBooks today!

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