A Private Limited Company is a corporate structure where ownership is divided among shareholders, and the business is managed by directors. It provides limited liability protection, meaning members are only responsible for company debts up to the amount they’ve invested.
Key benefits include:
- Protection of personal assets
- Capability to raise funds by issuing shares
- Recognition as an independent legal entity
- Potential tax benefits under corporate tax laws
- Stronger business credibility and market trust
Commonly required documents include:
- Memorandum of Association (MoA)
- Articles of Association (AoA)
- PAN cards of all shareholders and directors
- Proof of the company’s registered address
- Identity proof of directors and shareholders
- Digital Signature Certificate (DSC) for all designated directors
The MoA is a foundational legal document that outlines the company’s objectives, scope of operations, and its relationship with shareholders.
The AoA defines the internal structure and rules of governance, specifying the duties, powers, and rights of the company’s directors and shareholders.
A Private Limited Company must have at least two directors.
Yes, individuals who are not Indian citizens can become shareholders or directors in a Private Limited Company, provided they comply with foreign investment and regulatory norms.
No, there is no mandatory minimum paid-up capital required to incorporate a Private Limited Company.
The company is taxed separately from its owners. It pays corporate tax on its profits, and dividends distributed to shareholders may be taxed in their hands based on prevailing tax laws.
Yes, a Private Limited Company can transition to other business formats like a Public Limited Company by following the appropriate legal procedures.