Private limited company

Private Limited Companies are those types of companies where minimum number of members is two and maximum number is two hundred. The maximum number of directors shall have to be mentioned in the Articles of Association. In the grand of privileges and exemptions, the Companies Act has drawn a distinction between an independent private company and other private company which is a subsidiary to the other public company.

Key Features of Private Limited Company are:

1. Limited Liability– The liability of each member or shareholders is limited. It means that if a company faces loss under any circumstances then its shareholders are liable to sell their own assets for payment. The personal, individual assets of the shareholders are not at risk.

2. Perpetual succession–The company keeps on existing in the eyes of law even in the case of death, insolvency, bankruptcy of any of its members. This leads to perpetual succession of the company. The life of the company keeps on existing forever.

3. Number of directors– when it comes to directors a private company needs to have only two directors. With the existence of 2 directors a private company can come into operations.

4. Prospectus– Prospectus is a detailed statement of the company affairs which is issued by a company for its public. However in case of private limited company there is no such need to issue a prospectus because in this public is not invited to subscribe for the shares of the company.

5. Name– It is mandatory for all the private companies to use the word “private limited “after its name.