The business world is competitive and with the age of technology, one needs to embrace each and every opportunity to go ahead in their business. The first part is that of selecting the right model of company registration to opt for so that the business can be benefited from it. Thus it is always important to look at the benefits of being a private limited company, person company, Public Limited company, etc.
Proper research will help in making the business fruitful and helps build better strategies and business plans for growth. Every business has its own benefits and risks and one needs to analyze each and every element before taking up any issue.
What are the benefits of Private Limited Company Registration?
When registering for a private limited company one has to look at the various ways in which the business model can have an impact on the way the business is conducted. No business model is free of its implications and one should always do proper research before coming to a decision. Some of the major benefits of being a Private Limited Company Registration are:
- Separate Legal Entity: Under the Companies Act,2013 a Private Limited Company is seen as a separate legal entity under the court of law. All the assets of the company are its own and can not be claimed by the shareholders. In the same way, the assets of the shareholders can not be taken into account when the company is held accountable.
- Limited Liability: A private Limited Company offers the shareholders limited liability and is held accountable for only the shares they hold and nothing more than that. The personal assets of the shareholders can not be brought into account when the company goes through loss and has debts. The shareholder is only liable for the shares they hold.
- Perpetual Succession: A private limited company is a separate legal identity and is separate from its shareholders and owners. It has the capability to continue existing even when the shareholders change until and unless it is dissolved under the law. It is unaffected by the events of the death of the members but rather continues to exist irrespective of the changes in the management structure. This is one of the most important elements of a Private Limited Company.
- Minimum Capital: Under the Amended Companies Act 2013 a Private limited company is no longer required to have a minimum capital for its formation. It can on the other hand get registered with a sum of 10,000 as an Authorized Share Capital for its business.
- Investments: A private Limited Company allows for the influx of 100% Foreign Direct Investments in the company beginning in foreign investors.
- Fund Raising: The Companies Act 2013 allows for Private Limited companies to raise funds through venture capital or Investors. It is the only form of the company apart from the public limited companies that are allowed to do so. Thus this becomes a point of advantage for the company.
- Transfer of shares: A Private Limited Company that is limited by the shares can make arrangements for the transfer of shares from one shareholder to another. The process of transferring the shares certificates through signing and filing is easy and hassle-free as compared to the transfer of an interest in a proprietorship or partnership.
- Credibility: The availability of the details of the Private Limited Company in the public database allows for the building of trust among the customers. It helps improve the credibility of the business and helps make it authentic.
The registration of a private limited company is very beneficial and does help in growing the business. The above-mentioned benefits play an important role in more and more companies getting registered as private limited companies and growing at an exponential rate.