Types of Private Limited Companies

As per Companies Act,2013 different types of private limited company can be incorporated with varying levels of liability for the shareholders and members. According to the business requirements, promoters can select between the following types of Private Limited Company and can also select between the entities.

Mentioned below are some common types of Private Limited Company

1. Private company limited by shares

In such company, the liability of the shareholders is limited to the extent of the member’s share in the company or the unpaid amount of share. Therefore, a member is not liable to pay more than his investment in the company. In other words, the liability of the shareholders in the private limited company is restricted to the paid-up share capital or any amount that remains unpaid.

Also, there are numerous benefits to a private limited company as compared to other forms of companies.

2. Private company limited by guarantee

In such company, the member gives a guarantee to be held liable. The liability of such a member is limited to the extent of his guarantee. He cannot be held liable for more than his guarantee to the company. The guarantee given by a member can only be called at the time of winding up of the company. This type of company is best suitable for clubs, trade associations, societies etc that requires minimal capital or working capital funds.

3. Unlimited company

The liability of the members in such companies is unlimited. It means that their personal assets can be utilized to pay off company’s debts and liabilities. It is to be noted that this does not mean that there is no separate legal entity. The company and the members are still different.

A privately limited company registration is the best form of company for a startup, especially one which is growth-oriented.

Conclusion

The company incorporation certificate provided by ROC in India is that of Private Limited Company Limited by Shares. There are many types of private limited company, but most preferable for the business purpose is Private Limited Company– Limited by Shares. This type of Company registration gives maximum protection for its members and is most widely accepted.

Read which type of Registration is best for your Startup

Compliances of a Private Limited Company

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2018-11-05T13:09:40+00:00Company Registration|