Importance Of Private Limited Company | Ebizfiling
                     Importance of a Private Limited 
Company in India
Introduct
ion
Many questions come to the mind when launching a new business or 
enhancing your  existing company. One of the most challenging processes is 
choosing a corporate  identity for your company. A Private Limited Company is 
the most preferred type of  business form among the aspiring entrepreneurs 
and top solo business dealers in the  country like India. It is one of the most 
significant corporate legal identities in India.  However, it is essential to know 
the importance of a Private Limited Company before  registering your 
company as a Private Limited Company in India. In this blog, we will go  
through the importance of Private Limited Company.
What is a Private Limited 
Company?
A Private Limited Company is a company where the shareholders enjoy the 
feature of  limited liability i.e., each shareholder is liable or accountable for the 
part of share he  owns and the members are restricted to transfer the shares 
to the people outside the  company. The registration and other compliance of 
a Private Limited Company are  governed by the Companies Act, 2013.
Importance of a Private Limited 
Company
Easy to raise funds
The maximum number of shareholders and members of a Private Limited 
Company is
200 members. These massive numbers of members in Private Limited 
Companies  make it easier for them to raise funds as compared to other types 
of business form.  Therefore, we may conclude that the scope of expansion is 
greater when a Private  Limited Company is formed. It is easier for companies 
to get loans from the banks and  financial institutions.
Dual relationship
Under the company form of organization, a company can enter into a binding 
agreement  with any of its members. It is also possible for a person to be the 
CEO of a company  and work for it at the same time. As a result, a person can 
simultaneously hold the  offices of director, shareholder, employee, and 
creditor.
Separate Legal entity
The members and shareholders are different from the company, indicating 
that the  Private Limited Company is a separate legal entity. As a result, in the 
situation of debts  or bankruptcy none of the members, or directors are liable 
to pay on the behalf of the  company.
Uninterrupted existence
As mentioned above, the company continues to exist as a separate legal entity 
until it is  officially dissolved or winds up. Further, it continues to run even after 
the death or  removal of any of its members. As compared to other business 
entities, the share  transfer process of the Private Limited Company is less 
complicated.
Key takeaways
In the eyes of law, a Private Limited Company is a separate legal entity that 
prohibits the  transfer of shares, has a maximum limit of 200 members, and 
members are liable for  the shares they hold. A Private Limited Company can 
be incorporated in three different  ways that are a Private Comp
any limited by shares, unlimited company, and a company  limited by 
guarantee. The growing number of start-ups and companies has boosted the  
importance of a private limited company in India.