Private company registration is a private company that is privately held for small businesses. This form of business entity gives the limitation to the owner’s liability for its shareholders, the number of shareholders to 200, and prohibits shareholders from trading shares in public.
10 Amazing facts in Private company registration
Ownership
In a public company, ownership of the rules and shares can be sold to the public in the open market. In a private limited company registration on the other hand, the shares may be sold or transfer to others by the owner’s choice. The shares of such companies are establish, manage or own by a group of private investors. Shares which are here are not sold open market. Thus the number of shareholders will be less. This means there is less complexity and confusion in decision making and management.
Number of shareholders
For a private company registration, the minimum number of required shareholders is 2, while for a public company; there is need at least 7 shareholders.
Legal Formalities
Legal formalities are expensive and time consuming. Still if someone is thinking of starting a public company, he/she better be prepare as there is a long list of legal formalities for creating a public company. There is a shorter list compare to private limited company registration.
Disclosing information
The public company is require to disclose its financial reports every quarter, as it will affect public investment; private company registration do not have to suffer any such compulsion.
Management and Decision making
Management and decision making in the form of public companies becomes more complex and confusing. It is because there are more shareholders need to be consulted. This complicated process has been eliminated in the private company registration as the number of shareholders is low.
Focus of the management
Managers of public companies focus on increasing the value of shares, while managers of private companies are more flexible in short-term and long-term business decisions.
Stock market pressure
Private companies are not pressure by the stock market and one doesn’t have to worry about shareholder expectations and interference as long as they act within the law. Shareholders in public companies focus on current earnings and they put pressure on the company to increase earnings.
Confidential
Clearly it’s not right; let competitors know about the business secrets. Confidential information such as executive compensation, legal settlement and other essential information cannot be reserved in public companies. Such information has high level of security in a private company.
Long term planning
Managers of public companies are being pressure to increase earnings in the short term in order to increase the value of their shares. Private companies can focus on long-term earnings as such pressures are remove.
Minimum share capital
One needs a lot of money for a public company. A public company must pay at least Rs. 5, 00,000. The previous minimum share capital for a private company was Rs. 1, 00, 000,. Nowadays there is no compulsion on minimum amount. So there is no pressure for funding requirements.
Start-ups prefer Private limited company
Structures are chose by startups and register through private company registration because of the stability and growth opportunities offered by these structures. Further, it guarantees a legal existence separate from its members. Therefore, he may be involve in contract and legal proceedings in his own name. Moreover, any change in members and management does not affect the position of the company.
A separate management board i.e. board of directors is beneficial for members interest in the purpose of investment. Where the board works on remuneration, the profits are distribute to the members in the form of dividends.
Private limited company registration
It also grants various funding options in the form of private equity, ESOP and more. This makes it more suited form of external funding options. And as such, it is more preferred by other outside funding agencies than VCs, Angel Investors and any other business formats. It is also prefer by banks and lending agencies because of its reliability as a corporate structure.
A private limited company registration is eligible to take advantage of registration under the Government of India’s Startup India scheme. The scheme offers a number of benefits, including tax exemptions for approved startups. For these reasons, it is a priority for both family-base businesses and start-ups. Where service-orient businesses tend to opt for LLP, Pvt Ltd is suitable for product-base and growth-orient businesses.
Name of the company
Each company paints or affixes the name and address of the registered office fee and will keep the same paint / tight, in legible letters outside each office fee or place where its business is conduct.
Letter head of company
Each company will have its name, address of registered office fee, CIN, telephone and email printed on all business letters, billheads, letter papers.
First board meeting
The first meeting of the Board of Directors shall be hold within 30 days of the incorporation of the Company. At least 7 days before the meeting, each director should call B.M. Notice must be sent.
Subsequent board meetings
A minimum of 4 board meetings will be held each year with an interval of more than 120 days between the two meetings. In the case of a small company, just having two board meetings is enough.
Issuance of share certificate
The company must issue share certificates to customers of the memorandum within 60 days of the company’s investment.
Filing of declaration of interest by the directors
Each director:
– The first meeting in which he participates as a director; Or
– The first meeting of the board in each financial year; Or
– Whenever the disclosure changes
Form MBP-1 (list of relatives in the company and with the concern of the relatives of the company as per RPT definition), will declare its interest in the company or any company, body corporate, pay firm or other organization of individuals (including shareholding interest).
Form MBP-1 should be keep in company records.
Resident Director
Each company is require to appoint at least one director who has stayed in India for a period of less than 182 days in a financial year.