Private limited Company formation is essential. A private limited company is a business organization run by a small group of people. It is register for predefine objects budgets and owns a group of members called shareholders. Many budding companies with growth ambitions choose a private company as the right business structure.
In India, a commercial company is recognize as a company by registration under the Companies Act 201. The Board of Governors is the Ministry of Corporate Affairs (MCA). The definition of a private company under the Act is give her to understand its basics. Section 2 (68) of the Act has definition for a private company. Minimum number of two adult directors. One of the directors of a private limited company must be the citizen of India.
Reasons for forming the private limited company
1) Responsibility
Private limited company formation has greater responsibility. Having limited or limited liability will ensure that shareholders and members do not have to bear the full burden of debt if the business suffers an economic loss. Shareholders ’assets and finances are thus protect beyond their shareholding value.
In extreme cases of financial bankruptcy of a company, shareholders are only require to contribute a nominal value to their shares. This protection allows the company to provide high value services which may lead to liability claims.
2) Status
A Private limited company formation in chennai creates a business image and enhances business value. They are see as more establish and reliable than sole traders. Furthermore, this entity provides a sense of security to investors and professionals who choose to use the services of professionals. It also indicates business stability. A private limited company opens up business opportunities with large companies that would not otherwise be available. Registration of a company as a private limited ensures brand uniqueness. Also this eliminates duplication in the market.
3) Tax savings
It is a well-known fact that corporation tax rates are lower than income tax rates for Private limited company formation. Registration of a company as a private limited enables the new company to save a significant amount on taxes. In addition to the normal salary, the company may also choose to pay dividends to its shareholders. While dividends have lower tax deductions than salaries and therefore shareholders benefit more. It also gives employees the opportunity to receive pension contributions from employers. The company can make a tax-deductible contribution to the employee pension fund which will be a tax deductible expense for the company.
4) Attract a better talent pool
This is a perspective that is not further analyse. In today’s competitive market, the company must maintain its high performing talent pool. To do this, businesses are offering many benefits such as stock ownership or ESOP. This is a very valuable benefit to potential tenants and employees. This is only possible in the case of a private limited company, as they can only give their employees ESOP plans or stock ownership.
5) Seeks opportunities
The Private limited company formation in Chennai ensures that the business is not to its promoter and is a separate legal entity. This means that when the promoters are develop and can get different opportunities. The sole merchant or partnership company does not have this freedom because it is attach to its promoter and does not have its own entity. As such, the company’s registration as a private limited company will result in rapid growth and the ability to gain various opportunities independently in the market, thus having its edge over the competitors.
Types of Private limited Company
Company Limited by Shares
In these companies, the liability of the members is limit to the amount of shares in the name state in the Memorandum of Association. The shareholder cannot be held liable or ask to pay more than the capital of the shares invest in the company.
Company Limited by Guarantee
Private limited company formation has limited by Guarantee, the liability of the members is limited to the amount of liability taken in the Memorandum of each Member Association. Consequently, the members of the Private Limited Company cannot be held liable for the amount exceeding the amount of guarantee made by the member in the Association Memorandum by guarantee.
Furthermore, a shareholder guarantee in a company limit by a guarantee can only be in the event of a wind-up of the company. The guarantee of the members of Company Limited cannot be withdrawn by guarantee while the company is concerned.
Unlimited Companies
Unlimited corporations are the type of businesses in which there is no restriction on the liability of their members. Each member’s liability extends to the full amount of the company’s debts and liabilities. Therefore, the creditors of the unlimited company have the right to impose on the shareholders the debts and liabilities of the company, if injured.
Although the shareholders are not protect by limited liability, the unlimited company is still consider a separate legal entity. Unlimited payments to members of the firm, therefore cannot be claimed individually in private limited company registration in chennai
Companies Act
The Companies Act, 2013 allows shareholders and members of different types of companies to join different levels of liability. In addition to choosing between organizations (LLP, private limited company, forest individual company), promoters can also choose between the following three forms of private limited company, depending on the needs of the company.
Recent updates
Tata Sons could continue to operate as a hybrid company – a private limited company with the characteristics of a private company – which became a “deemed public company” following a 2014 Supreme Court ruling, a top executive said.
Tata Sons started out as a private limited company.in Chennai It became a “deemed public company” by law in 1975. A deem public company is not a general public limited company. Cyrus Investments of former Tata Sons chairman Cyrus Mistry has said in submissions to the Supreme Court that the Tata Group holding company has never acted on the restrictions imposed on a private company from collecting deposits from the public.