A private limited company is a voluntary association of not less than two and not more than two hundred members, whose liability is limited, the transfer of whose shares is limited to its members and who is not allowed to invite the general public to subscribe to its shares or debentures, cannot make or accept deposit from public. The liability of shareholders is limited.

Advantages of a Private Limited Company

Limited Liability

Section 8 Companies are recognized under various scheme carried on by the Central and State Government for charitable and religious purposes and are given special treatment under the said scheme

Capacity to sue

It means that if the company experience financial distress because of normal business activity, the personal assets of shareholders will not be at risk of being seized by creditors.

Liability:

A Section-8 Company exists as a separate legal entity from your personal life. Both company and person who own it are separate entities and both functions separately.

Finance and Resources

Scope of expansion is higher because easy to raise capital from financial institutions.

Business Continuity

Private limited companies enjoy permanent succession because the company is its own legal entity. Shareholders and employees act “as agents of the company,”

Long-Term Planning

Formation of private limited company is always preferred when the business setup is for long term.

Social Benefit

A company enjoys the benefit of credibility among the customer & public and customer reliance on a company is much higher than any other form of business.

Flexibility

One of the most important features of Company is flexibility with regard to changing name of company, ownership and main objects of company.