What is a private limited company ?

Question

can some one tell me what a priivate limited company is and what its feutures are and what restrictions there are

thanks

Answer 1

By law, a corporation is a separate entity that has its own rights and responsibilities. In forming a corporation, potential shareholders offer money and/or property in exchange for stock.

ADVANTAGES OF THE CORPORATION
* Limitations of the stockholder's liability to a fixed amount of investment. However, do not confuse corporate liability with appropriate liability insurance considerations.
* Ownership is readily transferable.
* Separate legal existence.
* Stability and relative permanence of existence. In the case of illness, death, or other cause for loss of a principal officer or owner, the corporation continues to exist and do business.
* Relative ease of securing capital in large amounts and from many investors. Capital may be acquired through the issuance of various stocks and long term bonds. There is relative ease in securing long term financing from lending institutions by taking advantage of corporate assets and often personal assets of stockholders and principals of guarantors.
* Delegated authority. Centralized control is secured when owners delegate authority to hired managers, although they are often one and the same.
* The ability of the corporation to draw on the expertise and skills of more than one individual.

DISADVANTAGES OF THE CORPORATION

* Activities limited by the charter and by various laws.
However, some states do allow very broad charters.
* Manipulation.
Minority stockholders are sometimes exploited.
* Extensive government regulations and required local, state, and federal reports.
* Less incentive if manager does not share in profits.
* Expense of forming a corporation.
* Double tax - income tax on corporate net income and on individual salary and dividends.

Answer 2

A private limited company by definition is a type of incorporated firm which (like a public firm) offers limited liability to its shareholders but which (unlike a public firm) places certain restrictions on its ownership.

These restrictions are spelled out in the firm's articles of association or bylaws and are meant to prevent any hostile takeover attempt.

The major restriction are: (1) stockholders (shareholders) cannot sell or transfer their shares without offering them first to the other stockholders for purchase, (2) stockholders cannot offer their shares or debentures to the general public over a stock-exchange, (3) number of stockholders cannot exceed a fixed figure (commonly 50).

Answer 3

There are three types of companies.

! Partnership firm
2 Private limited company
3 Public limited company.

In partnership firms there will be 2 or more than 2 patners. One can be called Managing Partner and the others are called partners. In this set up 2 or 3 or more partners join hands to start and run the business. They are required to invest a percentage of amount agreed mutually.. Loss and profit are shared according to their % of investment. In some cases Managing Partner is also paid salary for the responsibilities he undertakes at mutually agreed amount apart from profit sharing.

In Private Limited Companies there will be Directors and Managing Director who are allotted shares according to their % of investment. In Private Limitted Companies Directors are chosen according to their investment and also on the basis of their reputation in the field some times without investment as non promotor directors.

MD is answerable to the board of Directors and all major decisions are taken by the board and MD has to implement.

In Public Limited Companies shares are allotted to general public also apart from promoter Directors. Board is responsible to the share holders and shares also get listed in Stock Exchanges accross thye country.

Answer 4

A private limited company is owned by only a few people, who have limited liability in case the company goes under.