A private limited company is a business entity owned privately by either a single individual or a group of individuals. Shareholders in this type of company enjoy the status of being company owners, holding shares that entitle them to receive dividends, a portion of the company’s profits. Importantly, the liability of shareholders is restricted to the extent of their investment in the company. This limited liability safeguards their assets in the event of the company incurring debts or liabilities, as these obligations do not put their assets at risk for settling the company’s financial obligations. Globally, private limited companies are widely adopted and prevalent across various countries. Private Limited Company Structure

Private Limited Company Structure

The private limited company framework offers numerous advantages to its proprietors, notably limited liability, ensuring the safeguarding of personal assets in the face of any financial challenges encountered by the company.

Furthermore, it establishes a well-defined structure for ownership and management, facilitating the process of capital raising and attracting potential investors. The following outlines the various designations and the organizational structure typically associated with a private limited company.

1. Director

2. Chairman

3. Managing Director

4. Chief Executive Officer (CEO)

5. Chief Financial Officer (CFO)

6. Secretary

7. Chief Operating Officer (COO)

8. Chief Technology Officer (CTO)

9. Vice President

10. Vice President

A private limited company may have some more designations and titles as per the requirements of the company.

How to Register a Private Limited Company

To establish a private limited company, the initial step involves registering the company with the relevant regulatory authority in the operating country, such as the Ministry of Corporate Affairs (MCA) in the case of Indian companies. This process typically encompasses registering the company name, specifying the business activity, identifying directors and shareholders, and acquiring the necessary licenses and permits.

While securing permits can be intricate for an individual, seeking professional assistance is advisable when setting up and registering a private limited company online. This is due to the requirement of multiple documents, including proof of identity for directors and shareholders, the registered office address, and the Memorandum and Articles of Association (MOA and AOA), which need to be submitted on the MCA Portal.

Seek assistance from our expert team at Auriga Accounting to efficiently incorporate your private limited company in just 7–14 days, all at a minimal cost starting from only Rs 4,999. Connect with our team for further discussions.

Shareholding in a Private Limited Company

A pivotal characteristic of a private limited company lies in the non-public trading of its shares. The company is restricted from selling shares to the public, and shareholders are unable to sell their shares to the public without obtaining consent from other shareholders. The ownership of the company rests with the shareholders, comprising founders and directors, and shares are not subject to public trading. This means they cannot be offered to the public through an Initial Public Offering (IPO) or listed on any stock exchange.

Examples of private limited companies in India

A distinguishing characteristic of private limited companies is that their names conclude with “Pvt Ltd” as a suffix. Examples of private limited companies include Flipkart Pvt Ltd, Malabar Gold Pvt Ltd, Mother Dairy Fruit & Vegetable Pvt Ltd, Parle Products Pvt Ltd, and Edumo Education Pvt Ltd.

In contrast, public limited companies do not bear this suffix. Examples of public limited companies encompass Reliance Industries Ltd, Bharat Petroleum, State Bank of India, and ONGC, among others.

Private Limited company is suitable for which type of Businesses?

Private limited companies serve as an optimal choice for small to medium-sized businesses aiming to restrict liability and retain control. They are particularly well-suited for enterprises seeking substantial investment for growth or expansion.

The inherent flexibility in ownership and management within this company structure makes it an appealing option for entrepreneurs. While private limited companies can secure funding from private investors or Foreign Direct Investment (FDI), it’s important to note that they are not permitted to offer shares to the general public.