A private limited company will be the one that will be having a minimum of two and a maximum of 50 members. The shares of this particular company will only be limited to the members and not to be general public. There are several kinds of advantages of going with the option of indulging into the pvt ltd company registration and some of the major advantages are explained as follows:
- It will help in providing the company with limited liability: Whenever the business will be facing any kind of unforeseen financial crisis or is on the verge of closure then private limited company shareholders will not have any kind of risk of losing their assets. Only the amount which they have invested in terms of starting the business will be lost and every other thing will be perfectly safe. Hence, the partners will never be personally liable for the debts of the company and there will be no risk to their positions.
- There will be proper access to funding opportunities: Private Limited Company which has been perfectly registered will be accommodating the equity funding as there is a clear distinction between the shareholders and directors as well as limited liability. The venture capitalist will provide equity funds are unlikely to invest into any other kind of structure. Hence, a company that is perfectly registered will be attracting a talented workforce through shares which will help in making sure that salaries will be limited.
- It will help in enhancing the borrowing capacity of the company: A private limited company will always enjoy the privileges of borrowing more funds in comparison to the limited liability partnership because it will be having more options in terms of taking the debt. Not only the bank loans are easy to obtain but this particular option of issuing the debentures and convertible debentures will also be easily available for the companies. Hence, even the banks and financial institutions will be welcoming the Private Limited registered companies in comparison to other available options like partnership entities.
- There will be greater credibility: The private limited company which is registered will be having a lot of information about its structure, operations and financials available to the registrar of the companies. This particular information will always be available in the public domain that will further make sure that business will become much more credible than before in comparison to other entities and the best part is that this type of information will be clear-cut proof of the credible operations of the companies.
- Such companies will be having easy exit: Private limited companies can be easily sold or transferred both partially or in full to any other kind of company. The best benefit of this particular exit procedure is that there will be no disruption to the current exiting operations and business of the companies.
Apart from all the above-mentioned points, the private limited company which has been registered under the Companies Act 2013 will be following these stringent procedures and disclosure norms which will be a clear-cut indicator of better governance in the whole process.