Characteristics/Features of a Private Limited Company
Members
The Act provides that a private limited company must have a minimum of two members, while the maximum members limit is 200.
Number of directors
The Act provides that a private limited company must have a minimum of two directors, while the maximum number of directors is 15.
Limited liability
The liability of all members or shareholders of a private limited company is limited. It means that when the company faces a loss under any circumstance, its shareholders will not be liable to sell their personal assets for payment. They will be liable to repay for only the amount of the shares subscribed or the guaranteed amount they have agreed to pay.
Perpetual succession
Perpetual succession means the company will continue to exist in the eyes of the law irrespective of insolvency, bankruptcy or death of any of its members. The life of the company continues to exist forever.
Authorised and paid-up share capital
The private limited company must have an authorised share capital of Rs.1 lakh. Due to an amendment to the Companies Act, it need not have any minimum paid-up share capital. Before the amendment of the Act, it needed to have a minimum paid-up capital of Rs.1 lakh, which has now been removed.
Name
A private limited company name must have the words ‘private limited’ after its name. For example, if the company name is ABC, it must write its name as ‘ABC Pvt. Ltd’ in all its official communications and the company registration form.
Prospectus
A prospectus is a detailed statement providing the status of company affairs. A company issues prospectus to the public to subscribe to the company share. However, a private limited company cannot issue a prospectus as it cannot invite the public to subscribe to its shares.
Index of members
A private company does not have to maintain an index of its members as per the Act. Whereas, a public company must maintain an index of its members.
