Private Limited Company - Definition, What is Private Limited Company, and How Private Limited Company works?A private company is a company which is commanded bynon-governmental organisations or a like small number of shareholders or members of a company. Normally, a private company doesn't offer or trade its shares to the general public on the stock exchanges, but rather the private stock of the company is commanded and traded.
The Companies Act
The Companies Act, 2013 allows the avatar for shareholders and members of colored types of companies with varying echelons of liability. In addition to choosing between the organisations (LLP LLP, Private Limited Company, One Individual Company), the promoters can also cherry-pick between the following three forms of Private Limited Company depending on the company requisites.
Types of Private Limited Company
1. Company Limited by Shares In these companies, the members' liability is limited to the nominal share quantity as mentioned in the Memorandum of Association. The shareholder can not be held liable or asked to pay else than his/ her share capital invested in the company.
2. Company Limited by Guarantee In a private limited company limited by guarantee, the members' liability is limited to the measure of liability each member undertakes in the Memorandum of Association. Therefore, members of a Private Limited Company Limited by Guarantee can't be held amenable for a sum prime than the measure of guarantee performed by the member in the Association Memorandum.
Either, the shareholder's guarantee in a company Limited by Guarantee can be sought only in the case of the company winding-up. The guarantee of the members of a Company Limited by Guarantee can't be withdrawn when the company is a going concern.
3. Unlimited Companies Unlimited guts are those types of businesses that have no restrictions on their members' liability. Each member's liability extends over the entire volume of the company's debts and score. Hence, an unlimited company's creditors have the right, if wound up, to levy the company's debt and score on shareholders.
Despite not giving limited liability protection to the shareholders, an unlimited company is still regarded as a separate legal substance. The members of an unlimited interest can not, so, be sued separately. Schwing Stetter (India) Private Limited