private limited company
A private limited company, also known as a limited liability company (LLC), is a type of business structure where the company's liability is limited to the amount of capital it has invested. This means that the personal assets of the company's shareholders are protected in case of lawsuits or bankruptcy.
In a private limited company, the shareholders' liability is limited to their shareholding in the company, and they are not personally responsible for the company's debts or liabilities. This provides a level of protection for the shareholders' personal assets.
A private limited company is owned by one or more shareholders and managed by directors. The shareholders' ownership is represented by shares, and their power and control over the company's operations are determined by their shareholding.
Other features of a private limited company include:
1. Limited liability: Shareholders are not personally liable for the company's debts and liabilities.
2. Separate legal entity: The company is considered a separate legal entity from its shareholders.
3. Perpetual succession: The company can continue to exist even if the shareholders change or transfer their shares.
4. Restricted transferability of shares: The shares of a private limited company are not freely transferable, and any transfer must comply with the company's articles of association.
5. Minimum capital requirement: There is usually a minimum capital requirement that must be met during the registration process.
6. Privacy and confidentiality: Private limited companies enjoy greater privacy and confidentiality compared to public companies. The financial statements and other business information are not accessible to the general public.
Private limited companies are commonly used by small and medium-sized businesses as they provide limited liability protection while allowing for flexibility in terms of ownership and management. They are often preferred by entrepreneurs who want to retain control over their business and protect their personal assets.