Private Limited Company

A private limited company is defined as a voluntary association of not less than two and not more than 50 members, whose liability is limited, the transfer of whose shares is limited and not allowed to invite the general public to subscribe to its shares or debentures. Main features are:

  • Independent legal existence
     
  • Less cumbersome to organise and operate as it has been exempted from many rules and regulations a public limited company is subjected to. Some of them are:
    • Need not file a prospectus
    • Need not obtain a Certificate for Commencement of business
    • Need not hold statutory general meeting nor need it file the statutory report
    • Restrictions placed on the directors of the public limited company do not apply to its directors.
       
  • Liability of its members is limited
     
  • Shares allotted are not freely transferable between members
     
  • Enjoys continuity of existence
     
  • Need a registered office and name
     
  • Requires signed Memorandum of Association and Articles of Association. For more information, read How to Incorporate Your Business
     

Advantages

Disadvantages

Continuity of existence

Shares not freely transferable

Limited liability

Not allowed to invite public to subscribe to shares

Less legal restriction

 

 

Suitable for: people seeking to take advantage of limited liability, but at the same time desire to keep control over the business within a limited circle and maintain the privacy of their business.