The companies having minimum 2 and maximum 50 members and which are formed by at least two individuals having minimum paid-up capital are called the private limited company. 8. A company is a legal entity and a juristic person established under the Act. While anybody can buy shares of a public company, who can be the members of a private company is defined by the law. There are various benefits of a private company, some of them are as follows: 1. Failure to fulfil these duties can lead to a fine or, in severe cases, a prison sentence. Companies limited by share are of two types – public companies and private companies. Disadvantages of Private Limited Company. Below, we discuss each one in … PRIVATE LIMITED COMPANY ADVANTAGES DISADVANTAGES Limited Liability – The obvious Cost – Some people will have you advantage of a Limited Liability believe that a Limited Company is Company is the financial security expensive to set-up. A limited company is private when its shares are not available to the public by being bought and sold on the stock exchange. Though there are various advantages of Private Limited Company, it is not out of disadvantages to all extent. In Australia, the most common types of company are: 'proprietary limited' companies (cannot raise money from the general public through share issues) A private limited company hold high credibility in the national and international market. A company is a distinct legal entity separate from its shareholders or officers. Today we are going to understand the Advantages and Disadvantages of incorporating a private company. In this post, we help you solidify your choice by listing the good and bad sides of incorporating a private limited company. Advantages of a Private Limited Company • Separate Legal Entity: An entity means something which has a real existence; a thing with distinct existence. Advantages and disadvantages of Private Limited Company Advantages of a Private Limited Company Separate Legal Entity: This makes the company a legal person and by that you can avail its benefits like owning property in the name of the company or can even incur debts. These companies could be limited by guarantee or shares. In Nepal, we have various options such as Private Company, Public Company, Proprietorship Firm, Partnership Firms, etc. Related Party Transactions: Private limited companies enjoy more relaxations over compared to public limited companies in related party transactions as most of the deals in private limited company is within the close network of directors or promoters. For every business decision, there will be advantages and disadvantages. However, there are a number of other limited company advantages available. The principal reasons for trading as a limited company are limited liability, tax efficiency, and professional status. ADVANTAGES. Unlike public limited companies, private limited companies are legally restricted from issuing their shares through an initial public offering.As such, they cannot trade their shares on a stock exchange.With this restriction, private limited companies may find it difficult to attract outside investors to buy the shares. Consider this structure if you want limited liability but be aware of strict legal obligations and set up costs. As the director of a Private Limited Company, you will also have a number of legal duties, including an obligation to safeguard the company’s assets. In a private limited company, the number of members in any case cannot exceed 50 . Advantages Private limited companies are owned by one or more shareholders. The company’s profits are also in its name which can then be shared. If you’re considering to choose a private limited company, it’s best to educate yourself with it. 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