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FORMATION OF PRIVATE COMPANY
Private Limited company is the most common business structure.It is the most accepted business organization.
Private company is incorporated under Companies Act,2013.Oneadvantage of owning a private limited company is that the financial liability of the share-holders is limited to their shares.Therefore, if a private limited company was in financial trouble and had to close, shareholders would not risk losing their personal assets.
MAJOR BENEFTS OF PRIVATE LIMITED
- Limited Liability: “The privilege of limited liability for business debts is one of the principal advantages of doing business under the corporate form of organisation.” The company, being a separate person, is the owner of its assets and bound by its liabilities. The liability of a member as shareholder, extends to the contribution to the capital of the company up to the nominal value of the shares held and not paid by him. Members, even as a whole, are neither the owners of the company’s undertakings, nor liable for its debts.
- Perpetual Succession : An incorporated company never dies, except when it is wound up as per law. A company, being a separate legal person is unaffected by death or departure of any member and it remains the same entity, despite total change in the membership. Perpetual succession, means that the membership of a company may keep changing from time to time, but that shall not affect its continuity.
- Artificial person : A Company is an artificial person created by law. It is not a human being but it acts through human beings. It is considered as a legal person which can enter into contracts, possess properties in its own name, sue and can be sued by others etc. It is called an artificial person since it is invisible, intangible, existing only in the contemplation of law. It is capable of enjoying rights and being subject to duties.