PVT. LTD . REGISTRATION
Limited Liability Company owned by any type of “private” economic entity, used in several jurisdictions, unlike a listed company, with some national variations. Examples include an LLC in the United States, a Limited Liability Company in the UK, a GmbH in Germany, a Limited Social Liability Company in France and a Limited Liability Company in the Spanish speaking world. The advantage of having a limited liability company is limited liability. However, the shares can only be sold to commercial shareholders, which means that it can be difficult to liquidate such a company.
With the start-up revolution in India, we are hearing the term “stay private” more than ever. A recent story referencing Steven Spielberg’s classics caused quite a stir in India’s most famous startup. But what does it mean if a business chooses to stay private? And what are some examples of private companies in India?
Examples of limited liability companies
The organizations that run Flipkart, Ola, Snapdeal, Carat Lane, Zoom Car are private elements, and those that run MakeMyTrip and Infibeam are among the main Indian new companies to open up to the world.
What is a limited liability company?
A private limited liability company is a company that offers its members limited liability, allows easy capital raising and ensures financial transparency. The minimum requirement for a limited liability company is two members, although it can be a maximum of 200 members.
Benefits of a limited liability company
As mentioned earlier, a limited liability company has huge advantages. Let’s take a look at some of the most notable:
Separate legal entity
This means that the members and directors are part of the company; however, none of their personal property is at risk. The business can borrow (borrow capital) under its name. However, none of the members or directors will be liable in the event that the company is unable to repay the loan.Easy sharing transfer
Any shares in the company can be transferred by the shareholder to any person. All that is required is the deregistration of the shares and the issuance of a share certificate.
Higher borrowing capacity
The liability of the members is very limited as the company is a separate legal entity. When it comes to borrowing capacity, a business can issue bonds, whether guaranteed or not, take deposits from foreigners, seek help from the financial sector and venture capitalists, and there is much more it can do to raise capital.
Why stay private?
As the name suggests, limited liability companies are not subject to the same controls as their public counterparts. Indeed, there is no obligation to disclose the accounts or publicly announce any securities transactions. And if the news of layoffs spreads, for example, it has no impact on the valuation of the company because no stock of the company has been offered publicly. Sentiment therefore does not affect the course of the action. It also allows many start-ups to take the opportunity to make bold statements about their income and plans.
For small businesses that want to grow quickly and make a constant change, such isolation is absolutely necessary. This allows the organization to be agile. With the introduction of large venture capital in India, it became possible for companies to stay private for a very long time (almost a decade in the case of Flipkart and MuSigma) and even spend large sums.
