According to the Companies Act, 2013, a private limited company is a company whose article of association restricts the transferability of shares and prevents the public from subscribing to them. This is a distinct feature that differentiates private limited companies from other types of public companies. With the rapid business growth across the country, there is a demand to learn more about the distinct business entities in India and their legal terms and conditions. In this article, we discuss what is a private limited company, explore the various types of private limited companies and learn how to start one.

Section 2 (68) of The Companies Act, 2013 defines a private limited company as a separate entity that is held privately and provides limited liability. It does not freely transfer its shares to the public like other public companies. In a private limited company, all business profits and liabilities belong to the company itself and stakeholders may not be responsible for debts incurred by the company.

Limited Liability Partnership Members' liability in these companies is limited to the nominal share number stated in the Memorandum of Association. The shareholder cannot be found accountable or required to pay more than the amount of money he or she spent in the firm.

Limited Liability Partnership The members' responsibility of a private limited partnership limited by guarantee is limited to the amount of liability each member undertakes in the Memorandum of Association. As a result, members of a Private Limited Company Limited by Guarantee cannot be found liable for a sum in excess of the amount of guarantee performed by the partner in the Association Memorandum.

Furthermore, the shareholder's guarantee in a Limited by Guarantee corporation can be obtained only in the event of the company's dissolution. When a Corporation Limited by Contract is a going concern, the members' guarantee cannot be revoked.

Private Limited companies are organizations that have no limitations on the liabilities of their owners. Each member is directly responsible for the full sum of the company's debts and liabilities. As a result, the creditors of an unlimited corporation have the right, once the company is wound up, to place the company's debt and liabilities on shareholders.