Before you decide to make your company a private limited company, it is important to understand what a private limited company is and what its advantages are.
A private limited company is a registered company having 2 - 50 members. This structure ensures that have limited liability, corresponding only to the extent of their investment in the company. Therefore, members will not be held personally liable for the total loss incurred by the company. However, a private limited company cannot invite common people to subscribe to the shares and debentures of the company.
Thus, a private limited company has a distinct legal existence. It is easy to form and organize. This is because there are certain exemptions at the time of private limited company formation. For example:
A private limited company is a registered company having 2 - 50 members. This structure ensures that have limited liability, corresponding only to the extent of their investment in the company. Therefore, members will not be held personally liable for the total loss incurred by the company. However, a private limited company cannot invite common people to subscribe to the shares and debentures of the company.
Thus, a private limited company has a distinct legal existence. It is easy to form and organize. This is because there are certain exemptions at the time of private limited company formation. For example:
- A private limited company is not required to file a prospectus with ROC.
- A private limited company does not need to obtain the Certificate of Commencement, which is generally required when a business starts.
- A private limited company does not have to hold a statutory general meeting.
- A private limited company is not required to file statutory reports.
Furthermore, the company has a long span of existence because according to the law, the company will continue to exist even if all its members no longer existed. Does the three most important benefit of a private limited company are less stringent legal restrictions, continued long-term existence and limited liability to its members.
Before actually getting into the process of private company limited formation, the entrepreneur needs to select a suitable name for the company. However, in the UK, the government does not allow to businesses to have the same or similar names. Therefore, it is necessary to check out the availability of the chosen name. It is also important to comply with rules pertaining to the use of sensitive words and expression while choosing a name. Some of the words that are considered to be sensitive include “bank”, "fund management", "insurance", "investment funds", "loans" and "reinsurance”. These are only some of the terms that are considered to be sensitive. Restricted names require approval from a government authority or a license before the name can be implemented.
This is followed by the submission of the Memorandum and Articles of Association. The company is also required to submit a Declaration of Compliance and a statement comprising of the name and address of the first company secretary and directors. These forms contain important information regarding the physical location and address of the company in the UK.
Since in the process of public limited company formation is an intricate one, many entrepreneurs prefer to hand over this process to a business start-ups service or formation agent. These agents have ample experience in the processes involved in business incorporation. Ample experience ensures speedy, error-free approval. Many of these services also provide sound advice regarding the benefits of certain company structures and how the structure of your company can be utilized to attract maximum tax benefits in the UK.
Before actually getting into the process of private company limited formation, the entrepreneur needs to select a suitable name for the company. However, in the UK, the government does not allow to businesses to have the same or similar names. Therefore, it is necessary to check out the availability of the chosen name. It is also important to comply with rules pertaining to the use of sensitive words and expression while choosing a name. Some of the words that are considered to be sensitive include “bank”, "fund management", "insurance", "investment funds", "loans" and "reinsurance”. These are only some of the terms that are considered to be sensitive. Restricted names require approval from a government authority or a license before the name can be implemented.
This is followed by the submission of the Memorandum and Articles of Association. The company is also required to submit a Declaration of Compliance and a statement comprising of the name and address of the first company secretary and directors. These forms contain important information regarding the physical location and address of the company in the UK.
Since in the process of public limited company formation is an intricate one, many entrepreneurs prefer to hand over this process to a business start-ups service or formation agent. These agents have ample experience in the processes involved in business incorporation. Ample experience ensures speedy, error-free approval. Many of these services also provide sound advice regarding the benefits of certain company structures and how the structure of your company can be utilized to attract maximum tax benefits in the UK.
