Benefits Of Formation Of Private Limited Company

(A) Easy Transferability

As the ownership of a company is represented by shares, the ownership of a company can be transferred to any other legal entity or person in India or abroad easily - in part or whole. The directors can also be replaced to ensure business continuity.

(B) Limited Liability

Shareholder enjoys limited liability to the extent of capital invested. In case of any unforeseen liabilities, it would be limited to the company and not impact the shareholders. Shareholder's personal assets protected in the event of the company's insolvency.

(C) Funding

A Company can easily raise funds from investors on an equity basis i.e. from persons or entities interested in becoming a shareholder.

(D) Separate Legal Existence

A company is a Separate legal entity from its Owners and Management in the eyes of law. It can have a PAN number, bank accounts, licenses, approvals, contracts, assets and liabilities in its unique name.

(E) Management and Ownership Separation

Management & shareholders can be separated. A shareholder can invest the fund in fruitful business without managing & Management can operate their business without frequent interruption of investors.

(F) Acquire Property In Own Name

Since a Company is a separate legal entity, it can sale, purchase and own the property like individual.

(G) Perpetual Existence

Company existence will go for ever and its existence will not be effected by the death of shareholders, directors or transfer of shares to others.

(H) Capacity to Sue and to be Sued

Company can take legal action against another and also other person can take legal action against company separate from directors, shareholders & promoters.