FEATURES OR CHARACTERISTICS OF PRIVATE LIMITED COMPANY
- Membership is from 2 shareholders and no maximum
- shareholders have limited liability
- shareholders are the owners of the company
- It is registered with the registrar of companies
- Capital is raised through the sales of shares
- It holds annual general meeting
- It is controlled by the board of Directors elected by fellow shares holders at the annual general meeting
- There is continuity of existence even after the death of important shareholders
- It has a separate legal status
- The letter Ltd (Limited) is written after the company name
- Shares are not sold at stock exchange
- Shares are not transferrable
- financial records are not filed with the registrar of companies
- It can start trading as soon as it is incorporated
ADVANTAGES OF PRIVATE LIMITED COMPANY
- All shareholders have limited liability
- There is continuity of existence even after the death of important shareholder
- It has a separate legal status from the promoters
- it has more capital because of more shareholders and
- It has more borrowing capacity compared to partnership
- Financial accounts are kept private
DISADVANTAGES OF PRIVATE LIMITED COMPANIES
- Shares are not sold to the public hence limits the amount of capital raised
- Shares are not transferable
- There are more formalities in running a company such as holding annual general meeting are compared to partnership
- There are more formalities in forming a company as compared to partnership such as formulating a memorandum of Association and article of association
- Share are not sold at stock exchange
- It is more expensive to set up as compared to a sole trader
- It is not flexible as compared to a sole trader as it is governed by two documents drawn up when it is registered as a company
