• Home
  • Finance
    • Financial Management
    • Strategic Management
    • Investment Analysis and Portfolio Management
    • Project Management
    • Islamic Banking & Finance
    • Auditing
  • Marketing
    • Principle of Marketing
    • Marketing Management
    • International Marketing
    • Advertising & Promotion
    • Commercial Challenges
  • HRM
    • Human Resource Management
    • Principles of Management
    • Training & Development
    • Employee Performance Management
  • Others
    • Introduction to Business
    • Business Communication
    • Banking & Finance
    • Entrepreneurship
    • Economics
  • Personal Skills
  • Tips & Tricks
  • About Us
    • Contact US

Business Study Notes

B.Com, M.Com. BBA & MBA Exam Study Online

  • Home
  • Finance
    • Financial Management
    • Strategic Management
    • Investment Analysis and Portfolio Management
    • Project Management
    • Islamic Banking & Finance
    • Auditing
  • Marketing
    • Principle of Marketing
    • Marketing Management
    • International Marketing
    • Advertising & Promotion
    • Commercial Challenges
  • HRM
    • Human Resource Management
    • Principles of Management
    • Training & Development
    • Employee Performance Management
  • Others
    • Introduction to Business
    • Business Communication
    • Banking & Finance
    • Entrepreneurship
    • Economics
  • Personal Skills
  • Tips & Tricks
  • About Us
    • Contact US
Home » Advantages and Disadvantages of Private Limited Company

Advantages and Disadvantages of Private Limited Company

By Richard Daniels Reading Time: 2 mins
Updated August 6, 2020

(Private limited company advantages and disadvantages). The private limited firm can easily be initiated and documented with the collaboration of two members. As stated by section 2(28) of the companies ordinance 1984 a private Limited company relates to a company which according to its Articles of Association:

  • Confine the rights to transfer the shares to any person
  • The members should be up to 50 in total
  • Avoid any interaction to the general public in order to pledge for the shares

private limited company advantages and disadvantages

The routine affairs of management are performed by the directors. Books of accounts are normally prepared organized and their audit is necessary annually. The company can be closed with the consent of the members and also through legal authorities. The shareholders in Pvt. Ltd company are quite known for each other due to close connection.

Advantages Of A Private Limited Company

Private companies do have the following advantages:

  1. Members are quite aware of each other but the total control is in the hands of the one who owns the capital.
  2. There is great flexibility in the management of affairs and the conduct of business.
  3. A statuary meeting is not needed along with submitting the statuary report.
  4. There should be two directors in a private limited company.
  5. The liability is limited because of which the members enjoy the facility.
  6. The company can be started immediately after getting the certification.

Disadvantages Of The Private Limited Company

Disadvantages of the private firm according to section 2(25) of company ordinance are as follows:

  1. Private firm restrict the transferability of shares by articles
  2. The number of members cannot exceed more than 50
  3. This cannot issue prospectus to the general public
  4. Their share cannot be quoted in the stock exchange.

Characteristics Of Private Limited Company

The characteristics of a Private Limited Company are listed below:

  • This can be created with the help of two members but the total number of members does not exceed 50.
  • A certain limitation is attached to filling the prospectus of the statement in accordance with the prospectus with the register.
  • The business can start after documentation without any certification.
  • Statuary meeting is not required along with statuary report.
  • There should be at least two directors. However, the maximum numbers of directors are mentioned in the article.
  • The directors can have a loan even without approval from the government.
  • In order to make a quorum, it is important that there should be at least two members in the meeting.
  • The directors are being paid and the staff does not have such restrictions.
  • The financial report which includes the balance sheet and profit and loss is not required to send it to the registrar.
  • Word private is necessary to be placed at the end of the company name.

Remember

According to the Companies (Amendment) Ordinance 2002, a new concept of a single-member private company (SMC) has been introduced to admit the individual businessman in the corporate sector as a company having limited liability. In the case of a single-member private company, the quorum shall be single-member present in person or by proxy.

Author at Business Study Notes
Richard DanielsAuthor at Business Study Notes

Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
Love my efforts? Don't forget to share this blog.

Related Posts:

  • Formation of Public Limited Company
    Formation of Public Limited Company
  • Tax Audit - Procedure and Objectives of Tax Audit
    Tax Audit - Procedure and Objectives of Tax Audit
  • Company Meetings - Types
    Company Meetings - Types
  • Risk Management: Definition, Types, Model, Process,…
    Risk Management: Definition, Types, Model, Process, Strategies, Practices
  • Purpose of Internal Audit
    Purpose of Internal Audit

Filed Under: Introduction to Business, Others Tagged With: advantages of private limited companies, advantages of private limited company, disadvantages of private limited companies, disadvantages of private limited company, private company advantages and disadvantages, private limited company advantages, private limited company advantages and disadvantages, private limited company definition

Related Posts

System-Views-of-Management-image

System Views of Management

System Views System views of management associates with the Management division of the organization and it assumes that all of the organizations are … [Read More...]

Leadership Theories

Situational Leadership Theories

Situational Leadership Theories Situational model of leadership is a factor that emphasizes the behavior of the leaders regarding different situations. … [Read More...]

Behavioral Leadership Model

Behavioral Leadership Model

Leadership  Leadership is the most critical and complex responsibility across any organization. It is because the leadership requires to be realistic, … [Read More...]

career development process in hrm

Career Development Process

Career Development Process Today's career development process has become a threat for students, especially a question that may stun many students who have … [Read More...]

Strategic leadership

Strategic Leadership Model

Strategic Leadership Model The strategic leadership model is basically the study of the leadership style. It describes the ways of modernizing an … [Read More...]

Types of Managerial Decision Making

Types of Managerial Decision Making

Managerial Decision Making Decision Making is an art of selection of one feasible alternative decision from many. Therefore types of managerial decision … [Read More...]

Quantitative-management-approach

Quantitative Management Approach

Quantitative Management Approach The quantitative management approach is used to enhance decision making power by using quantitative tools. As well as … [Read More...]

Effective-business-messages-image

Effective Business Messages

Effective Business Messages The process through which business messages are effectively prepared that have the potential to create desired results from … [Read More...]

Search the Site

ADVERTISEMENT

Business Study Notes

Business Study Notes is all about business studies or business education. Visit us to find here free business notes of all the subjects of B.com, M.com, BBA & MBA online.

Disclaimer

All the images and videos present on the Business Study Notes are not owned by us, if you found anything under copyrights, please Contact Us, we will remove it ASAP.

Categories

© Copyright 2023 Business Study Notes. All rights reserved. Privacy Policy, Sitemap.  
DMCA
PROTECTED