Limited Liability of Shareholders

Limited Liability implies that the owners or shareholders of the company are not personally liable to pay debts of the business. They are only responsible for the unpaid shares of the capital of the company. In order to reap the Limited Liability Benefit, the owner needs to comply with all laws.

Perpetual Succession

Perpetual Existence implies that the company is unaffected by the death of the owner or the transfer of its shares to a new establishment. The best part of perpetual existence is that a company will continue to exist, no matter how many directors, officers, and shareholders join or leave.

Easy Transfer of Ownership

The shares of a company are considered movable property and are freely transferable. A shareholder can transfer shares to any person by just executing a share transfer form and handing over the share certificate of the Company. However, such share transfer must be done under the applicable provisions of the articles of association.

Option to Sell the business

The companies can be sold or transferred in its entirety, and the entire process of selling the company is easy and straightforward. You must have seen many exits at a very high premium price to the potential buyer of the company, for example, the sale of Flipkart to Walmart.

Can a company own property in its own name?

Like a person a private limited company can purchase, sell, own, possess, enjoy, and transfer property rights to anyone in its own name. Moreover, no claim can be made upon the property of the company by the shareholder as long as it exists.

Tax Advantages

The tax rate for a company incorporated in India is the lowest in the world. For a manufacturing company, the tax rate is 15% whereas for all other kinds of companies such as trading, services, etc. the Income Tax Rate is 22%. There are some nominal surcharge and cess on and over the above said corporate Income Tax Rates.

Easy to Raise Money Through Private Placement

Raising money in a proprietary concern, partnership, or LLP is complicated and cumbersome. A company can get investment from a closed group of people up to 200 shareholders by way of private placement is straightforward for a company. The company can either allot new shares to the investors/angel investors at a price higher than the valuation of the stock. Since the companies act prescribes a clear and precise method to raise funds; hence this is a preferred choice for new startups.

Foreign Direct Investment (FDI)

Traditionally the FDI comes to a company form of business, and The Indian companies may allot new shares to an overseas investor, or enter into a joint venture and create a new company for a specific purpose. When it comes to funding and FDI, the company is the best choice.

Capacity to Sue and to be Sued in Its Own Name

Private Limited Companies enjoy the advantage to carry out legal proceedings and to bring a suit in the court of law. Just like any other type of person, a company being an independent legal entity, can initiate legal action against any other person and similarly can be sued in the court of law.