Private limited company is popular and well known business structure. Corporate Customers, Vendors and Govt. Agencies prefer to deal with Private Limited Company instead of proprietorship or normal partnerships. Private Ltd. is easy to sell, very less documentation and cost is involved in selling a Pvt. Ltd. company.
Pvt. Ltd. company enjoys wide options to raise funds through bank loans, Angel Investors, Venture Capitalists, in comparison to LLPs and OPCs. Investors love to invest in Private Limited companies as it is well structured and less strings attached. Most important it is very easy to exit from a private limited company.
A private limited company registration is governed by the Ministry of Corporate Affairs, Companies Act, 2013 and the Companies Incorporation Rules, 2014. A natural person can be a director and as well as shareholder, where a corporate legal entity can only be a shareholder. In addition to that, foreign nationals, foreign corporate entities or NRIs are also allowed to be the Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.