Private Limited Company Types
Three types of private limited company can be registered. They are differentiated on the basis of a level of liability of the members. Following are types of private limited company
1. Private company limited by shares
In such a company, the liability of the shareholders is limited to the extent of the members share in the company or the unpaid amount of share. The liability is limited to the paid-up or unpaid share capital of the member. A member is not liable to pay more than his investment in the company.
2. Private company limited by guarantee
In such a company, a member gives a guarantee to be held liable. The liability of such a member is limited to the extent of his guarantee. He cannot be held liable for more than his guarantee to the company. The guarantee given by a member can only be called at the time of winding up of the company.
3. Unlimited company
The liability of the members in such companies is unlimited. It means that their personal assets can be utilized to pay off company’s debts and liabilities. It is to be noted that this does not mean that there is no separate legal entity. The company and the members are still different.
Related Article– Private Limited Company Registration