A private company is a legal entity on its own established under the Act. Therefore the company has large legal ability and can own property an also incur debts. The members of a company, whether shareholders or directors, have no liability to the creditors of a company for such debts.

The private limited company offers an advantage of dual relationship, that is, a person associated with the company can at the same time be a shareholder, creditor, director and also an employee of the company. In a private company it is viable to make contracts with any of its members.

A Private Company enjoys better options for funds borrowing. Banking and financial institutions prefer lending financial assistance to private companies in comparison to proprietary and partnership firms. It can issue secured as well as unsecured debentures and can also accept deposits from the public, etc.

The greatest benefit of private limited companies is limited liability. If anything happens to the company, its members are not personally affected. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company’s debts is limited.

A shareholder can easily transfer the share of a limited company to any person. The shares can be easily transferred by filing and signing a share transfer form and handing over the buyer of the shares along with share certificate.

A limited company can get hold of its own property and its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern.

A private company being in independent company can sue or can also be sued for its own name. To sue means to institute legal proceedings against or to bring a suit in a court of law.

Private limited companies gain benefit of permanent succession as the company is its own legal entity. Dissolution of the company can only occur through liquidation or similar means. The company is not affected by the death or discontinuation of any member and continues to be in existence.