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In India, most upcoming entrepreneurs opt to start a private limited company rather than any other type of company. This is because it has many advantages, such as the operations of the company can be closely held by them as well as the fact that the liability arising from the company itself is limited in nature.
The drawback of a private limited company, however, is the fact that the company cannot offer its shares to the public, therefore, barring it from raising investment capital from the general public.
As mentioned earlier, a private company cannot offer up shares to the public to raise capital for itself. This is only allowed for public companies. Instead, to raise capital for the business, they can only take investments from the members of the company, family and friends. Therefore capital has to be raised via private arrangements.
Therefore to invest in a private limited company, one must personally approach the members of the company. There are three forms of investment options for a third party when trying to invest in a private limited company.
There are always some key points to keep in mind when one is investing in any venture. In the case of investing in a private limited company, the following are the points to keep in mind.
Investments made into private limited companies are at the whims of the investors as well as the owners of the company. Investment is only possible if they come to private agreements in terms of their choices.
Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.