Can I buy a Private Limited Company?

The Ministry of Corporate Affairs regulates the Private Limited Company in India, which are owned by non-governmental organizations or by a small number of shareholders/members. The Private Limited Company is currently a hot favourite among aspiring entrepreneurs due to its unique advantages such as ease of creation, the requirement of only two members, limited liability, and so on.

1. Considerations Before Investing in a Private Limited Company: Any investor who is willing to invest money usually has the following goals in mind:

   1. Return on investment (in the form of interest, dividends, or principal appreciation, for example)

   2. Safety and security of the principal balance.

   3. Liquidity is abundant (i.e. When needed, the investment can be easily converted into cash).

2. When it comes to the financial benefits of investing in a Private Limited Company: If an investor wants to invest in a start-up company, the chances of getting a low return, in the beginning, are higher than if the investor wants to invest in an already established company. Higher returns can be obtained by investing in shares. Investing in debentures or loans, on the other hand, yields average returns.
3. Control over operations in relation to the safety of the principal amount: If the investor chooses to invest in a Private Limited Company by purchasing company shares. Such investor shareholders may have voting power, giving them some control over the company’s operations and decision making. However, while investing in stocks can yield higher returns, the safety of the principal amount is relatively low.In contrast, if the investor invests in the form of debentures or loans and advances, the return will be average. At the same time, the principal amount would be more secure. As a result, the option can be chosen based on the investor’s needs/requirements.
4. As we know, a private company cannot raise capital by selling shares to the general public. This is only permitted for publicly traded companies. Instead, they can only accept investments from company members, family, and friends to raise capital for the business. As a result, capital must be raised through private means. To invest in a private limited company, one must approach the company’s members personally.