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A private limited company is a type of company that is formed with the association between friends, family or relatives. To form a private limited company, there should be minimum 2 members and the maximum should not cross 50. A private limited company has more flexibility than other forms of entities as the number of shareholders and the amount of capital can be raised as and when need arises.

Its benefits for share holders include limited liability and legal protection. There are also restrictions on the ownership, which will be mentioned on bylaws to put off any hostile takeover. The shares of a private limited company are not traded on public exchanges and there will be no initial public offerings. A shareholder is also prevented from selling the shares without the consent of other shareholders.

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