As per section 2(68) of the companies Act 2013, private company” means a company having a minimum paid-up share capital as may be prescribed, and which by its articles, —
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred:
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that—
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company
One of the most prevalent and popular type of corporate legal entity in India is Private Limited Company. Our Ministry of Corporate Affairs, governs registration of private limited company under Companies Act, 2013 and the Companies Incorporation Rules, 2014.
Minimum requirement of registering Private Company is at least of two stakeholders and two directors. foreign nationals, foreign corporate entities or NRIs are allowed to be Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.
Private limited company have ability to raise equity funds, separate legal entity status and perpetual existence make it the most recommended type of business entity for millions of small and medium sized businesses that are family owned or professionally managed.