What Is Private Company?

A private company may be a privately held corporation for little businesses. A member’s liability in an exceedingly Private Ltd. is restricted to the number of shares that he or she owns. Shares during a private Ld. Cannot be exchanged publicly. A private Ltd. could be a privately held corporation for little businesses. A member’s liability in an exceedingly Private Ltd. is proscribed to the number of shares that he or she owns. Shares in a very private company can’t be exchanged publicly.

Characteristics of a Private Limited Company


According to the Companies Act of 2013, a minimum of two members and a maximum of 200 members are necessary to form a business.

Restricted Liability

Each member’s or shareholder’s liability is limited. It means that if a corporation suffers a loss in any way,its shareholders may be forced to sell their own assets to cover the loss. The shareholders’ own, individual assets are not in jeopardy.

Perpetual succession

The corporation continues to exist in the eyes of the law even if one of its members dies, becomes insolvent, or files for bankruptcy. As a result, the company will continue to exist in perpetuity. The company’s life will continue to exist indefinitely.

Index Of member

A private company has an advantage over a public company in that it is not needed to keep an index of its members, but a public company is compelled to do so.

Number Of Directors

A private firm simply requires two directors when it comes to directors. A private business can begin operations with the presence of two directors.

Paid-up capital

It must have at least Rs 1 lakh in paid-up capital or such a higher amount as may be prescribed from time to time.


A prospectus is a thorough summary of a company’s affairs that is issued to the public by the company. A prospectus is not required to be issued in the case of a private limited company because the public is not encouraged to subscribe for the business’s shares.

Minimum Subscription

The minimum subscription is the amount received by the corporation that equals 90% of the shares issued in a given period of time. If the company does not obtain 90% of the funds, it will be unable to continue doing business. A private limited corporation can issue shares to the public without having to meet the minimum subscription requirement.


The usage of the word “name” is required for all private companies.

Requirements for Private Limited Company Registration


Before a company may be registered, it must have a minimum of two and a maximum of 200 members or shareholders, according to the Companies Act of 2013.


A minimum of two directors is necessary for the registration of private limited company. Each director must have a DIN, or director identification number, issued by the ministry of corporate affairs. One of the directors must be an Indian resident, which means he or she must have spent at least 182 days in India in the previous calendar year.


A private limited company’s name is one of its most important components. The firm’s name is made up of three parts: the name, the activity, and the private limited company. All private limited companies must include the phrase “private limited company” at the end of their company name. Every corporation must submit 5-6 names to the registrar for approval, and each name must be distinct and expressive. The approval name should not be similar to any other company’s name. As a result, picking the appropriate company name is crucial because it will be associated with the company for the rest of its existence.

Registered office address

When applying for a company’s registration, the owner should specify the company’s temporary address until it is officially registered. However, once the business has been registered, the registrar of the company should be informed of the permanent address of the company’s registered office. The company’s registered office is where the majority of the company’s business is conducted, as well as where all of the company’s paperwork are kept.

 Advantages of Private Limited Companies


Regulation and ownership of shares in a public corporation can be sold on the open market. In a private corporation, on the other hand, the owner has the option of selling or transferring shares to other persons.

Minimum Number of Shareholders

The minimum number of shareholders required is two.

Management and Decision Making

In public corporations, management and decision-making get increasingly complex and confusing as more shareholders are consulted. Because the number of stockholders in a private corporation is smaller, this complicated procedure is eliminated.

Minimum Share Capital

 A public corporation will necessitate an outsized sum of cash. A minimum share capital of Rs. 5,00,000 is required for a public business. The minimum share capital requirement for a non-public business accustomed be Rs. 1,00,000, but this can be not the case. As a result, there’s no have to worry about meeting money requirements.

Disadvantages of a Private Limited Company

  • One of the most significant disadvantages of a Private Limited Company is that its articles limit the transferability of shares.
  • In any event, a Private Limited Company cannot have more than 50 shareholders.
  • A Private Limited Company also has the disadvantage of not being able to submit public prospectuses.
  • Shares cannot be quoted on the stock exchange.