Private Limited Company

A private limited company is a limited liability entity that can have a maximum of 200 shareholders. The Companies Act 2013 prescribes a minimum of two shareholders. These companies are usually small business establishments, where owner liability is limited to the extent of the shareholder's contribution. Shareholders cannot trade their shares publicly, though shares can be transferred with the approval of the Board of Directors — preventing the general public from becoming involved in private businesses. This is convenient for families or groups that don't want outsiders subscribing to company shares; fewer shareholders means less complexity in administration and management.

Private Limited Companies have perpetual succession — the company exists in the eyes of the law even if members die, or the company becomes insolvent. It requires a minimum of two directors, of which one must be an Indian resident. The maximum is 15 directors, though this can be exceeded with a special resolution.

Private limited companies have several advantages over public limited companies: fewer legal formalities, no requirement to issue a prospectus or publish financial reports in newspapers, and no pressure to meet stock market expectations — letting them focus on long-term earnings. Confidential information such as executive compensation and legal settlements stays confidential. Compared to LLPs and OPCs, private limited companies have more options to raise funds through angel investors and venture capitalists.