Registration Of A Private Company: Legal Definition

Startups are booming across the country, and a large proportion of the workforce is more interested in setting up their own business. There are various types of companies, but the most popular of them is a private limited company. It is held by private stakeholders. The liability of a shareholder is limited to the number of shares held by him and cannot be held liable more than the share he holds. Therefore, more and more entrepreneurs are opting for registration of a Private Company.

According to the constitution of India, Section 2(68) of the companies act, 2013, a private limited company is defined as “a company with the minimum paid-up share capital of one lakh rupees or higher as may be prescribed.” Further, it provides that:

  • there is a restriction in transferring its shares
  • its members are limited to two hundred, except in One Person Company
  • prohibits any invitation to the public to subscribe for any securities of the company.

Requirements For Registration Of A Private Company

Following are listed the requirements that a company needs to fulfill to get registered:

  • The number of members should be at least 2 and must not exceed 200.
  • Directors must have a DIN authorized by the Ministry of Corporate affairs.
  • Must have at least 1 Resident director.
  • Should have a registered office address.
  • Name of the company with ‘private limited company’ and activity to be carried out.

Perks Of Forming A Private Limited Company

The reason to set up a Private Limited Company over other types is that it offers several advantages. These benefits are listed below:

  • Liability is limited, and thus shareholders do not have any risk of losing their private assets.
  • A private limited company can be started with only two members.
  • Shares can be sold or transferred to other shareholders.
  • A private limited company is a legal entity and remains functioning even after the demise of a member.

If you are interested in forming a private limited company but you are not legally profound in India Company Incorporation policies, reach out to 3E Accounting India. We have a dedicated team with ample experience and legal knowledge required to help you through the company registration process. Email us or call us to talk to our consultants to learn more about setting up a Pvt. Ltd. company.