Private Limited Company

Private Limited Company

A ‘Company’ is a business organisation registered under company law for doing business in a particular jurisdiction. It is an association of real persons and/or body corporate (Companies, LLPs, etc) registered under relevant laws. Usually companies formed for gaining profits. This collection, group or association of persons can be made to exist in law and then a company is itself considered a "legal person". 

So, in simple company is an association of persons organized for doing any business registered under the provision of Companies Act, 2013.

In India, Companies are incorporated under the provision of Companies Act, 2013 by office of Registrar of Companies in each state. For administrative and other requirements including compliance, a company is classified as primarily ‘Private’ or ‘Public’ company.

Features of Private Limited Company

It is the most common incorporated business organisation available for business. It is generally called as a ‘Private Company’. A private limited company is registered with the below mentioned features and restrictions:

• Name of the company should end with the words ‘Private Limited’
• Minimum and maximum number of shareholders in a private company is 2 and 200, respectively
• Minimum number of directors are 2
• There is no minimum capital requirement to register a company
• Share transfer can be restricted as per Articles of the company
• Cannot accept deposits from the public. It can take loans from shareholders and directors and relatives of directors’ subject to certain conditions
• Cannot issue shares to the public
• Less compliance with respect to company laws compared to Public Limited Company 

A Private Limited Company is more flexible than a Public Limited Company as many of the restrictive provisions of Companies Act are not applicable to Private Limited Companies.

Classification of Private Limited Companies

1. One Person Company (OPC)

One Person Company or OPC means a company which has only one person as a member. 
An OPC is classified as a private company under Companies Act. OPC has all benefits of a private limited company such as protecting personal assets from business liability, separate legal entity and perpetual succession.

2. Small Company (Private Limited)

"Small Company" means a a Private Limited Company with paid-up share capital does not exceeding Rs.50 Lakhs and the turnover does not exceeding Rs.2 Crores as per profit and loss account for the immediately preceding financial year 

Companies comes under the following categories shall not be considered as a small company:
- a public limited company
- a holding company or a subsidiary company;
- a company registered under section 8; or
- a company or body corporate governed by any special Act

Private Limited Company which is categorised as Small Company is exempted from certain compliance requirements of Companies Act 2013.

3. Private Limited Company other than Small Company

All private Limited Companies other than a small company is categorized as  a regular Private Limited Company