Numbers of Shareholders in Private Limited Company

  • June 09, 2021
  • Dushyant Sharma
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A Private Limited Company is a business entity which is privately held by the private stakeholders. In this business entity, the liability arrangement is that of a limited partnership wherein the shareholders’ liability is limited to the number of shares that are owned by them. Compared to the public limited companies, private limited companies have the upper hand when it comes to investment in long-term strategies, flexibility when it comes to the operations and keeping financial figures discreet.

 

A minimum of 2 shareholders are required to form a Private Limited Company in India.

Private Limited Company as defined by the Companies Act

To explain in legal terms, Section 2 (68) of the Companies Act, 2013 defines a private company as: “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; (iii) prohibits any invitation to the public to subscribe for any securities of the company.”

Advantages of Private Limited Companies

Here are some advantages of Private Limited Companies:

  • Limited Liability: It comes with a limited liability due to which the company’s shareholders are not at the risk of losing their private assets. 
  • Less number of shareholders: As compared to the public limited companies which require 7 shareholders, the private limited companies only require 2 shareholders.
  • Uninterrupted existence of the private companies: Even after the demise of a shareholder, the company continues to exist unless it has been decided to shut it down legally.
  • Ownership: The owners of the company have the freedom to transfer or sell their shares to the investors, founders, management, etc. as they prefer.

Documents Required for Private Limited Company 

The following documents are mandatory for a Private Limited Company:

  • ID proof: PAN card in case of an Indian director. Passport in case of a foreign directors.
  • Proof of Address: Ration card/Aadhaar card/Driver’s license/Voter ID
  • Residential proof: Bank statement or the latest electricity bill of the premise
  • Notarized rental agreement
  • Property owner’s No Objection Certificate
  • A copy of the sale deed or property deed (in case of an owned property)

How to register as a Private Limited Company?

To register as a Private Limited Company, the following steps are necessary:

  • Applying for DSC (Digital Signature Certificate)
  • Applying for the DIN (Director Identification Number)
  • Applying for the availability of the company’s name
  • Filing the EMoa and EAOA to register the private limited company
  • Applying for the PAN and TAN of the company
  • Certificate of incorporation’s issuance by the RoC with PAN and TAN
  • Opening a current bank account on the company name

All these steps are mandatory to set up your very own Private Limited Company. It is advised to consult with the right people who can help you make the best choice for your company’s growth.

Conclusion

A private limited company is a business entity which is privately held by the private stakeholders. A minimum of 2 shareholders are required to form a Private Limited Company in India. Want to set up a Private Limited Company? Connect with the Registrationwala team and we promise to make the entire process smooth and easy for you!


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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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