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Private Limited Company: Things You Must Know

To register a private limited company, a minimum of two shareholders and two directors are required. MCA has recently implemented major changes to the process and made it very simple to incorporate a company. 

A Private Limited Company is the most prevalent and popular type of corporate legal entity in India. Private limited company registration is governed by the Companies Act, 2013 and the Companies Incorporation Rules, 2014. Vakilsearch offers online private limited company registration as well. In this article, we look at the private limited Company Registration process and documents required in detail.

What Is a Private Limited Company?

A Pvt. ltd company is a privately held business entity. It is privately held by the shareholders and the maximum number of shareholders should not be more than 200. Similarly, the liability arrangement in a private limited company is that of a limited partnership, wherein the liability of a shareholder extends only up to the number of shares held by them.

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Beyond the value of the shares, the shareholders cannot be held liable. Before the registration of a private limited company, its objectives are determined. Likewise, the governing body for such a company is the Ministry of Corporate Affairs (MCA).

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4 Advantages of Private Limited Company

Limited liability

There is limited liability, which means the members of the company are not at risk of losing private assets.  If a company fails, the shareholders aren’t liable to sell their assets for payment. 

Fewer Shareholders

A private limited company can be started with just two shareholders, unlike a public company that requires seven. 


As the company’s shares are owned by investors, founders and management, the owners are at the liberty of transferring and selling their shares to others. Through this, there is also less complexity and confusion. 

Uninterrupted Existence

The company is a legal entity. So, until it is legally shut down the company runs even after the death or departure of any member. 

Characteristics of a Private Limited Company

A private limited company has the following characteristics: 

1. Membership

In order to start a private limited company, a minimum of two shareholders is required. However, because it is a small business holding enterprise, there is also a maximum cap on the number of members fixed at 200. Moreover, there is also a requirement for two directors to run the company. 

2. Limited Liability Structure

In a private limited company, the liability of each member or shareholder is limited. Therefore, even in the case of loss under any circumstances, its shareholders aren’t liable to sell their own assets for payment. Likewise, the personal assets of the shareholders are not at risk.

3. Separate Legal Entity

A private limited company is a separate legal entity and continues in perpetual succession. Meaning that even if all the members die, or the company becomes insolvent or bankrupt, the company still exists in the eyes of the law. Additionally, the life of the company will be perpetual, not affected by the lives of its shareholders or members unless dissolved by way of resolution.

4. Minimum Paid-up Capital

A private limited company requires to have and maintain a minimum paid-up capital of ₹1 lakh. It could vary, as prescribed by the MCA from time to time. 

5. Minimum Subscription

Subscription here refers to the amount received by the company by way of issuance of shares in a given period of time. Therefore, in a given period of time before the commencement of the business, a company is required to receive 90% of the total worth of all the shares. Similarly, failing this, in the absence of the minimum subscription, the commencement of business is not allowed. 

How to Register a Company Online: The Registration Process

Company registration in India benefits start-ups since it offers them an advantage over those who have not registered. The process of registering your company is complex and involves many compliances. However, you needn’t worry as long as you have Vakilsearch, as our professionals can help you with every step of the private limited company registration process.

  1. Obtain Digital Signature
  2. Apply for the DIN
  3. Application for the name availability
  4. Submission of MoA and AoA to register a private limited company
  5. Apply for the PAN Card and TAN of the company
  6. RoC issues a certificate of incorporation with a PAN and TAN

What Are the Requirements for Private Limited Company Registration?

The requirements for registering a private limited company are as stated below: 

  1. A minimum of two adult persons are required to act as directors of the company
  2. Minimum of 2 directors and can have a maximum of 15 directors
  3. One of the directors of a private limited company has to be an Indian citizen and Indian resident
  4. The other director(s) can be foreign nationals
  5. Two persons are required to act as shareholders of a company


So, if you are planning to register a private limited company, we appreciate you on behalf of Vakilsearch. Further, we can help with setting up your company by making private limited company registration easy for you. Click here to know more about it.

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