Starting a business requires understanding important legal concepts such as liability protection, funding, compliance, and more. With entrepreneurship growing rapidly in India, one of the most preferred structures for new businesses is forming a Private Limited Company (Pvt. Ltd.).
In India, a Private Limited Company is regulated by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013, which lays down detailed rules for running businesses.
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:
This business structure offers limited liability to its shareholders while imposing certain restrictions on ownership and share transferability.
| Features | Pvt. Ltd. Company |
|---|---|
| Definition | A legal entity with limited liability to the owners and shareholders |
| Minimum Share Capital | No minimum capital required |
| Members Required | Minimum 2 – Maximum 200 |
| Directors Required | Minimum 2 – Maximum 15 |
| Authorized Capital | ₹1 lakh (minimum) |
| Board Meetings | At least 4 per year; within 120 days of the previous meeting |
| Statutory Audit | Mandatory |
| Annual Filing | Annual financial statements (AOC-4) and annual return (MGT-7) must be filed with the Registrar of Companies. |
| Compliance | High |
| Liability | Limited |
| Transferability of Shares | Easily transferable; restrictions may apply via Articles of Association |
| Foreign Direct Investment | Allowed under automatic and government route |
| Company Name | Must end with Pvt. Ltd. |
| Governance | Under Companies Act, 2013 |