Private limited company: meaning, features and requirements
A private limited company has 2 to 200 members, at least two directors and restricted share transfers. It is the most common structure for Indian startups.
Short answer
A private limited company is a company that, by its articles, restricts the transfer of its shares, limits its members to 200 and prohibits inviting the public to subscribe to its securities, under section 2(68) of the Companies Act, 2013. It needs at least two members and two directors and is the usual structure for funded startups.
- Members
- Minimum 2, maximum 200
- Directors
- Minimum 2, maximum 15 (more by special resolution)
- Resident director
- At least one, in India for 182 days or more in the year
- Name ends with
- Private Limited
Key features
The company is a separate legal person, so it owns assets, enters contracts and can sue or be sued in its own name. Shareholders' liability is limited to any unpaid amount on their shares. There is no minimum paid-up capital, and incorporation is done online through SPICe+.
The 200-member limit excludes current and former employees who became members during employment, which makes room for ESOP holders. Directors must have a DIN, and at least one of them must stay in India for at least 182 days during the financial year.
Ongoing compliance
Every private company must meet a set of recurring obligations, though small companies get relaxations. The core ones are listed below, alongside separate income-tax, GST and labour filings that apply depending on the business.
- Statutory audit every year
- AGM within six months of year end
- AOC-4 and MGT-7 or MGT-7A filings
- Board meetings as required by section 173
- DIR-3 KYC once every three years
- Statutory registers and minutes
Why it matters for startups
Venture capital and angel investors generally invest only in private limited companies, because they can hold preference shares, negotiate board rights and exit through share sales. The structure also supports ESOPs and qualifies for DPIIT startup recognition and the startup tax holiday. The trade-off is heavier compliance than an LLP or proprietorship.
Related services
Sources
Written by the Refogo Editorial Team from the official sources above and checked on 2026-10-31. Laws, rates and due dates change, and authorities often extend deadlines, so confirm your own case with a qualified professional. This is general information, not legal or tax advice. Read our editorial policy or report an error to support@refogo.com.
Common questions
Can one person start a private limited company?
No. A private company needs at least two members and two directors. A single founder can use a One Person Company instead.
Is there a minimum capital to register a private limited company?
No. The minimum paid-up capital requirement was removed in 2015, so you can start with any amount.
Can foreigners own a private limited company in India?
Yes, subject to the FDI rules for the sector. At least one director must be resident in India.