A Private Limited Company is a business entity held by small group of people. 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.”
To register a Private Limited Company in India, minimum two members are required. Here, an individual or even a body corporate can become a member of the company. Members and directors: As mentioned above, to get it legally registered, a private limited company must show a minimum number of two and a maximum number of 200 members. This is a statutory requirement as mandated by the Companies Act 2013.
ID proof: PAN card and passport of Indian and foreign directors, respectively
Address proofs: Ration card or Aadhar card or driver’s license or voter ID
Residence proofs: Bank statement or electricity bill of the premise
Notarized rental agreement
NOC from the property owner
A copy of sale deed or property deed (for an owned property) Advantages of a Private Limited Company
Private Limited Company is preferred structure by startups because of stability and growth opportunities offered by this structure. Further, it assures separate legal existence from its members. So, it can involve contracts and legal proceedings in its own name. Moreover, a company’s status is unaffected from any change in members and management.
It also offers various funding options in form of private equity, ESOP and more. This makes it more suitable for external funding options. And thus, it is more preferred by VCs, Angel Investors, and other outside funding agencies compared to any other business structures. It also is rather preferred by banks and lending agencies because of the credibility that it holds as a corporate structure.
The business entity gets recognized as a Company through its registration under Companies Act of 2013 in India. The companies Act has laid down a certain set of rules and regulations to be abided while the incorporation of a company.