Private Company is the company which can be incorporated with zero paid up capital as per the Companies Act (Amendment), 2015. This is the company which can start its business with minimum 2 members. It has to get registered with the Registrar of companies and required to obtain the Certificate of Incorporation to start its business.
ACCORDING TO SECTION 2(68) OF COMPANIES ACT, 2013
Private company means a company which by its articles
- Restricts the right to transfer its shares
- Except in case of One Person Company, limits the number of its members to 200
- Prohibits any invitation to the public who are or were in the employment of the company.
FEATURES OF PRIVATE COMPANY
NUMBER OF MEMBERS
It must have minimum 2 members to start its business. The maximum number of members can be 200.
The private company has to prepare the Memorandum of Association and Articles of Association and has to submit these documents with the Registrar of the companies to get the company registered.
It is compulsory for this to register itself. The company gets registered with the Companies Act, 2013.
NUMBER OF DIRECTORS
It must have minimum 2 directors.
It is not under obligation to convene the statutory meeting and submit the statutory report to the registrar.
It can allot the shares to its shareholders immediately after its registration. The condition of minimum subscription does not apply to this kind of company
USE OF WORD ‘PRIVATE LIMITED’
Every private company is required to use the word ‘Private Limited’ as suffix with its name.
CERTIFICATE REQUIRED TO START BUSINESS OPERATIONS
it is required to get the Certificate of Incorporation to start its business. Certificate of Incorporation is the conclusive evidence that:
- All the requirements of incorporation of the Act have been complied with in respect of registration.
- The company is duly registered
- That the company came into existence on the date mentioned in the certificate.
The private company is suitable for the person who want to run a business but without undertaking the unlimited liability and giving up the control of the business.