A Private Limited Company can be formed with a minimum of 2 members or shareholders. An individual person above 18 years of age or a corporate body can be a member or shareholder in it. Moreover, the maximum number of members/shareholders in a Private Limited Company can go up to 200.
A Pvt Ltd Company needs to have a minimum of 2 directors who shall manage the conduct and affairs of the company. The directors may be existing shareholders of the company or can be a person other than a shareholder. There may be a maximum of 15 directors in any company. Furthermore, every Indian Company has to ensure that they have 1 director who is a permanent resident of India.
- Restriction on Transfer of Shares
The members/shareholders of private limited companies cannot transfer their shares publicly. Therefore, there can be a restriction on the transferability of shares in these companies.
- Foreign Direct Investment (FDI)
Foreign citizens, foreign corporate entities, NRIs, or OCIs can invest in a Private Limited Company and become its shareholder. This is why foreign promoters prefer Private Limited Companies.
- Prohibition on Inviting Investments from Public
A Pvt Ltd Company cannot invite the general public to purchase or subscribe to its shares or any other kind of securities. Also, it cannot accept deposits from the public other than its members, directors, or relatives of directors.