A private limited company is a company established by a few individuals privately. The shareholders of a private limited company cannot trade their shares publicly. A private limited company cannot issue a prospectus inviting the public to subscribe to its shares. It is the most recommended type of business entity for many small and medium businesses that are managed by a few individuals or are family-owned.

Section 2(68) of the Companies Act, 2013 (‘Act’) defines a private company as a company having a minimum paid-up capital as prescribed and whose articles of association:

• Restricts the right to transfer shares
• Excluding One Person Company (OPC) limits the number of its members to 200
• Restricts any invitation to the public to subscribe to any company securities