A Private Limited Company (PLC) is a business entity held by a small group of people. It is registered for pre-defined objects and owned by a group of members called shareholders. Startups and businesses with higher growth aspiration popularly choose Private Company as suitable business structure.
The business entity gets recognised as a Company through its registration under the Companies Act of 2013 in India governed by the Ministry of Corporate Affairs (MCA). The definition of a Private Company under the Act is:
Section 2(68) of the Companies Act, 2013 defines a Private Company as under:
A company can have a minimum paid-up share capital as may be prescribed by its articles of association:
(i) restricts their rights to transfer its shares;
(ii) except in the case of the One Person Company (OPC), limits the number of its members to two hundred;
(iii) prohibits any invitation for transfer or issue to the general public to subscribe to any securities/shares of the company
We know that a Private Limited Company's (PLC) securities/share's rights to transfer are restricted with some of the conditions from the essential reading. Further, if its members exceed 200, it stops being a Private Company. It additionally inherits the prohibition to invite the public at large to subscribe to any securities. In the absence of these conditions, the company loses its identity as a Private Company.