Private Companies in India

All over the world, a Company as a form of business organisation is very popular and especially private companies are in large numbers as compared to public companies.

Two major benefits of a Private company
  • As few as 2 shareholders can incorporate and run a private company;
  • The liability of the shareholders are limited to their contribution to the company in the form of share capital.
Private Companies in India

You will be surprised to note that there are 93% Private Companies out of the total number of companies in India. As of 31st March 2014 there were 8,88,430 private companies, out of the total active companies in India i.e. 9,52,433.

During the financial year 2013-14, 95,253 new private companies were incorporated. Highest number of new private companies were incorporated in Maharashtra (17,325) & Delhi (16,502) and in other states viz. Andhra Pradesh (7,093), Gujarat (5,009), Karnataka (5,953), Uttar Pradesh (7,431) & West Bengal (8,976). As you can see, these all states are constituting almost 70% of the new incorporations of private companies.

Some of the important features of a private company are discussed below:

Minimum Paid-up Capital of the Company

All the private companies incorporated in India are required to have a minimum paid up share capital of Rupees One Lakh at all times during its existence.

Minimum and Maximum No. of Members (shareholders) of the Company

Every Private company is required to have at least 2(two) shareholders and a maximum of 200(two hundred) shareholders, beyond that it will automatically become a public company.

In the above 200 count, ex-employees (who became shareholder during their employment and continued to be a shareholder after employment) will not be included.

Minimum and Maximum No. of Directors of the Company

Every Private company is required to have at least 2(two) directors and a maximum of 15(fifteen) directors. Although they can have directors more than 15 by passing a special resolution.

P.S. Let me know your thoughts on what scenario it will be in the coming years for private companies in India and across the world.