NOTES

Private Company [Section 2(68)]

“Private Company” means a company having a minimum paid-up share capital as may be prescribed, and which by its articles,—

(i) restricts the right to transfer its shares;

(ii) except in case of One Person Company, limits the number of its members to two hundred:

Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:

Provided further that—

(A) persons who are in the employment of the company; and

(B) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be included in the number of members; and

(iii) prohibits any invitation to the public to subscribe for any securities of the company;

Important points related to a Private company:

(i) No minimum paid-up capital requirement.

(ii) Minimum number of members - 2 (except if private company is an OPC, where it will be 1).

(iii) Maximum number of members - 200, excluding present employee-cum-members and erstwhile employee-cum-members.

(iv) Right to transfer shares restricted.

(v) Prohibition on invitation to subscribe to securities of the company.

(vi) Small company is a private company.

(vii) OPC can be formed only as a private company.

Small Company: Small company given under the section 2(85) of the Companies Act, 2013 which means a company, other than a public company-

(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; and

(ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:

Exceptions: This section shall not apply to:

(A) a holding company or a subsidiary company;

(B) a company registered under section 8; or

(C) a company or body corporate governed by any special Act.