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Private Limited Company is the most prevalent and popular type of corporate legal entity in India. To register a private limited company, a minimum of two shareholders and two directors are required. The Companies Act, 2013 earlier mandated that all Private Limited Companies have a minimum paid up capital of Rs.1 lakh. However, the Companies Amendment Act, 2015 relaxed the minimum requirement for paid up capital. Therefore, there is now no requirement for any minimum capital to be invested to start a private limited company. A private limited company is one which, by its Articles, (a) restricts the right of the members to transfer their shares, if any; (b) limits the number of its members (not including its employees) to 200; and (c) prohibits any invitation to the public to subscribe for any shares in, or debentures of, the company.

A natural person can be both a director and shareholder, while a corporate legal entity can only be a shareholder. Further, foreign nationals, foreign corporate entities or NRIs are allowed to be Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.

The Unique features of a private limited company like limited liability protection to shareholders, ability to raise equity funds, separate legal entity status and perpetual existence make it the most recommended type of business entity for millions of small and medium sized businesses that are family owned or professionally managed. Shares of Private Limited Company cannot be publically traded.