An entrepreneur can choose from many types of business structures to establish the business. In India, one of the most preferred business structures is the private limited company. A business has many advantages when incorporated as a private limited company. Let’s look at the private limited company advantages and disadvantages.

A private limited company is a company held privately by a group of persons. The member’s liability is limited to the shares held by them in the company. However, the shares of the private limited company cannot be publicly traded.

A private limited company is a popular form of business structure in India. It can be registered with just two members and two directors. However, the maximum number of members is 200. It is the most recommended form of business structure for millions of small and medium businesses that are professionally managed or family-owned.

Section 2(68) of the Companies Act, 2013 defines a private limited company as follows:

• A company having a minimum paid-up share capital.
• It restricts the right to transfer shares through its Articles of Association (AOA).
• It limits the number of its members to 200.
• It prohibits the issuance of a public invitation for subscribing to its securities.