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Private Limited Company is the most prevalent and popular type of corporate legal entity in India. Private limited company registration is governed by the Companies Act, 2013 and the Companies Incorporation Rules, 2014. A private limited company is a company privately held for small businesses. This type of business entity limits owner liability to their shareholdings, the number of shareholders to 200, and restricts shareholders from publicly trading shares.Start-ups and growing companies prefer private limited company as it allows outside funding to be raised easily, limits the liabilities of its shareholders and enables them to offer employee stock options to pull in top talent.

There are multiple reasons to choose private limited company :

  • Preferred by banks, VCs & investors.
  • Easy to allocate and redistribute shares to investors or other directors.
  • Separate legal entity which limits your liability.
  • Offers the flexibility of a partnership firm and the advantages of a Public Ltd Company.
  • Easy to register, manage & run.
  • Easy to dissolve or wind-up.

Private Limited Vs One Person Company

One Person Company
 Private Limited   Company
Name of the entity The name of the One Person Company must be ended with the word ‘OPC’ in the brackets. The name of the company must have suffix ‘Private Limited’.
Number of shareholders Only one member is required to form One Person Company.

Minimum- 2 members

Maximum-200 members

Number of directors Minimum one director is required which can be extent to maximum 15 without any special resolution. Minimum two directors are required to form a private company which can also be extent to maximum 15.
Transferability In one person company shares can be transfer only by altering the MOA (Memorandum of Association). In private company shares can be transfer easily.
Appointment of nominee Appointing a nominee is necessary by the sole member of the company who must be a resident of India. No such requirement in case of private company.
Board Meeting One board meeting must be hold in each half of the calendar year and the gap between the meetings must be at least 90 days. In case of one director, no need to hold a board meeting. One board meeting must be hold in each quarter of the calendar year and the maximum gap between two meetings can be 120 days.
Annual General Meeting (AGM) In case of OPC no requirement to hold an AGM. In private company an AGM is required to conduct within 180 days from the end of the financial year.
NRIs or foreign nationals as shareholder NRI or foreign nationals cannot be a member of the OPC because a natural person who is a resident of India can be a member or nominee of the company. There is no such restriction in private company. NRI can be a shareholder in private company.
Conversion OPC can be converted into private company after two years of incorporation or by crossing the threshold limit. A private company can be converted into One Person Company. But, threshold concept is not applied to the private company.
Annual Filings Financial statements (excluding cash flow statement) and annual return required to be filed with the registrar. In case of private company annual accounts and annual return are required to be filed with the ROC.