Under the Companies Act of 2013 various entities have been prescribed out of which the most preferred is the Private Limited Company Registration. Such kinds of entities are having a number of benefits due to which they are the first choice of most of the business owners. The very basic thing regarding such entities is that they need a minimum of two directors to incorporate such entities. Without having a minimum number of directors one cannot incorporate such entities. Just like the minimum directors, they also have limitations on the maximum number of members in a private company. In order to know about the maximum number of members in a private company you have to go through the current blog till its last line.
What is a Private Limited Company?
A private limited company is an organization that has been registered under the Companies Act of 2013 and has at least one director and one lakh rupees in paid capital. The maximum number of members in a private company can be 200. Numerous benefits are theirs, including limited liability, permanent succession, status as an artificial legal person, and separate legal entity. These entities are the top choice of business owners because of their great level of trustworthiness and dependability in the marketplace.
The Ministry of Corporate Affairs must complete the necessary procedures in order to register these businesses. Such businesses are acknowledged as soon as they register. Because they are open and honest, their customers have great faith in them. It is among the greatest options for both large and midsize enterprises. Establishing a private limited corporation requires a substantial amount of capital.
Types of Members in a Private Limited Company
In a private limited company there are many types of members. Some of the key type of members are mentioned below in the table:
| Type of Member | Details |
| Individuals and Corporates | Any individual or corporate entity, such as another company or a LLP that is commonly known as Limited Liability Partnership Firm, can become a member of a private limited company. |
| Indian Nationals and Foreigners | Both Indian nationals and foreigners are eligible to be members of a private limited company. There is no restriction on nationality. |
| Shareholders as Members | In order to become the member of the company it is required to become the shareholder, accordingly ownership will be determined |
| Nominee Members | Nominee members are those members who has been appointed on behalf on any entity to represent the same |
| Minority and Majority Members | Members may have varying percentages of ownership in the company, and decisions are often made based on the voting power associated with the number of shares held. |
| Natural Persons and Legal Entities | Both natural persons (individuals) and legal entities (corporate bodies) can hold membership in a private limited company, providing flexibility in ownership structure |
Number of Members in a Private Limited Companies
In private limited companies the number of members is limited. That limitation is on both the minimum as well as maximum number of members in a private company. Let’s discuss regarding both the minimum as well as maximum number of members in a private company one by one for the sake of better understanding:
What is the Maximum Number of Members in a Private Company?
The maximum number of members in a private company can be 200. It means that in a private limited company in any situation members cannot be more than 200. Members here means those people of the company who have shares of the companies. Under the Companies Act of 2013 it has been given that members of the company can transfer their shares. It means shares of the private limited companies are transferable.
What is the Minimum Number of Members in a Private Company?
In a private limited company in India, the minimum number of members required to start the company is two. This means that at least two individuals or entities must come together to form the company as shareholders. These individuals can act as both directors and shareholders, and they collectively initiate the company’s incorporation process. The flexibility of having a minimum requirement of two members makes it easier for entrepreneurs and small businesses to establish and operate a private company, providing a suitable structure for closely held businesses.
Disqualification of Member of Private Limited Company
Following are the conditions when the members of the private limited companies can be disqualified as members of the same:
- If a member, as per the company’s articles, holds shares exceeding the maximum limit allowed, they may face disqualification.
- Bankrupt or insolvent persons becomes disqualifies as the member of the private limited company
- Persons of unsound mind
- Any member who is convicted for an offense is also disqualified as the member of the private companies
- Any person who is involved in any kind of fraudulent activities or any kind of misconduct will be disqualified as the member of the company
- Disqualification is sure if a member of the company fails to obtain DIN
- Failure to pay calls as well as other amounts which are due on the shares of the company
- Breach of shareholder agreement also amounts to the disqualification
- In case there is any kind of non compliance then also disqualification is possible
- In any situation, if any one ceased to be the shareholder of the company he or she might be automatically disqualified to be the member of the company
Conclusion
A private limited company in India, regulated by the Companies Act of 2013, offers benefits like limited liability and a separate legal entity. The maximum number of members in a private company is capped at 200, balancing manageable ownership. The minimum requirement is two members, aiding small business establishments. Various member types, including individuals and corporates, add flexibility to ownership. Disqualification conditions, tied to financial instability, legal issues, and non-compliance, ensure adherence to legal standards. Understanding these aspects regarding minimum and maximum number of members in a private company is vital for entrepreneurs venturing into private limited company registration in India.
