A private company means a company having such minimum paid-up share capital as may be prescribed, and which by its Articles of Association:
1. Restricts the right to transfer its shares;
2. Limits the number of members to 200 (excluding present and past employee-members); and
3. Prohibits any invitation to the public to subscribe to any securities of the company.
### Key Points on Counting Members (the '200' limit)
Joint shareholders are counted as one member.
The following persons are NOT counted while computing 200:
Persons who are in the employment of the company; and
Persons who were formerly in employment of the company and continued to be members during such employment and after cessation thereof.
### One Person Company (OPC)
Where two or more persons hold one or more shares jointly, they shall be treated as a single member for the purpose of this limit.
### Minimum Members
Minimum number of members in a private company: 2 (One in case of OPC).
### Quick Recall Table
Feature
Requirement
Minimum members
2
Maximum members
200
Transfer of shares
Restricted
Public invitation
Prohibited
Minimum paid-up capital
As prescribed
Worked example
### Example 1
Q. ABC Pvt. Ltd. has 195 members. Out of them, 10 are current employees who hold shares, and 8 are ex-employees who acquired shares during their employment and continue to hold them. Has ABC Pvt. Ltd. exceeded the 200-member limit?
A. While counting the 200-member ceiling under Section 2(68), present employee-members and ex-employee-members (who became members during employment) are excluded. Effective member count = 195 − 10 − 8 = 177 members. Hence, the company is well within the statutory limit.
### Example 2
Q. Three friends X, Y and Z jointly hold 1,000 shares in PQR Pvt. Ltd. Apart from them, the company has 199 other individual members. Is the limit breached?
A. Joint shareholders are treated as a single member. Hence total members = 199 + 1 = 200, which is within the prescribed limit. No breach.
⚠️ Common exam mistakes
Counting joint shareholders as separate members while computing the 200-member ceiling.
Forgetting that present and past employee-members are excluded from the count.
Confusing the 200-member limit with the number of shareholders for OPC (which is 1).
Stating a fixed minimum paid-up capital — the Act only says 'as may be prescribed'.
Bare-Act text Section 2(68) · Companies Act, 2013 · click to expand
'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.