Under the Companies Act, 2013, a private company can have a maximum of 200 members.
This limit was increased from the earlier limit of 50 members under the Companies Act, 1956. The Act specifically states that a private company shall restrict the right to transfer its shares and limit the number of its members to 200.
Important distinction:
For counting purposes, the following are excluded from the 200-member limit:
- Persons who are in the employment of the company
- 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
In contrast, a public company has no such maximum limit and can have unlimited members, which is why Option 4 (unlimited) might seem tempting but applies only to public companies, not private companies.