Private Limited Company · Chapter 3
Directors, shareholders and DIN
In short
Shareholders own a Private Limited Company and directors run it. A PVT. LTD. needs at least 2 of each, one director resident in India, and a DIN for every director.
Shareholders own a Private Limited Company and directors run it. A PVT. LTD. needs at least 2 shareholders and at least 2 directors, at least one director must be resident in India, and every director needs a Director Identification Number (DIN). The same people can be both.
Two groups of people matter in every company: those who own it, and those who run it. Understanding the difference early avoids many disputes later.
Who are shareholders and what do they do?
Shareholders (also called members) hold the company's shares. They vote on major decisions — changing the articles, appointing auditors, approving accounts — and receive dividends. A PVT. LTD. needs at least 2 and can have up to 200 members. A shareholder can be an individual, another company, an LLP, or a foreign person or company (subject to foreign investment rules).
Voting power normally follows shareholding. A founder with 60% of the shares can pass ordinary resolutions (more than 50% of votes) alone, but a special resolution needs at least 75% of the votes cast.
Who are directors and what do they do?
Directors form the board, which manages the company day to day and is responsible for its compliance. A PVT. LTD. needs at least 2 directors and can have up to 15 (more with a special resolution). At least one director must be resident in India — that is, stayed in India for at least 182 days during the financial year. Only individuals can be directors; a company or LLP cannot.
Directors owe duties to the company under Section 166 of the Companies Act: to act in good faith, with due care and skill, and to avoid conflicts of interest.
Shareholder vs director: what is the difference?
| Point | Shareholder | Director |
|---|---|---|
| Role | Owns the company | Manages the company |
| Minimum in a PVT. LTD. | 2 | 2, at least one resident in India |
| Maximum | 200 | 15 (more by special resolution) |
| Can be a company or LLP? | Yes | No — individuals only |
| Needs a DIN? | No | Yes |
| Earns through | Dividends and rise in share value | Salary or sitting fees, if approved |
What is a DIN (Director Identification Number)?
Every director needs a DIN, a unique number issued by the Ministry of Corporate Affairs. For a new company, DIN for up to three directors is allotted as part of the incorporation (SPICe+) form. A person joining an existing company as a director applies separately through Form DIR-3. A DIN is for life — the same number is used for every company or LLP you join, and a person must never hold more than one.
How do you keep your DIN active? (DIR-3 KYC)
Directors must file KYC for their DIN. Under the rules effective from 31 March 2026, the regular DIR-3 KYC is filed once every three financial years, by 30 June. Any change in your mobile number, email or address must still be updated within 30 days. If the KYC is missed, the DIN is deactivated, and reactivation carries a fee of ₹5,000.
- Keep your mobile number and email on the MCA portal current — OTPs go there.
- Note the year your next KYC falls due in a calendar.
- A deactivated DIN blocks filings for every company where you are a director.
Can the same person be both a director and a shareholder?
Yes — this is the most common setup. In most new companies, the two founders are both directors and the two shareholders. Later, investors may become shareholders without joining the board, and professionals may join the board without owning shares.
Other common questions
- Can an NRI be a director? Yes, as long as at least one director is resident in India. An NRI or foreign national also needs a DIN and a Digital Signature Certificate.
- How many companies can I be a director of? Up to 20 companies, of which not more than 10 can be public companies.
- Can a salaried employee be a director? The Companies Act does not stop it, but check your employment contract and your employer's policy first.
Key takeaways
- Minimum 2 directors and 2 shareholders; at least 1 director resident in India.
- DIN is permanent — keep its KYC up to date.
- Shareholders own; directors are responsible.
Frequently asked questions
How do I get a DIN for a new company?
For a new Private Limited Company, a Director Identification Number (DIN) for up to three proposed directors is allotted through the SPICe+ incorporation form itself, so no separate application is needed. A person who is appointed as a director of an existing company, or where more than three new directors are involved, applies for DIN separately through Form DIR-3 on the MCA portal.
What is the due date for DIR-3 KYC?
Under the rules that apply from 31 March 2026, a director files the regular DIR-3 KYC once every three financial years, by 30 June. Any change in the director's mobile number, email address or residential address must be updated within 30 days of the change. Directors should check the MCA portal for the year in which their next KYC falls due.
What happens if a director does not file DIR-3 KYC?
If the KYC is not filed on time, the Ministry of Corporate Affairs marks the DIN as deactivated. The person cannot sign forms or act as a director on the MCA portal until the KYC is filed with a late fee of ₹5,000, after which the DIN is reactivated. The deactivation also affects every company where that person is a director.
Can a company be a shareholder in a Private Limited Company?
Yes. Another company, an LLP or a foreign company can hold shares in a Private Limited Company. The investing entity acts through an authorised representative appointed by a board resolution. A body corporate cannot be a director, though; only individuals can be directors. Foreign shareholders are subject to India's foreign investment rules.
What is the maximum number of directors in a Private Limited Company?
A Private Limited Company can have up to 15 directors. It can appoint more than 15 by passing a special resolution of its shareholders. The minimum is two directors, and at least one of them must have stayed in India for 182 days or more during the financial year. An individual can be a director in up to 20 companies at a time.
