Which of the following statement is incorrect -

A private company is one which by its articles of association:

1. Restricts the right to transfer its shares
2. A private company must have at least 2 persons, except in case of one person company
3. Its paid up share capital is not more than Rs. 50 Lakhs
4. Limits the number of its members to 200 (excluding its employees)

A private company under the Companies Act, 2013 has specific characteristics defined in its Articles of Association. Let's examine each statement:

Statement 1: A private company restricts the right to transfer its shares - This is correct as per Section 2(68) of the Companies Act, 2013.

Statement 2: A private company must have at least 2 persons, except in case of One Person Company - This is correct. Minimum membership requirement is 2 members (except OPC which requires only 1 member).

Statement 3: Its paid up share capital is not more than Rs. 50 Lakhs - This is incorrect. Under the Companies Act, 2013, there is no restriction or upper limit on the paid-up share capital of a private company. The earlier limit of Rs. 1 crore (under Companies Act, 1956) has been removed.

Statement 4: Limits the number of its members to 200 (excluding its employees) - This is correct. A private company cannot have more than 200 members, excluding present and past employee-members who were members during their employment.

The paid-up share capital restriction mentioned in Option 3 does not exist under current company law. A private company can have any amount of paid-up share capital without any upper ceiling.

Therefore, Option 3 is the incorrect statement.