Different types of company which a startup can register in India. A company is popularly referred to as a group of persons coming together with resources concerning capital, human resources, and skill for the common objective of making profits. In the old companies Act 1956 a company should have at least two persons as its member or shareholder. However the companies Act 2013 introduced a new concept of One Person Company in India wherein only one Indian person who is a citizen of India can Register Private Limited Company in India with some limitation.
In India, a company can be formed only by registering it with the concerned registrar of companies by following the procedure prescribed under the Companies Act or the rules framed thereunder. Though there are provisions in the act by which ten types of companies can be incorporated like an unlimited company, guarantee company apart from public limited, private limited companies, the following are the most common types of companies which can be incorporated in India.
Public Limited Company
A company that can raise a large amount of capital not only from its promoters, close relatives, or investors but also from the public at large by offering its securities for sale in the open market. The shares of a public limited are the freely tradeable item and can be listed on a stock exchange for real-time sale, purchase, and delivery. These are large companies which need a huge amount of resources, You Can Read about the advantages of a public limited. On the other hand, the compliance requirement is very high which is costly and time-consuming. To safeguard the interest of investors and in particular the small investors there are strict controls and regulations prescribed by law to comply. The accounts of a public company need to be published and are open for inspection at the concerned registrar of companies. Because of public trading of the shares in stock exchanges, there is always a risk of losing control of the company by the promoters. Due to its huge size and structure, the decision-making is slow click here to read more on the disadvantages of a public limited company. In our opinion, a public limited company is suitable for capital intensive industries with large operations.
Private Limited Company
is a company which is formed with minimum two shareholders and two directors, The minimum requirement concerning authorized or paid up capital of Rs. 1,00,000 has been omitted by The Companies (Amendment) Act, 2015 w.e.f. 29th of May, 2015. Another crucial condition of a Register Private Limited Company India is that it by its articles of association restricts the right to transfer its shares & also prohibits any invitation to the public to subscribe for any securities of the company. The maximum of 200 persons can become a shareholder in the company. A private limited company is exempted from various provisions of the Companies Act 2013 in comparison with the public limited company. In other words, some of the sections and proviso apply to only public limited companies as they have been specifically marked as not applicable to a private limited company. Click here to read exemptions available to the private limited company under Companies Act 2013. A private Limited company can be formed in three variations. (a). As a private limited company, (b). As a small private limited company, (c). As a One Person Company (OPC).
Small Private Limited Company
A private Limited company has capital up to Rs. 50 Lac and whose turnover has not crossed Rs. 2 Crore in any financial year is considered as the small company. Another requirement is that to be considered a small company it should not have been formed by a company which is not a small company. There are certain exemptions available to the small companies which are almost the same as that of a one-person company. The government filing fee for MCA filing is considerably low for a small company.
One Person Company
Popularly also known as OPC, which can be incorporated by only one person as its owner. However, it can have many directors subject to limits prescribed by the act. A nominee of the owner of one person company must be declared with the consent of such nominee.
Section 8 Company
Is a company which has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object; and which intends to apply its profits, if any, or other income in promoting its objects; and intends to prohibit the payment of any dividend to its members. The Legal Framework: The law which prescribes and regulates the registration of the private limited company is laid down in The Companies Act 2013; and the Companies (Incorporation) Rules, 2014 Which has been recently amended to simplify the process of incorporation of the companies in India. It is imperative on the part of every individual to know that the Act of 2013 has superseded the Companies Act, 1956 after the President of India gave his affirmation on 29th August 2013.
No business can be called a company unless it is incorporated/registered with the registrar of companies in pursuance of law laid down in the companies act 2013 and the rules framed thereunder. With the incorporation of a company under the companies act 2013 it acquires a distinct legal identity that is different from that of its owners/promoters. The six great benefits of registering a business as a company are as under
Distinct Legal Entity
Right after the registration, a company becomes a distinct legal entity, other from its members with its own name, seal, assets, and liabilities. It can own a property in its name, incur the debt, borrow money, own a bank account, employ the people, enter into contracts and can also sue or can be sued distinctively.
The liability of the members of the company is confined to their promised contribution to the capital of the company which he subscribes. Moreover, a member is required to pay only the uncalled money that is due on the shares held by him.
Perpetual Succession: Another most important advantage of a Private Limited Company is that the company is consistent. Thus it never ceases to exist even in the case of death or insolvency of the member. Although the membership of a company may go into different hands from time to time, the company doesn’t get affected by it.
Enables Free Transfer of Shares: Yes, the shares of a Register Private Limited Company India are freely transferable under certain conditions. Thus, with the transfer of shares, the transferee acquires all the rights of the transferor associated with the shares.
Common Seal: Company does not have a physical presence being an artificial person. Consequently, the Board of Directors carries out all the activities. These directors also enter into several agreements, and it has to be noted that such contracts come under the seal of the company which is also the official signature of the company. The common seal of the company has the name of the company engraved on it. However, the adoption of the common seal is no longer necessary after the amendment of the Companies Act in 2015.
Capacity to Sue or to be sued: Last but not the least, a company also carries the right to sue and can also be sued in its name distinctively from its members.
Undoubtedly, every individual who starts the business possesses the dreams or aspirations of being successful enough to recruit or employ at least a dozen people. Taking into view the same, one needs to be aware that it’s not possible to legally hire employees if the company is not registered. Getting your Company Registered by Professional and Experienced Company Registration Consultants is a prudent step to be followed to turn your entrepreneurial dreams into reality. Hence, it is highly recommended to register your company right from the day of its inception. Our Startup Specialists are experienced and capable of answering your queries.
The Step By Step Procedure for Company Registration Common in all types of the company whether it is a public limited company, Register Private Limited Company India, small company, or a One Person Company.
Director Identification Number of Director: Also known as DIN which is a unique number allotted by the ministry of corporate affairs to identify a person who wishes to be appointed as the director in a company or a designated partner of a Limited Liability Partnership (LLP).