Press ESC to close

Types of Company Registration in India for startups

Types of Company

In India, there are more than 1000 companies that are formed but not registered. And as of the government in India has mandatory the registration process. So, every company must get registered today itself. There are different types of company registration India has. The benefit of company registration is to get legal certification to run smoothly. You can easily do online company registration without any hassle. The easy formation, process, and documentation.

So, In this article, we will be focusing on the types of company registration in India and their features.

Types of Companies in India & Registration

The mca has introduces many companies and mandated their registration for their smooth running. There are various types of company registration that are :

  • Private Limited Company
  • Section 8 Company
  • Limited Liability Partnership
  • Sole proprietorship
  • One Person Company
  • Nidhi Company
  • Public Limited Company
  • Partnership Firm Registration

These are the main company registrations that are mandatory for businessperson, companies, and especially a startup. Now in the following paragraphs, we will have a little overview of all the companies which help you in picking the right one according to your requirements.

Private Limited Company

A private limited company is a company that is personally held for small businesses. The liability of the members of a Private Limited Company is limited to the number of shares individually held by them. Shares of Private Limited Company cannot be publically purchased.

Feature in registering private limited company :

  1. Members– A minimum number of 2 members are needed and the highest number of 200 members can start a company as per the requirements of the Companies Act 2013.
  2. Index of members– A private company has a right over the public company as they don’t have to retain an index of its members whereas the public company is expected to keep an index of its members.
  3. Exemptions regarding directors– When it comes to directors, a private company requires to have only 2 directors. With the presence of 2 directors, a private company can come into action. Also, the private company must not select independent directors. The highest number of companies that a person may be selected as a director is 20 in the case of a private company.
  4. Paid-up capital– There is no requirement to maintain minimum capital of company. You can even start your company with lowest amount as you wish.
  5. Name– All the private companies must use the word private limited after its name. For example, Deepesh Automobile India Pvt. Ltd, Marriott Hotels India Pvt. Ltd etc.

Limited Liability Partnership ( LLP Company)

This company concept was first founded under the Limited Liability Partnership Act, 2008. An LLP is a composite form of entity which has the features of both, a partnership firm and a Company. The individual assets of partners are not put at risk as the most liability of every partner is defined by his share capital in the entity.

It is a more selected company model for the investors over as they have much higher credibility.

Feature of registering LLP Company :

  • Sperate Legal Entity-A separate legal entity from their Members.
  • Limited Liabilities of Member-They have the advantage of limited liability for their Members. That is all members are not responsible for other misconducts.
  • LLP Agreement-Any agreement (“LLP Agreement”) among the Members supervising the process of the LLP is a private document means confidential to the Members.
  • Partners in LLP -At least 2 Partners (18 years and above age) are ” Designated Members”
  • Capital Requirement – There is No Capital Requirement for the formation of LLP.

One Person Company ( OPC Registration)

One Person Company (OPC) is the newest in the different types of companies registration in India. It was started under the Companies Act 2013, in support of entrepreneurs who hold the ability to operate a business single handedly, yet strongly. The least paid-up capital of shares in a one-person company can be lowest. Government has waived off the minimum capital requirement criteria.
This new interest to the different types of companies in India was a welcome change as it allowed a single person to take command of the company affairs while other kinds of companies needed a minimum of 2 individuals to function as members in any company.
It is extremely beneficial for owners of small businesses who do not require partners.

Features in registering of OPC Company

  • Legal Protection: Gives legal protection to the members of the company with LLP.
  • Formal situation: In case any undesired situation will start anytime, like death or removal of the owner the company will never stop its business
  • Easy to get loans: Registered OPC company can obtain easy to obtain loan facilities.
  • Capital requirement: Minimum authorized share capital for any one person company to have no boundation. 
  • Members needed: Maximum and least number of members for any OPC is only 1.

Sole Proprietorship

It is a form of a company where a single person controls the entire business operation. He is the only person to have profit and bear loss. There is no particular law that directs sole proprietorship. Proprietors of these firms have unlimited business liability. This means that owners’ owned assets can be added to meet business liability claims. It is not likely to transfer the ownership of a Sole Proprietorship from one person to another. That’s how it’s different from OPC.

Features of registering Sole Proprietorship

  1. Single person ownership and risk are also faced by the proprietors himself.
  2.  Every decision is taken by the One Man Control that is the business owner itself. He/she doesn’t consult anyone.
  3. Profits and Losses.belongs to sole trader/ owner only.
  4. Liability is not limited to sole proprietors because they have to pay all the dues even from their personal assets.
  5. No limitations of capital requirement he can get funds from anywhere he wants to.
  6. In the case of a sole proprietorship, there is no separate legal entity.

Nidhi Company

A Nidhi company is a kind of company that is a non-banking finance sector.  approved under section 406 of the Companies Act, 2013. Their core work is borrowing and lending money among their members.

Features of registering Nidhi Company

  • Helps small savings among the middle and lower-middle-class
  • Takes term deposits for appropriate returns
  • An easy source of loan to members on collateral
  • Active means of savings and loans with the least documentation
  • Secured midpoints of investment because of setting membership structure

Section 8 company

Section 8 company is an organizational company. The NGO Registration is Section 8 company only. Registered as a Non-Profit Organization (NPO). The major mission includes the advancement of arts, commerce, charity, education, protection of the environment, etc. Accordingly, the application of its profits, if any, or other income is applied to support the objectives. It operates similarly like a limited company including all the rights and responsibilities that come with such a company. 

Features of registering Section 8 company/ NGO registration

  1.  Section 8 companies do not intend to make profits. Their objectives are essentially charitable in nature. They intend to solve further problems like science, culture, research, sports, religion, etc.
  2.  Do not need a minimum paid-up share capital.
  3. Members have limited liability. Their liabilities cannot be unlimited in any circumstance.
  4. As these companies own charitable objectives, the Companies Act has allowed many benefits and exemptions to them.

Public Company

It is a type of company in India whose shares can be purchased by the general public. It is built and owned by shareholders. Shares of a public limited company are recorded and traded on a stock exchange market easily.

Features of registering a public company:

  1. It must have at least 7 members and no limit with regards to the maximum number of members.
  2. The shares of a public company are easily transferable.
  3. It can ask the public to subscribe to its shares or buy its shares.
  4. Can take public money easily for expansion of business.

Partnership firm

Partnership business entities are very comparable to a sole proprietorship. The basic difference between a partnership and sole proprietorship is that more than one person is included in a partnership. There is a legal partnership deed agreement where the roles, responsibilities, and the part of all partners are clearly defined. Therefore, profit earned by the business is distributed among partners according to the legal partnership agreement. 

Feature of registering a Partnership firm

  • Two or more persons are required to start to begin a partnership firm
  • A partnership deed is prepared for making all the terms and conditions mentioned describing the role of work their share etc.
  • The partnership agreement must define the way of sharing profits and losses among partners.
  • All partners are together and individually liable for all activities carried out by the partnership

These types of company registration in India.

Conclusion

The different types of companies are defined all above. They are mandatory to get registered for the legal certification. The registration will build trust in the mind of customers, that is very important for the growth of your business. So, apply today.

If you are puzzled as to which types of Online Company Registration are more suitable for your business, our specialists can help to choose one. We at LegalPillers are offering online CA Services at economical pricing. You can visit the website. Even for a free consultation call our professionals at 9625279785 – 9267941961 or you write to us at [email protected].

 

Related Articles

Steps for company registration

MCA introduces companies fresh start scheme, 2020

 

Ritesh Mishra

Hi, My name is Ritesh Mishra, a Practicing Advocate having several year experience in Business Consultancy, Secretarial Law, Intellectual Properly Law, Taxation, Business Modeling and other allied matters. I have been serving Small and Big Industries since several years. I have also been serving industry in various kind of licensing and liasoning works across India.

Comments (7)

Leave a Reply

Your email address will not be published. Required fields are marked *

Ask An Expert

  • This field is for validation purposes and should be left unchanged.