One of the first things you need to find out when you’re starting a business is what laws will apply to your business entity.
Right registration, licences, and permits are mandatory to run business in India. They allow you to operate without fear of closure from non-compliance or other legal concerns.
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The word Company denotes any entity formed under the Companies Act, 2013 to carry on the explicitly laid down objectives. A company could be a Statutory Company or a Registered Company. A company has perceptual existence. Based on the nature of the business entity, different types of company can be incorporated.
Registered Company Vs Statutory Company
Even though statutory companies are governed by the provisions of their special Acts, the provisions of the Companies Act, 1956 apply to these companies. These companies are build when the necessity for a special public undertaking with certain privileges are required.
Companies that are registered under the Indian companies act falls into the category of registered companies. The business entities are governed, monitored, and regulated by the provision of companies act.
Companies that are registered under the Private limited company registration is governed by the Ministry of Corporate Affairs, Companies Act, 2013 and the Companies Incorporation Rules, 2014.
Different Companies that can be Registered Under the Company Registration Act
Private Limited Company
To start a private limited company you need to follow all the legal compliance’s that are mandate to form a private limited company. For a private limited company you need to have a minimum two partners (with limited liabilities, the personal assets of the shareholders are not at risk) with non-transferable shareable with a minimum share capital of Rs 100,000. private limited companies are help by small businesses.
Types of private limited companies
- Company limited by shares:– The liability of the shareholders to creditors of the company is limited to the capital originally invested. A shareholder’s personal assets are thus protected in the event of the company’s insolvency, but any money invested in the company may be lost.
- Company limited by guarantee:– Companies limited by guarantees are usually non-profit companies – that is, they do not distribute their profits to their members but either retain them within the company or use them for some other purpose.
One Person Company (OPC)
One Person Company was introduced in the Companies Act, 2013 to support newbie entrepreneurs who are capable of starting a venture on their own, by allowing them to create a single person entity.
Minimum Requirement for a One Person Company
- Should have one Shareholder
- Must to have a Director (Minimum one director)
- The share holder can also act as a director
- Minimum of one Nominee is required
- Letters ‘OPC’ to be suffixed with the name of OPCs to distinguish it from other companies
The simplest business form under which one can start and run a business. The sole proprietorship usually refers to a person who owns the business and is personally responsible for its debts. A sole proprietor ship company can be setup under the owners name. Its is the most simplest form of business model.
Partnership companies are created with a sole objective of bringing together 2 or more people (referred as partners), with a legally bound agreement that denotes the partners share in the entity and their co-operation to advance in a business objective.
Limited Partners and General Partners
- Limited Partner:-Limited partners serve as investors.
- General Partners:– The general partners own and operate the business and assume liability for the partnership.
Advantages of a partnership companies
- Business is easy to establish and start-up costs are low
- All partners can bring capital to the business
- Two heads are bette than one
- Talented people can be made as partners
- More contribution and strategic decision making (involment of partners wil help in making the right decision)
- Partners’ business affairs are private
- Easy to change your legal structure later if circumstances change.
Statutory companies are public corporations that are established and operated by statues. Few eg of statutory companies are, Oil and Natural Gas Corporation, RBI, State Bank of India, Airport Authority of India, etc. A statutory company is often referred to as a corporation created by the state.
- A statutory Company is financed by the central or state government.
- Lesser government interference.
- Frame their own policies within the scope of state legislature.
- They can recruit employees with their service condition.
- Autonomous functioning, enjoy operational flexibility.
- The members of the corporation have limited liability.
- Main objective is to provide better services to public and make adequate profit.
- Can borrow funds from the public and government organisations.