The Most common way to do business in India is to form a Private Limited Company. The First Preference of Entrepreneurs to start the business is Private Limited Company because of its nature of separate legal entity Limited liability better credibility, and ease in raising external funds. The registration of Private Limited Company is governed by the Ministry of Corporate Affairs. Any two legal people can open a private limited company while it must be limited to 200 members. A natural person can be both a director and member, while a corporate entity can only be a member. Further, foreign nationals, foreign corporate entities or NRIs are allowed to be Directors or Shareholders of the Company.
Public Limited Company registration is required seven persons with no limitation to number of members. This form of business is suitable for large scale of business where the capital requirement is very high and the company is willing to obtain money from the public at large. Being a public company, it allows the company to sell their shares to investors A minimum of three Directors are required for establishing a Public Limited Company and it has more stringent regulatory requirements compared to a Private Limited Company. The shares of Public limited company are freely tradable in open market, hence can get its shares listed on public Platform.
One Person Company is a unique concept to execute Business in India. It was introduced by the Companies Act, 2013 for the first time wherein only one person can open a company. One of the biggest advantage of an OPC is that, there can be only one member in an OPC, while a minimum of two members are required for incorporating and maintaining a Private Limited Company or a Limited Liability Partnership (LLP)
OPC can be established only for small businesses as the maximum turnover it can operate with is INR 20 Crores and paid up capital only up to Rs. 2 Crore. Only an Indian Citizen can open a OPC. One person can act as a shareholder as well as director of the company hence it is more like an one person controlled organization. OPC have a characteristic of proprietorship firm wherein one person owns, controls and manage the organization.
Every One Person Company (OPC) must nominate a nominee Director in the MOA and AOA of the company – who will become the owner of the OPC in case the sole Director is disabled to execute OPC’s operations. In other words, OPC is single director dependent company. Therefore, it is important for the Entrepreneur to carefully consider the features of OPC prior to incorporation.
Limited Liability Partnership was introduced in India by way of the Limited Liability Partnership Act, 2008. It is an alternative corporate business form that gives the benefits of limited liability and the flexibility of a partnership business, In other words, it offers benefits of both options by bringing simplicity in management and scope of expansion like that of a company.
LLP Registration is a popular business formation among services and professional firms like Chartered Accountants, Company Secretaries, Management Consulting Businesses, Recruiting Firms, and other services-based businesses.
For small LLP, the audit is not required and the compliance is based on the information declared by the partners. Minimum two persons can form an LLP with no maximum limit on the number of its partners. The main advantage of Limited Liability Partnership over a traditional partnership firm is that in an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence and liability of the partners of LLP is limited.
Section 8 Company is a company which is registered as per the provision of section 8 of the Companies Act 2013 for charitable or not-for-profit purposes. This Company is, however, similar to a Trust or Society; an exception is that a Section 8 Company is registered under the Central Government’s “Ministry of Corporate Affairs (MCA), whereas the Societies and Trusts are registered under the State Government regulations. Thus, Section 8 Company has various advantages when it is compared to Trust or Society and it also has higher credibility amongst the donors, Government departments, and other stakeholders. Further, the key feature of this Company is that the name of the Company can be incorporated without using the word “Limited” or “Private Limited” as the case may be.
Producer Company is basically a body corporate registered as Producer Company under Companies Act, 1956/2013 and defines producer as any person engaged in any activity connected with or relatable to any primary produce (Produce: “things that have been produced or grown, especially by farming”). A producer company can be formed by 10 or more producers OR two or more producer institutions OR a combination of 10 or more producers and producer institutions. Such a company can only have equity capital, require a minimum of five directors. The procedure for forming a producer company is similar as registering a private limited company. The concept of Producer Company is aimed at empowering farmers by creating clusters of farmers organized as a Producer Company.
Nidhi Company means a company which has been incorporated with the object of developing the habit of thrift and reserve funds amongst its members and also receiving deposits and lending to its members only for their mutual benefit. All the Nidhi companies incorporated should have the last word as “Nidhi Limited” as part of its name. They are mutual benefit societies as their dealings are restricted to its members and the membership is limited. The source of funds for such a society is the contribution from its members.
Since Nidhi come under one class of NBFCs, the RBI is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, since Nidhi deal with their shareholder-members only, RBI has exempted such notified firms from the core provisions of the RBI Act.
Documents required for Registration
