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A private limited company is a company privately held for small businesses. This type of business entity limits owner liability to their shareholdings, the number of shareholders to 200, and restricts shareholders from publicly trading shares.
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The prerequisites for the incorporation of a private limited company are that:
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Yes. The company needs to provide address proof for incorporation. But the Ministry of Corporate Affairs (MCA) allows a residential address to be used as the company’s registered address. Thus any address can be provided as the registered address.
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Memorandum of Association (MOA) is defined under section 2(56) of the Companies Act 2013. It is the foundation on which the company is built. It defines the constitution, powers and objects of the company.
The Articles of Association (AOA) is defined under section 2(5) of the Companies Act. It details all the rules and regulations relating to the management of the company.
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Yes, it is mandatory to file eMOA and eAOA in the following circumstances, where the number of subscribers are up to 7:
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On acceptance of SPICe forms, the Certificate of Incorporation (COI) will be issued with valid PAN and TAN as allotted by the Income Tax department. An email with the COI as an attachment along with PAN and TAN will be sent to the applicant.
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Yes, NRIs, foreign nationals and foreign entities can register a company and invest in India, subject to the Foreign Direct Investment norms set by the RBI. However, incorporation rules in India require for one Indian national to mandatorily be a part of the company on the Board of Directors.
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A company is required to maintain certain compliances once it is incorporated. An auditor needs to be appointed within 30 days and income tax filing and annual return filing needs to be done every year. Apart from these, mandatory compliances like ‘Commencement of Business’ forms, and DIN eKYC also needs to be done.
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The Public Limited Company is a wider form of the limited company, which has no restriction on the maximum number of shareholders, listing its shares in the stock market, transfer of shares, and raising funds from public and accepting public deposits.
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For setting up a public limited company anywhere in India, there are required a minimum of Seven Shareholders and Three Directors; the directors can also be shareholders. The requirement of the minimum paid-up share capital worth INR 5 Lac, has been removed by the Companies (Amendment) Act, 2015.
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As a public limited company deals with public money, it has to make rather heavy compliances strictly, which are bulkier than those performed by a private limited company. Apart from the regular compliances related with income tax, there are many periodic and annual compliances to be made by a public limited company with ROC/MCA, SEBI, RBI, etc. These regulatory liabilities are in addition to securing and promoting steadily the profits and welfare of all shareholders of the public limited company.
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There are the following two authentic options for registering a public limited company anywhere in India :
OPTION 1
Register the company through filing the Integrated Incorporation Form INC-29, with the MCA.
OPTION 2
Apply for getting approval and reservation of any of the proposed names, through Form INC-1, sent to the Central Registration Centre.
Filing Form INC-7 for incorporation of the public limited company.
Filing Form INC-22, Form DIR-12, etc., together with all required documents
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Yes, an NRI or Foreign National can also be a shareholder or director in a public limited company of India. For becoming a director, besides the basic requirement of being a sensible adult, such a person must possess the DIN issued by MCA.
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Public limited companies are broadly categorised into two distinct types:
Listed Company
This type of public limited company has its shares actively listed and available for trading on one or more stock exchanges. This accessibility allows the public and various financial entities to buy and sell the company's shares, providing greater liquidity and exposure to a diverse pool of investors.
Unlisted Company
Unlike its listed counterparts, an unlisted public limited company does not have its shares traded on any stock exchange. As a result, its shares are not as easily transferable, and the company does not experience the same level of public scrutiny or regulatory requirements as a listed company. This category of public limited company may appeal to businesses seeking to benefit from a broader base of shareholders while avoiding the complexities of full public trading.
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A limited liability partnership (LLP) is a business structure that combines aspects of a partnership and a company. It protects partners from personal liability for the business's debts.
A limited liability partnership (LLP) is a flexible legal and tax entity where every partner has a limited personal liability for the debts or claims of the partnership.
Partners of an LLP can benefit from economies of scale by working together while also reducing their liability for the actions of other partners.
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The formation and regulation of limited liability partnerships is governed by Limited Liability Partnership Act, 2008 and the rules made thereunder i.e. Limited Liability Partnership Rules, 2009.
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A limited liability partnership has the following benefits:
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As per Section 2(1)(m) of the Act, a “foreign limited liability partnership” means a limited liability partnership formed, incorporated or registered outside India which establishes a place of business within India.
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The liability of each partner is limited to their contribution to the LLP.
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You'll need PAN cards/ID proofs and address proofs of partners, as well as other documents as required by the Ministry of Corporate Affairs (MCA).
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Every LLP must have at least two designated partners, and at least one of them must be a resident of India.
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It's a written agreement between the LLP and its partners, outlining their mutual rights and duties, and is mandatory to be drafted within 30 days from the date of incorporation.
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As per Section 26 of the Act, every partner of a limited liability partnership is, for the purpose of the business of the limited liability partnership, the agent of the limited liability partnership, but not of other partners.
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A Partnership Firm in India is governed by the provisions of The Indian Partnership Act, 1932. As per Section 4 of the Indian Partnership Act ‘’Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all’’.
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The formation and regulation of limited liability partnerships is governed by Limited Liability Partnership Act, 2008 and the rules made thereunder i.e. Limited Liability Partnership Rules, 2009.
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A Partnership Deed is a written legal document signed by the partners at the time of commencement of the partnership. A partnership deed or a partnership agreement is the essence of the partnership where all terms and conditions pertaining to the partnership are set forth. The partners can make changes in the terms of the Partnership Deed at any time in the future at their mutual consent.
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Minimum of two persons can form a partnership. Rule 10 of Companies (Miscellaneous) Rules, 2014 restricts the maximum number of partners to form a partnership to fifty.
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In India Registration of a partnership firm is not compulsory but optional. However a partnership firm cannot avail certain legal benefits provided to the firm under the partnership act, 1932, if the firm is not registered.
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The registration of a Partnership Firm in India can take up to 10 to 14 working days. However, the time taken to issue a certificate of incorporation may vary as per the regulations of the concerned state. The registration of a Partnership Firm is subject to government processing time which varies for each State.
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Every partner is jointly liable with all the other partners and also individually, for all acts/activities of the firm, during the course of business while he/she is a partner. This means that if a loss or injury is caused to any third party or a penalty is levied during the course of business all partners will be held liable even if the injury or loss was caused by one of the partners.
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Section 8 companies can avail tax exemptions under the Income Tax Act, subject to meeting prescribed conditions and complying with reporting requirements. Donations to these companies may also be eligible for tax deductions under Section 80G of the Income Tax Act.
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Yes, they can, as per the Companies Act of 2013[1]. The act per say does not prohibit a Trust/Co-Operative Society from becoming a member of a Section 8 company.
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Minimum of two persons can form a partnership. Rule 10 of Companies (Miscellaneous) Rules, 2014 restricts the maximum number of partners to form a partnership to fifty.
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Yes, AOA can have an entrenchment clause. As per Section 5(3) of the act an Articles of Association (AoA) of a Section 8 Company can have an entrenchment clause.
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