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Private Limited Company

A Private Limited Company (Pvt Ltd) is a type of business entity in India that offers limited liability to its shareholders and has some restrictions on ownership. Here are its features and requirements:

Features of a Private Limited Company:

  1. Limited Liability: Shareholders are liable only to the extent of their shareholdings in case of debts or losses incurred by the company.
  2. Separate Legal Entity: A Pvt Ltd company is distinct from its shareholders and directors, providing it with perpetual succession.
  3. Minimum and Maximum Members: Requires a minimum of 2 members and can have a maximum up to 200 shareholders.
  4. Ownership Restrictions: Shares cannot be traded on stock exchanges. Ownership is restricted to private individuals or corporate entities.
  5. Regulatory Compliance: Must comply with regulations laid out in the Companies Act 2013, including annual filings, board meetings, and maintenance of statutory records.
  6. Management Structure: Managed by directors appointed by shareholders, with flexibility to define roles and responsibilities in the Articles of Association.

Requirements for a Private Limited Company:

  1. Directors: Minimum of 2 directors (one of whom must be a resident of India).
  2. Shareholders: Minimum of 2 shareholders and a maximum of 200.
  3. Name Reservation: Unique name approval from the Registrar of Companies (RoC).
  4. Registered Office: Must have a registered office within India from the date of incorporation.
  5. Documents Required:
    • Identity and address proof of directors and shareholders.
    • Memorandum of Association (MOA) and Articles of Association (AOA) defining the company's objectives and internal regulations.
    • Proof of registered office address (rent agreement, utility bill, etc.).
    • Declaration of compliance by directors and shareholders.
  1. Registration Process:
    • Apply for Digital Signature Certificates (DSC) for directors and shareholders.
    • Obtain Director Identification Number (DIN) for directors.
    • File an application for name reservation and incorporation with the RoC including MOA and AOA via Spice form.
    • Obtain Certificate of Incorporation(COI), PAN and TAN from the RoC.

Public Limited Company

A Public Limited Company is a type of business entity in India that allows for public investment and trading of shares on stock exchanges. Here are its features and requirements:

Features of a Public Limited Company:

  1. Limited Liability: Shareholders have limited liability, meaning their personal assets are protected in case of company debts or losses.
  2. Minimum Capital: Requires a minimum paid-up capital as prescribed by law, which is not required for a Private Limited Company.
  3. Public Trading: Shares of a Public Limited Company can be traded on stock exchanges, providing liquidity to shareholders.
  4. Number of Members: Must have a minimum of 7 shareholders (no maximum limit).
  5. Regulatory Compliance: Subject to stricter regulatory requirements including regular filings with the Registrar of Companies (RoC), holding annual general meetings (AGMs), and publishing financial statements in Newspaper.
  6. Management Structure: Managed by a board of directors elected by shareholders, with a separation of ownership and management.
  7. Ownership: Ownership is not restricted and can include public investors, institutions, and other corporate entities.

Requirements for a Public Limited Company:

  1. Directors: Minimum of 3 directors (one of whom must be a resident of India).
  2. Shareholders: Minimum of 7 shareholders.
  3. Minimum Paid-up Capital: Must have a minimum paid-up capital as per the Companies Act,2013(currently INR 5 lakhs).
  4. Name Reservation: Unique name approval from the Registrar of Companies (RoC).
  5. Public Issue: If intending to raise capital from the public, it must comply with SEBI regulations regarding Initial Public Offerings (IPOs).
  6. Documents Required:
    • ID and address proof of Directors and Shareholders.
    • Memorandum of Association (MOA) and Articles of Association (AOA) defining the company's objectives and internal regulations.
    • Proof of registered office address (rent agreement, utility bill, etc.).
    • Declaration of compliance by directors and shareholders.
  7. Registration Process:
    • Apply for Digital Signature Certificates (DSC) for directors and shareholders.
    • Obtain Director Identification Number (DIN) for directors.
    • File an application for name reservation and the Incorporation document (Including MOA and AOA) with the RoC via Spice form.
    • Obtain Certificate of Incorporation (COI), PAN, and TAN from the RoC.

Limited Liability Partnership (LLP)

A Limited Liability Partnership (LLP) is a form of business entity that combines the flexibility of a partnership with the limited liability of a company. Here are its features and requirements:

Features of LLP:

  1. Limited Liability: Partners have limited liability, meaning their personal assets are protected from the debts and liabilities of the LLP.
  2. Separate Legal Entity: LLP is a separate legal entity from its partners, allowing it to own assets, enter into contracts, and sue or be sued in its own name.
  3. Flexible Management: Partners can manage the LLP directly, just like a partnership, or appoint designated partners to manage the affairs as per the LLP Agreement.
  4. No Minimum Capital Requirement: Unlike companies, LLPs do not have a minimum capital requirement for incorporation.
  5. Taxation: LLPs are taxed as a partnership, where partners are taxed individually on their share of profits, avoiding the double taxation issue faced by companies.

  1. Regulatory Compliance: LLPs have fewer compliance requirements compared to companies, making them easier to manage and operate.
  2. Number of Partners: Must have at least 2 partners, with no maximum limit on the number of partners.
  3. Perpetual Succession: LLP has perpetual succession, meaning its existence is not affected by changes in or death of partners.

Requirements for LLP:

  1. Partners: Minimum of 2 partners, who can be individuals or corporate entities. At least one designated partner must be a resident of India.
  2. Registered Office: Must have a registered office address in India from the date of incorporation.
  3. Documents:
    • ID’s and address proof of partners (Aadhar card, PAN card, passport, etc.).
    • Proof of registered office address (rent agreement, utility bill, NOC, etc.).
    • LLP Agreement defining the roles, responsibilities, profit sharing, and other operational aspects among partners.
  4. Registration Process:
    • Apply for Digital Signature Certificates (DSC) for partners.
    • Obtain Designated Partner Identification Number (DPIN) for partners.
    • File an application for LLP registration with the Registrar of Companies (RoC).
    • Draft and file LLP Agreement with the RoC.

LLPs are suitable for professionals, small businesses, and service providers looking for the benefits of limited liability along with operational flexibility and minimal compliance requirements. It's important to note that LLPs are not suitable for businesses looking to raise capital through equity shares or planning for public listings, as these are typically better served by Private Limited or Public Limited Companies.

One Person Company (OPC)

One Person Company (OPC) is a unique form of business entity in India that allows a single individual to operate and manage a corporate entity with limited liability. Here are its features and requirements:

Features of OPC:

  1. Single Member: An OPC can be formed with only one person as a member and shareholder. And he/she can holds 100% shares of the company.
  2. Limited Liability: Similar to other corporate structures, the liability of the member is limited to the extent of the unpaid subscription money in his/her name.
  3. Separate Legal Entity: OPC is a separate legal entity from its owner, offering benefits like perpetual succession and the ability to enter into contracts in its own name.
  4. No Minimum Capital Requirement: Unlike Private Limited Companies, there is no mandatory minimum capital requirement for OPCs at the time of incorporation.

  1. Nominee Requirement: The member of an OPC must nominate a nominee who will take over the OPC in case of death or incapacity of the sole member.
  2. Conversion: An OPC can be converted into a Private Limited Company once it exceeds certain thresholds of paid-up capital or turnover.
  3. Taxation: OPCs are taxed like Private Limited Companies, with profits taxed at the corporate tax rate applicable to companies.

Requirements for OPC:

  1. Single Member: Only one person can be the member and shareholder of the OPC.
  2. Nominee: A nominee must be appointed by the sole member who will become the member of the OPC in case of the sole member's death or incapacity.
  3. Director: A nominee must be appointed by the sole member who will become the member of the OPC in case of the sole member's death or incapacity.
  4. Registered Office: A nominee must be appointed by the sole member who will become the member of the OPC in case of the sole member's death or incapacity.
  5. Documents:
    • ID’s and address proof of the sole member and nominee (Aadhar card, PAN card, passport, etc.).
    • Proof of registered office address (rent agreement, utility bill, etc.).
    • Consent from the nominee to act as such.

  1. Registration Process:
    • Apply for Digital Signature Certificates (DSC) for the sole member and nominee.
    • Obtain Director Identification Number (DIN) for the director.
    • File an application for name reservation with the Registrar of Companies (RoC).
    • Draft and file Memorandum of Association (MOA) and Articles of Association (AOA) with the RoC.
    • Obtain Certificate of Incorporation from the RoC.

NGO (Non-Governmental Organization)

NGOs are typically formed to operate for charitable, social, educational, or environmental purposes. They can be registered as trusts, societies, or Section 8 companies.

Features:

  • Non-profit Objective: Focus on social welfare or community development rather than profit-making.
  • Legal Status: Operate with the objective of promoting the welfare of society or a specific community.
  • Funding: Can receive funding from government grants, donations, and international organizations for their activities.

Registration Requirements:

  • Trust: Governed by the Indian Trusts Act, 1882.
    • Documents: Trust deed defining the objectives, trustees, and operational guidelines.
  • Society: Governed by the Societies Registration Act, 1860.
    • Documents: Memorandum of Association (MOA) and Rules & Regulations defining objectives, members, and management structure.
  • Section 8 Company: A company registered under Section 8 of the Companies Act, 2013.
    • Documents: Memorandum of Association (MOA) and Articles of Association (AOA). Stricter compliance requirements compared to trusts and societies.

1. Trust

Type: A legal entity created by the settlor (person who creates the trust) for the benefit of beneficiaries. The trustee holds and manages trust property for the benefit of the beneficiaries as per the trust deed.

Features:

  • Beneficiaries: Trust property is held by trustees for the benefit of beneficiaries.
  • Objectives: Operates with specific objectives outlined in the trust deed.
  • Management: Trustees manage and administer trust property as per the terms of the trust deed.

Registration Requirements:

  • Trust Deed: Defines the objectives, powers, duties, and mode of management of the trust.
  • Documents:
    • -Identity and address proof of each Trustee
    • -Two photographs of each Trustee
    • -Copy of PAN Card of each Trustee
    • -Registered Address proof
    • -Utility Bill of the registered address

2. Society

Type: A group of individuals coming together for a common non-profit objective, like promoting education, art, culture, or charity. Governed by the Societies Registration Act, 1860.

Features:

  • Memorandum of Association (MOA): Defines objectives, members, and management structure.
  • Activities: Detail internal rules, governance procedures, and membership criteria.
  • Funding: Can receive grants and donations for societal welfare activities.

Registration Requirements:

  • Memorandum of Association (MOA): Defines objectives, members, and management structure.
  • Rules & Regulations: Detail internal rules, governance procedures, and membership criteria.

3. Section 8 Company (Non-Profit Company)

Type: A company incorporated under Section 8 of the Companies Act, 2013, for promoting art, science, commerce, etc., or any other useful object. It functions like a regular company but without profit distribution to its members.

Features:

  • Legal Entity: Operates as a corporate entity with limited liability.
  • Profit Usage:: Uses its profits or income for promoting its objectives and prohibits distribution of dividends to its members.
  • Credibility: Greater credibility and legal recognition compared to trusts and societies.

Registration Requirements:

  • Memorandum of Association (MOA): Defines the company’s objectives and operations.
  • Articles of Association (AOA): Governs the internal management and operations.
  • Directors and Shareholders: Minimum of 3 directors (one must be a resident of India) and 7 shareholders.
  • Documents: For Indian National: Identity ,address and Residential proofs of directors and shareholders are required.
  • For Foreign National: Passport( Notarized and Apostilled in the country it was issued) and Translated into English language.

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