Company Incorporation and Types of Company in India
About Company Act
The Companies Act 2013 is an Act of the Parliament of India on Indian company law which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company.
A company is a legal entity formed by a group of individuals to engage in and operate a business. It is a legal entity that is separate and distinct from its owners and provides the same rights and responsibilities as a person
In India the following types of Company
- Private Limited Company
- One Person Company
- Public Limited Company
- Limited Liability Partnership (LLP)
- Unlimited Company
Both Indian Promoter and Foreign Promotor can form the above Business entities in India.
Private limited company
A Private Limited Company is the best possible option for businesses to increase growth Aspirations with various benefits available. A Pvt Ltd Company must have a minimum of two directors and a maximum of fifteen directors. A minimum of two shareholders is required for legal registration of a Pvt Ltd company. A total of
two hundred shareholders are acceptable in any Private Limited Company.
One person company
A one-person company means a company that has only one member is responsible for controlling, managing and directing the affairs of a company, in other words, OPC as a Private Company for all the legal purposes with only one member. All the provisions related to the private company are applicable to an OPC, unless otherwise expressly excluded. Indian who is also a resident of India is eligible to incorporate an OPC. Meaning thereby, the advantages of an OPC can only be obtained by those Indians who are naturally born and also a resident of India
Public limited company
A public limited company is a type of public company. Public Limited Company is a separate legal business entity that offers its shares to be traded on the stock exchange for the general public. According to the regulations of the corporate law, a has to compulsorily present its financial stats and position publicly to maintain transparency
Limited liability partnership ( LLP)
A limited liability partnership is India has been enacted by the Parliament of India recently. (Limited Liability Partnership (LLP) Act of 2008. LLP shall be a body corporate and a legal entity separate from its partners. It will have perpetual succession. While the LLP will be a separate legal entity, liable to the full extent of its assets, the liability of the partners would be limited to their agreed contribution in the LLP
An unlimited company is a company in which the liability of shareholders, members, and partners is unlimited. The members, partners, or director even use their personal property while meeting the debts of the company.
The unlimited company can be registered with or without share capital one of the biggest advantages.
Another advantage is the New Company Act. 2013 which is not applied to the unlimited company in India where it uses or increases or reduces its share capital without any restrictions.
The requirement of Private Limited Company
- Business Name: It cannot be identical (or very similar to) the name of an existing company. It won't be considered if it is offensive or illegal and the use of certain words in a company (for example, `Institute', `National') can only be used in certain circumstances. The company name must be displayed in a conspicuous place at every office, or other premises where the company carries out business.
- A Registered Office: This is the address, though, where all official correspondence will go.
- Shareholders: There must be a minimum of 2 Shareholders but in Private limited Company shareholders can not more than 200 its is prohibited.
- Share Capital: Minimum Authorized share capital is 1,00,000 INR is required to form a private limited company in India.
- Memorandum of Association (MOA): It is a very important document of the company it states the following clause or details
- Company's name
- Registered office
- Share capital
- Liability of its member
- The object for which the company has been formed
- Articles of Association(AOA): this document contain the internal regulation of the company regarding the following points
- Share capital and variation of rights
- Calls on shares
- Transfer of shares
- Forfeiture of shares
- Buy-back of shares
- General meetings
- Proceedings at general meetings
- Adjournment of meeting
- Voting rights
- Board of Directors
- Proceedings of the Board
- Dividends and Reserve
- Certificate of Incorporation: Company Registrar issues this document when he approved the company.
- Auditor: Every Company must appoint a qualified auditor. Auditors are appointed or re-appointed at general meetings at which annual accounts are presented, and they hold office from the conclusion of the meeting until the next general meeting.
- Accounts: The Companies Act lays down strict rules on accounting. Every company must maintain a set of records, which show the financial position at any one time with reasonable accuracy. The accounts comprise a profit and loss account and balance sheet with the auditors' and directors' reports appended.
- Registers Etc.: In addition to the accounts books, companies are required to have: a register of members and share ledger; a register of directors and secretaries; a register of share transfers; a register of charges; a register of debenture holder, etc.
- Company Seal: All Company must have Company seal it impressed on share certificates and used when the company has to execute a deed.
The requirement of Public Limited Company
- Business Name
- A Registered Office
- Shareholder: There must be a minimum of 7 Shareholders
- Director: In Public Limited company minimum 3 directors are required
- Share Capital: Minimum Authorized share capital is 5,00,000 INR is required to form a private limited company in India. The public limited company can trade its share on the stock exchange
- And the general condition is the same as private limited.
Steps to obtain a Company registration
Step 1: Application for a Digital Signature Certificate (DSC)
Step 2: Apply for the Director Identification number
Step 3: Application for the name approval
Step 4: Filling of MOA and AOA
Step 5: Apply for PAN and TAN of the company
Step 6: MCA Issued certification of Incorporation with PAN and TAN
Step 7: Starting a current Bank account on the company Name.
Documents required for company registration
1. Copy of Pan card of Directors.
2. Passport size photograph of directors.
3. ID proof like Adhar card or voter id Card.
4. Copy of address proof.
5. All director's bank account statements last one month.
6.All directors' mobile number and mail id.
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