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An Overview of The Various Types of Company Registration

Have you decided to open a company in an Indian state? If yes, you must think of the company structure. The company structure is mentioned when registering a company with MCA (Ministry of Corporate Affairs). Usually, business owners struggle to decide the company’s structure because of the variations. They rely on company incorporation experts for the same rationale to determine the right company structure. The company registration process might change according to the company type. An entrepreneur can search for a company registration consultant to reduce the paperwork burden. Read on to understand the various types of company registration in India.

Public Limited Company

The general public purchases a Public Limited Company’s shares. For a public company, three directors should be there. Besides the directors, seven shareholders are necessary for a Public Limited Company. The shares of the company are listed on the public stock exchange. 

Anyone can purchase the company’s shares and a part of ownership. A Public Limited Company must get an incorporation certificate from the Registrar of Companies to begin operations. A Public Limited Company has to listen to the demands of major shareholders.

Private Limited Company

A Private Limited Company belongs to an individual or a group of individuals. For a Private Limited Company, there must be at least two members. The maximum number of members for a private company is 200. These members control the shares of a private company. The shares of a private company will make the entire capital. The liability of a company’s group members depends on the number of shares. The more shares an individual holds, the more the liability. Public trading is not an option for a Private Limited Company. A common person outside of the company cannot purchase the shares of a private company. To incorporate a Private Limited Company, registration with the MCA is necessary.

One Person Company

One Person Company (OPC) is comparatively new in the country compared to other types of companies. According to the Companies Act 2013, a single individual can run a company. 

But the minimum paid-up capital of an OPC needs to be Rs 1 Lakh. Other company types in India require at least two individuals. With the new concept of OPC, individual entrepreneurs can successfully run businesses. Sometimes, small business owners do not prefer having partners. In such a case, they can benefit from the OPC rule. Limited liability protection is for shareholders of an OPC. As usual, one must gain permission from the MCA to start an OPC. Are you still confused about the OPC rule? You can consult a company registration consultant to know more.

Partnership

When multiple partners open a company, it is known as a Partnership company. The partners of the company handle the operations and business activities. Before incorporating a Partnership company, an agreement is drafted. The agreement defines the responsibilities and roles of every partner. The agreement also establishes the number of shares held by each partner. It will also define the percentage of profit/loss dedicated to each partner.

Sole Proprietorship

When there is only one person to manage all company operations, it is called a Sole Proprietorship. The company registers under a single person’s name with the MCA. The single owner of the business is entirely responsible for the profits or losses. One might think Sole proprietorship and OPC are the same, but they are not. Both company types have only a single owner, but the only difference is that a sole proprietor has unlimited liability.

Limited Liability Partnership

A Limited Liability Partnership (LLP) has at least two partners. The shares of each partner will determine their liability in the company. It is crucial to note that the credibility of an LLP is greater than that of a Partnership company. The credibility is also greater than a Sole Proprietorship. The assets of an LLP will also differ from other companies. The incorporation process of an LLP will differ from other companies in India. For any issue, one can contact a company registration consultant.

NPO

One can opt for a Section 8 Company or an NPO (Non-Profit Organization). The main objectives of an NPO might include arts, commerce, education, charity, social welfare, etc. One has to register with the ROC (Registrar of Companies) to open a Non-Profit Organization in India. An NPO generates profits to meet its objectives. For example, an NPO opened for the welfare of unprivileged children will use the earnings for the same goal.

How to register a company with less effort?

Depending on the structure of the company, the registration process will change. It involves several documents, forms, and details. Usually, business owners aren’t familiar with the company incorporation processes. A company registration consultant can save time for business owners and entrepreneurs. Decide your company structure and register with the MCA now!

Read more about internal financial control applicability.

Ahsan Khan
Ahsan Khan
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