7 Important Types of Company Registration in India (2022)

Company Registration

The Companies Act of 1956 divides businesses into private and public entities and establishes a regulatory framework based on that classification. However, as the economy grows and commercial operations become more complicated, the forms of corporate organizations continue to evolve. There is a need for the law to take into account the needs of various types of businesses and to establish universal rules to which all businesses can turn when establishing their corporate governance structure. Entrepreneurs’ risk-taking endeavors are hampered by rigid institutions, superfluous restrictions, and laws. Private firms and small businesses that do not rely on public issues or deposits for their financial needs and instead rely on their own personal or in-house resources require flexibility and compliance at a cheap cost. Similarly, public firms that raise funds from the general public must adhere to a more stringent corporate governance code. The Company Law should ensure diverse classifications of corporations in order to provide a comprehensive framework for all types of corporate entities. It should also make it easier for businesses to transition from one category to the next.

The Companies Act of 2013 governs the business world. In India, there are seven different methods of company registration. It can be difficult to choose the proper type of company registration because there are so many alternatives.

Types of Company Registration in India

Public limited company

If you want to run your business as a private entity, forming a private limited company is the way to go. Typically, shareholders share liability risk equally in order to protect their investments. The net capital of these companies is the total number of shares held by each stakeholder. The shares of a private limited business, unlike those of many other companies, are not eligible for public trading or transfer.

Private limited company

Unlike private limited corporations, the general public can own a share in a public limited company. It was formed in accordance with business legislation and is freely traded on stock exchange systems. Before engaging in any commercial operations, these sorts of businesses need to apply for the ROC certification.

Partnership company

In numerous aspects, this sort of business resembles a single proprietorship. The amount of people engaged, however, is a substantial distinction between a sole proprietorship and a partnership. Partnership firms are made up of two or more people, with each member’s responsibilities explicitly outlined in the agreement.

Meanwhile, profits are shared among the partners in accordance with the agreement. Partners, on the other hand, are likewise accountable for absorbing losses comparable to earnings. If these enterprises have registered a Partnership Deed, they can operate without a licence. The Indian Partnership Act of 1932 regulates partnership corporations.

Limited Liability Partnership

LLPs are a relatively new trend that separates corporate assets from personal assets and provides ultimate limited liability protection. The partners in this corporation rely on the amount of share capital to satisfy the liabilities.

If you want to form an LLP, one of the most crucial conditions is that you have a minimum capital of $1,000,000.00 with at least one partner from this country.

One Person Company

One Person Company registration is a relatively new concept in India. This is the type of registration chosen by the majority of small enterprises or startups conducted by a single person. The owners benefit from liability protection as a result of this registration, thus they don’t need to form any partnerships.

It’s simple to maintain, manage, and run because only one person is in charge of all aspects of the firm. It’s a hybrid of a sole proprietorship and a private limited company in a nutshell. To be eligible for this registration, you must have a minimum capital amount of around $1,000,000. If you’re in the finance industry, you’re not eligible for an OPC registration. Also, the person must be an Indian citizen.

sole proprietorship

A sole proprietorship is a business that is owned and operated by one person.

A sole proprietorship is a business owned and operated by a single individual. In most sole proprietorship businesses, the owner is personally liable for all earnings and losses. It’s a one-of-a-kind company that’s relatively simple to set up. This sort of registration is used by most people who work from home or manage enterprises from their homes.

Section 8 company

These businesses are generally referred to as NGOs, or Non-Profit Organizations, and they actively participate in charitable activities. The primary goal of these businesses is to promote the arts, science, and education, as well as to protect the environment and assist the less fortunate. There are a few requirements for obtaining an NGO registration, including the presence of at least two shareholders and directors. The majority of the time, the shareholders act as directors. Unlike many other businesses, this one does not require any funding. Any one of the directors must be a resident of India, and the firm must be registered in India.

Sum it up

There are seven different types of company registration available in India that you must be aware of. 

If your business requires any type of registration, you should hire a best legal consultant firm like LawgicalIndia, which makes your registration process easier. We, at LawgicalIndia, have a team of top-rated experts that can handle the entire registration process and allow you more time & freedom to do other important things.  

You can visit our website and contact us today to further discuss your company’s registration. 

Also Read: What is an FNS Number?

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