Registration of company in India, as part of the Digital India Initiative, is mandatory as per the Company Act, 2013. However, before proceeding to register a company, the pre-requisite thing to do is to choose the correct business type that the new enterprise will operate and need to be registered under. Proper incorporation has a long term effect on the legal compliances and income tax returns that the business entity needs to deal with in the future.
Types of company formations in India
A company is a legal entity that is duly formed and registered as per the provisions of Company Act, 2013. Company registration in India is regulated by the Registrar of Company of each state. These ROCs are governed by the Ministry of Corporate Affairs. Legally, there are different types of companies in India:-
- One Person Company (OPC) – Introduced in 2013, it enables a single investor to form a company with limited liability. It is similar to a Sole proprietorship, the difference lies in the fact that the business and the owner have different identities and hence the risk associated with the owner is limited only to the value of shares held by him in the company.
- Private Limited Company – as per Indian laws, for Pvt ltd company registration minimum of 2 and a maximum of 200 members are required. The company cannot raise funds from the open market. The different types of companies are – Company limited by shares, company limited by guarantee and unlimited company.
- Public Limited Company – a company that is listed on a stock exchange, shares is easily transferrable and can be formed with a minimum of 7 members. This company needs to be compliant with government regulations and authorities like RBI and SEBI.
Private Limited Company Incorporation process is almost the same for all these companies except for few formalities.
