A Company is an artificial person created by law, having a separate legal entity and perpetual succession. It can own property, incur liabilities, sue, and be sued in its own name.
A Company is a legal entity formed by registering with the Registrar of Companies (ROC) under the Companies Act, 2013.
The act provides for various types of companies, including:
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Private Limited Company
A Private Limited Company is a type of company structure that is governed by the Companies Act, 2013 in India. It is a popular form of business organization among small and medium-sized enterprises.
The main characteristics of a private limited company are:
Limited Liability: The liability of the shareholders is limited to the amount of share capital they have invested in the company. In other words, the personal assets of the shareholders are protected in case the company incurs any debts or losses.
Minimum and Maximum number of Members (Shareholders): A private limited company can be formed with a minimum of two and a maximum of 200 members.
Separation of Ownership and Management: The management of the company is separate from its ownership. The company is managed by a board of directors appointed by the shareholders.
Perpetual Succession: A private limited company has a separate legal identity, and it continues to exist even if the members or directors change.
Share Transferability: The shares of a private limited company can be transferred with the approval of the board of directors and the shareholders.
Restrictions on Public Offer: A private limited company is not allowed to invite the public to subscribe to its shares or debentures.
Statutory Compliance: A private limited company is required to comply with various statutory requirements, such as filing annual returns, conducting regular board and shareholders meetings, maintaining proper books of accounts, and so on.
In summary, a private limited company is a popular form of business organization among small and medium-sized enterprises in India due to its limited liability, flexibility in management, and separation of ownership and management.
Limited Liability Partnership (LLP)
A Limited Liability Partnership (LLP) is a type of business structure that combines the features of a partnership and a company. It was introduced in India through the Limited Liability Partnership Act, 2008, which came into effect on April 1, 2009.
The main characteristics of an LLP are:
Separate Legal Entity: An LLP is a separate legal entity from its partners, which means that it can own property, enter into contracts, sue, and be sued in its own name.
Limited Liability: The liability of partners in an LLP is limited to their agreed contribution to the LLP. This means that the personal assets of the partners are protected in case the LLP incurs any debts or losses.
No Ownership Change: Unlike a traditional partnership, the death or retirement of a partner does not affect the continuity of the LLP. The LLP can continue to operate with the remaining partners.
Management: The management of an LLP is done by the partners, or they can designate a designated partner to manage the day-to-day affairs of the LLP.
No Minimum Capital Requirement: An LLP does not have any minimum capital requirement, which means that the partners can start an LLP with any amount of capital.
Flexible Ownership: An LLP can have any number of partners, who can be individuals or entities. Also, an LLP allows for the creation of different types of partners such as designated partners, who are responsible for the management of the LLP.
Audit and Compliance: An LLP is required to file an annual return with the Registrar of Companies and get its accounts audited by a Chartered Accountant, only if the annual turnover exceeds the specified limit.
In summary, an LLP is a flexible and attractive option for entrepreneurs who want to start a business with limited liability and a separate legal entity, but do not want to be subject to the stricter compliance requirements of a company. The concept of LLP combines the advantages of a company and a partnership, making it a popular choice for businesses in India.
One Person Company (OPC)
One Person Company (OPC) is a type of company structure that allows a single person to form and operate a company. The Companies Act, 2013 introduced the concept of OPC in India to provide a separate legal entity to the individual and enable them to operate a business with limited liability.
The main characteristics of an OPC are:
One Owner: An OPC can have only one owner who is the sole shareholder and director of the company.
Limited Liability: Like other types of companies, the liability of the owner of an OPC is limited to the extent of their shareholding in the company. The owner's personal assets are not at risk in case the company incurs any debts or losses.
Separate Legal Entity: An OPC is a separate legal entity that can own property, enter into contracts, and sue or be sued in its own name.
Perpetual Succession: The existence of an OPC is not affected by the death or incapacitation of its owner. The company can continue to exist and operate with a new owner in such cases.
Nominee Director: An OPC is required to appoint a nominee director who will take charge of the company in case of the death or incapacitation of the owner.
Minimum Requirements: An OPC needs to have a minimum of one director and one nominee director. The company is not required to hold an annual general meeting or maintain statutory records, which makes it easier to operate.
Restrictions on Conversion: An OPC cannot be converted into a private or public limited company for two years from the date of its incorporation.
In summary, an OPC is a suitable option for individuals who wish to start and operate a business with limited liability and have full control over its operations. The concept of OPC provides a separate legal entity to the individual, which makes it an attractive option for entrepreneurs who are starting a business on their own.