Company
What is Company ?
The Companies Act, 2013 is an Indian law that governs the formation, operation, and management of companies in India. According to this Act, a company is a legal entity that is incorporated or registered under the provisions of the Act.
Under the Companies Act, 2013, a company is defined as “a company formed and registered under this Act or an existing company.” An existing company refers to a company that was registered under any of the previous company laws in India, such as the Companies Act, 1956.
The Act specifies the types of companies that can be formed in India, such as private limited companies, public limited companies, and one-person companies. It also outlines the requirements for the formation of a company, including the minimum number of shareholders and directors, the procedures for incorporation, and the registration process.
The Act also sets out the rules and regulations for the management and operation of companies, including requirements for maintaining records and filing documents with the Registrar of Companies, the rights and obligations of shareholders and directors, and provisions for mergers, acquisitions, and winding up of companies.
Overall, the Companies Act, 2013 provides a comprehensive framework for the formation and regulation of companies in India, with the aim of promoting transparency, accountability, and good corporate governance.
TYpe of Company
The Companies Act, 2013 recognizes several types of companies that can be incorporated in India. The main types of companies as per the Act are:
1.Private Limited Company:
A Private Limited Company is a business entity held by small group of people. It is registered for pre-defined objects and owned by a group of members called shareholders. Startups and businesses with higher growth aspiration popularly choose Private Company as suitable business structure.
The business entity gets recognised as a Company through its registration under Companies Act of 2013 in India. The governing body is Ministry of Corporate Affairs, widely known as MCA. The definition of Private Company under the Act is provided here to understand its basics. Section 2 (68) of the Act defines a Private Company as under:
A Company having a minimum paid-up share capital as may be prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred;
(iii) prohibits any invitation to the public to subscribe for any securities of the company
2.Public Limited Company:
A Public Limited Company (PLC) is a type of business structure in which ownership is divided among shareholders, and the company’s shares can be publicly traded on a stock exchange. This means that members of the public can purchase shares in the company, and the company can raise capital by issuing additional shares.
According to the Companies Act, 2013, a public limited company is defined as a company that:
- Has a minimum paid-up share capital of Rs. 5 lakh or such higher amount as may be prescribed.
- Has at least seven shareholders and three directors.
- Has no restriction on the maximum number of shareholders.
- Can invite the public to subscribe to its shares or debentures through a prospectus.
- Can list its shares on a stock exchange.Must have the words “public limited company” at the end of its name.
A public limited company is subject to greater regulatory and compliance requirements than a private limited company, as it is accountable to a larger number of shareholders and members of the public. However, it also has access to a larger pool of capital, which can be used to fund growth and expansion.
3.One Person Company:
One Person Company (OPC) is a type of business structure in which a single person can form a company, enjoying limited liability and a separate legal identity. In other words, OPC allows an individual to start and run a company without the need for a co-founder or partner.
According to the Companies Act, 2013, a one-person company is defined as a company that has only one person as its member and director. The key features of an OPC are as follows:
- Only a natural person who is an Indian citizen and resident in India can form an OPC.
- An OPC can have a maximum of one director and one member.
- The member of an OPC has limited liability and is not personally liable for the debts of the company.
- An OPC is required to nominate a nominee who will take over the management of the company in case the sole member/director becomes incapacitated or dies.
- An OPC is not allowed to carry out non-banking financial investment activities including investment in securities of any body corporate.
- An OPC is required to use the term “One Person Company” in its name.
OPC provides several advantages to entrepreneurs who wish to start a business alone, including limited liability, separate legal identity, and perpetual existence. OPC is subject to less regulatory and compliance requirements than a private limited company, making it a popular choice for small business owners.
4.Section 8 Company:
A Section 8 Company, as per the Companies Act, 2013, is a type of non-profit organization that is formed for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other such objectives.
According to the Act, a Section 8 Company is defined as a company that has the following features:
- It must be incorporated as a company under the Act and registered with the Registrar of Companies (ROC).
- Its main objective must be to promote charity, social welfare, religion, education, science, art, sports, research, or any other such objective.
- It must apply its profits or other income for promoting its objectives and cannot distribute any dividend to its members.
- Its name must end with the words “Foundation,” “Association,” “Society,” “Council,” “Charity,” “Institute,” “Organization,” “Federation,” “Chamber of Commerce,” or any other such word that signifies its non-profit nature.
- It must have at least two members or shareholders, and a minimum of three directors.
- It must file its annual returns and other documents with the ROC, and comply with other legal requirements under the Act.
A Section 8 Company is a popular form of non-profit organization in India, as it provides various benefits, such as tax exemptions, limited liability, and separate legal identity. However, it is subject to strict regulation and supervision by the government, to ensure that it uses its resources and funds for its stated objectives and does not engage in any commercial activities.
Benefits of Company Incorporation
Incorporating a company in India offers several benefits, including:
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Limited liability: One of the key benefits of incorporating a company in India is limited liability. This means that the personal assets of the company’s shareholders are separate from the assets of the company. In case of any legal or financial liability, the shareholders’ personal assets will not be at risk, and they will only be liable to the extent of their investment in the company.
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Separate legal identity: A company is a separate legal entity from its shareholders. It can own property, enter into contracts, and sue or be sued in its own name. This provides the company with greater flexibility and credibility, and allows it to conduct business transactions more easily.
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Access to funding: A company can raise funds through the sale of shares or by taking loans from banks and financial institutions. This makes it easier for the company to access capital and invest in growth opportunities.
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Tax benefits: Companies in India can enjoy various tax benefits, such as deductions for business expenses, depreciation on assets, and tax exemptions for certain types of income. They may also be eligible for various government incentives and subsidies.
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Perpetual succession: A company has perpetual succession, which means that it continues to exist even if its shareholders or directors change. This provides greater stability and continuity for the company’s operations.
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Brand recognition: Incorporating a company in India can also help in building brand recognition and creating a positive image for the business. Customers and investors may view a company as more credible and trustworthy than a sole proprietorship or partnership.
Overall, incorporating a company in India can provide several benefits for entrepreneurs and businesses, and can help in achieving long-term growth and success.
basic documents for company incorporation in India
The basic documents required for company incorporation in India are as follows:
- Identity proof and address proof of all directors and shareholders: This can be in the form of PAN card, Aadhaar card, passport, or driving license.
- Passport size photograph of all directors and shareholders.
- Proof of the registered office address of the company: This can be in the form of a rent agreement or sale deed, along with utility bills such as electricity bill or property tax receipt.
- Memorandum of Association (MOA) and Articles of Association (AOA): MOA and AOA are the charter documents that define the objectives, powers, and internal rules of the company.
- DIN (Director Identification Number) of all directors: DIN is a unique identification number allotted to every director of a company.
- Digital Signature Certificate (DSC) of all directors: DSC is required for e-filing of documents with the Registrar of Companies.
- Bank statement or cancelled cheque of the company bank account.
- Declaration by a professional such as a CA, CS or advocate certifying the compliance with incorporation requirements.
These are the basic documents required for company incorporation in India. However, depending on the type of company and the industry in which it operates, additional documents or licenses may be required. It is advisable to consult a professional such as a chartered accountant or a company secretary for a complete list of documents required for incorporation.
Singh Associates is a professional firm that provides company incorporation services in India. We understand the legal and regulatory requirements of company incorporation in India and have a team of experienced professionals who can guide you through the entire process.
We provide end-to-end company incorporation services, right from the initial consultation to obtaining the certificate of incorporation. Our services include drafting of the Memorandum of Association and Articles of Association, obtaining Director Identification Numbers and Digital Signature Certificates, and filing of various documents with the Registrar of Companies.
Our team of professionals ensures that all the documents are prepared and filed in accordance with the Companies Act, 2013, and other relevant laws and regulations. We also assist our clients in obtaining various licenses and registrations required for their business.
We believe in providing our clients with timely and cost-effective services. We have a transparent pricing policy, and our clients can be assured of no hidden costs. Our goal is to make the company incorporation process as smooth and hassle-free as possible for our clients.
If you are looking to incorporate a company in India, Singh Associates is the right choice for you. Contact us to know more about our services and how we can help you in incorporating your company in India.
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