The word company signifies any entity formed under the companies’ act 2013. It usually consists of an association of people be it natural, legal or any other kind of an entity. It is seen the trial to choose a proper legal entity before starting your own business.
Here we are going to see a detailed description of the different kinds of companies in India.
Private Limited Company
A private limited company is usually held for small startups or small-scale business. The shares of these companies are not available for public sharing or trading. A private limited company can be the one which is limited by shares or can be limited by guarantee. Now, by shares, we mean to say that the company have the liability of its members. Whereas, by guarantee, it means to say that the members can contribute to the assets of the company as and when the need arises and save it from going bankrupt. Another kind under this is the unlimited company which means that there is no liability to the members of the company. The unlimited company has it as a rule that the members of the company need to meet up and pay all the existing debts of the creditors. This means that the risk is really very high in such cases. These kinds of organisations are not found in India given to the level of risks involved in such cases. Private limited companies have a lot of benefits over a public company which is why they are widely used.
Public Limited Company
This is a type of company where shares can be bought by the public in general. Here, the shares are listed and can be traded in stock market freely. But you have to get your company listed to sell the shares on the stock exchange. There should be at least 7 members in this company but there is no upper bound to the number of members allowed here. The public can easily subscribe to its shares or make any kind of purchases. However, an audit is necessary in public limited company
Nidhi Company
Nidhi Company is a kind of non-banking Indian finance sector but it operates its functions between its members only no other person is allowed to take part in these activities without being its member. Nidhi Company is also an incorporated company under the companies act 2013 with the MCA. Its objectives are to promote savings among members, to lend loans and receive money from its member only.
Section 8 Company
Section 8 Company is a company registered under the Indian Companies Act, 2013, which operates its business activity for the social welfare of society. It is a non-profit organization that works only for the betterment of society. They are established to promote commerce, science, art, education, research, social welfare, religion, charity, protection of the environment and all other charitable activities. The members of this company are restricted to share the profit earned by the company; the profit shall be used only for the fulfilment of the objective of the company.
One Person Company
A totally new concept introduced under the Companies Act, 2013, One Person Company (OPC) in which a single person can start his business solely. In a private limited company and public limited company, the minimum requirement of a person is two and seven whereas in OPC a single person can register its company. It is a revolutionary concept for the single-handed business earlier a single person cannot form its company in the name of “private limited or public limited” but now a sole person can use the name private limited at the end of the name of its business. OPC enjoys all the benefits of the private limited company with some exemption granted in companies act, 2013.
Limited Liability Partnership
Limited Liability Partnership (LLP) is a hybrid of a partnership firm and company. It is an upgraded version of a partnership firm with the features of the company. LLP having partners and designated partners rather than directors and shareholders. The LLP is a separate legal entity, required a minimum of 2 partners with no minimum capital requirement, the partners of the LLP having limited liabilities. The incorporation of LLP is not so high, there are fewer restrictions and compliances as compared to the company so it is easy to maintain and run LLP
These kinds of registrations have their own kind of benefits. It depends completely on the person who is starting the business or may also depend on the kind of business being started.
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