The first most important thing to deal with while starting a business of your own is fulfilling the legalities to make sure the smooth running of your company. Company registration is the first step in the procedure that grants you a legal authorization for conducting business. It involves abiding by a set of rules and regulations discussed under the Companies Act.
Company registration is a primary procedure that all business owners must accomplish. The Companies Act 2013 lists various kinds of companies that can be incorporated in India. Therefore, before you move ahead with the registration process, have a look at these various kinds of companies that you can register in India.
Private Limited Company
A Private Limited Company is a private entity that is meant for small businesses. According to the rules per the Companies Act 2013, there can be at least a minimum of 2 members and a maximum of 200 members in an organization. In this type of company, there will be a group of stakeholders and the total capital is made of shares by each member.
In a Private Limited Company, the liability of members is restricted to the number of shares they have. Personal and business assets are treated in a separate way. Shares of a Private Limited Company can be transferred or sold to individuals, who in turn become the owners of the company. However, the shares cannot be traded publicly. A Private Limited Company can be classified as:
- A company limited by shares- It is the most general form of a Private Limited Company. Here, the liability of members is limited by the memorandum to amount, if any, unpaid on shares held by them respectively.
- Company Limited by Guarantee- In this kind of Private Limited Company, the liability of members is restricted by the memorandum to such an amount, which the members may contribute respectively to the assets of the organization, during the event of it going bankrupt.
- Unlimited company- In this type of company, there is no limit on the liability of members. This implies that during an event of a loss if the company assets are not enough to pay the creditors, the private asset of its members are consumed to clear all debts. Here, the risk factor is very high.
Public Limited Company
A Public Limited Company shares can be bought by the general public. The organization must have 3 directors and a minimum of 7 shareholders. In a Public Limited Company, there is no restriction on the shares. These shares are listed on the stock exchange and can be freely traded. Such type of companies is owned by their shareholders. Companies that fall under this category need a certificate from the Registrar of Companies before they start their operations.
Partnership
It is one of the various kinds of companies where business operations and transactions are handled by the partners. The roles, responsibilities and the total number of shares withheld by the two people are defined clearly in the partnership agreement. The profits or the losses incurred by the business is divided among partners as defined in the agreement.
In India, no company can be treated as a company if it is not registered with the registrar of companies under the Companies Act, 2013. Therefore, Company registration is a vital and crucial step in realising your dream of becoming a successful business owner.