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Private Limited Company
In India, most preferred mode of corporate legal entity is Private Limited Company., Ministry of Corporated Affairs(MCA) is empowered with the power to govern the Private limited company registration, MCA issues Certificate of Incorporation to every private limited company as soon as its registration with the Central Government. All Private companies are subject to comply with Companies Act 2013.
There is no minimum capital requirement for incorporation of Private Limited company, However there are certain Conditions which are needed to compiled for incorporating a private limited company, such as follows:-
To register a private limited company, there should be a minimum of two directors and shareholders. An Individual can be both a director and shareholder, whereas a corporate entity are allowed to only own shares and members of the company. Foreign nationals, are allowed to become be Directors and/or Shareholders of a Company with Foreign Direct Investment, making it the preferred choice of entity for foreign promoters.However foreign entity can only become shareholder
Limited Liability Partnership (LLP)
Limited Liability partnership is one of the latest model of business entity.Which was introduced by way a new act called Limited Liability Partnership Act 2008.This mode of entity has the benefits of Private Limited and Partnership.The LLP mode enables the parties to maintain the business while providing the advantage of Limited liability.
In Limited Liability Partnership liability of each partners are limited unlike traditional partnership.Which makes clear that in a LLP,one Partners is not liable for misconduct of another partner.
Limited liability liability also protect the partners from the debt of the LLP.In the traditional partnership or private Limited there is upper cap on the maximum number of members where as there is no such maximum limit in the number of members in an LLP.
The incorporation and business management of an LLP is very simple.The requirement of Statutory audit is not required for an LLP, Where the paid up capital and turnover is less than 25 Lakh and 40 Lakhs respectively.The LLP mode is better for MSME,Professional,Consultant and Service oriented businesses.
Public Limited Company
Public Limited company is a company which has more than 7 members and 3 directors,and the same has incorporated as public limited company under companies Act 2013 with Ministry of Corporate Affairs.Public limited company provides it members the benefit of limited liability.Public limited company allows the company to raise investment from larger public and transfer of shares.
Public limited company are allowed to list its share on recognised stock exchange.Public limited companies is not having any limit on the maximum number of members.Public limited company enjoys all the benefit of Private Limited plus some other advantages in raising of capital, Number of Shares, Transferability of shares.
One Person Company
One person company is one of the recently introduced mode of business entity. Which is introduced by Companies Act 2013.This is similar to sole proprietorship with limited liability.As the name indicates for incorporation of one person company one members is required. OPC provides limited liability protection,separate legal entity.
For incorporating a one person company, it also requires a nominee director in the Memorandum of Association and Article of Association,who will become the director/owner incase the promoter director is disabled
For cultivation the habit of savings ,Government has introduced Nidhi Companies in India,The mode of operation of Nidhi Company is borrow and lend to its own members.The person who borrow money from the nidhi company should be its members.So it cultivates a habit of savings among its members.
Partnership firm means two or more people come together to carry out business together.Partnership firm is most common form of business entity and easy to setup.Compliance cost for partnership is very less however the liability of partners are unlimited.Maximum cap on number of partners in a business is 100.
A sole proprietorship is a type of unregistered business entity that is owned, managed and controlled by one person. Sole proprietorship’s are one of the most common forms of business in India, used by most micro and small businesses operating in the unorganised sectors. Proprietorships are very easy to start and have very minimal regulatory compliance requirement for started and operating.