The Companies Act, 1956 deals with Company law in India and defines 'company' as one that includes company formed and registered under the Act or an existing company i.e. a company formed or registered under any of the previous company laws. The provisions of Company Law lay down difference between Private Limited, Public Limited Companies and the applicable law.
Section 3(1) (iii) of the companies act describes eligibility of a private company. A private company is one having a
1. Minimum paid-up capital of one lakh rupees or such higher paid-up capital as may be prescribed
2. Articles of Association that restricts the right of transfer of its shares
3. Articles of Association that limits maximum number of its members o fifty. In determining this number
employee and ex-employee (who were members while in such employment and who have continued to be members after ceasing to be employees) are not considered
4. Articles of Association that prohibits any invitation to the public to subscribe to any shares or debentures of the company
5. Articles of Association that prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives
All the provisions in the articles to maintain the basic characteristics of a private company in terms of that section is restriction on the right to transfer and the same will apply even if a private company is a subsidiary of a public company
Means a company which not a private company. Public Company is a company which is not a private company and having a minimum paid-up capital of five lakh rupees or such higher paid-up capital, as may be prescribed. The Articles of Association of Public Company allow right of transfer of shares, no restriction as to membership and allows invitation to public to subscribe to its shares
Process Of Company Incorporation comprises of following steps:
1. An application for name availability (Six names in order of preference) has to be filed with the Ministry of Corporate Affairs and post approval of the same
2. Each individual who want to become a director of the company, is required to apply and obtain a Director Identification Number (DIN), which is unique and is required to be quoted with all the companies in which, he / she is a director.
3. The documents required to be filed for incorporation at various stages are to be filed online and the same are to be signed digitally be one of the directors. So before initiating the procedure of name availability itself at least one director should hold a digital signature.
Documents required for incorporation of company in India
1. Memorandum of Association
2. Articles of Association
3. A declaration stating that all the requirements of the Companies Act 1956 and the applicable rules with respect to the regi stration and other matters have been complied with
4. A list of persons who have consented to act as directors of the company
5. If the proposed company is a public company, consent of very person prepared to act as a director must be submitted in a prescribed format
6. Information about directors, managing directors and managers and secretary must be submitted in a prescribed form 32
7. Information about the registered office in a prescribed form 18
8. Filing of Form 1 with Memorandum of Association, Articles of Association and certification by a Chartered Accountant that the compliances are met
9. Power of attorney and Payment of applicable registration fee payable to the registrar of the companies
Limited Liability Company
A kind of business organization that combines some aspects of a corporation with those of a sole
proprietorship or partnership. It does not have shareholders and does not require meetings. A limited
liability company does not need to create a set of bylaws, though some states require an operating
agreement in order to recognize the company. It’s a company, authorized only in certain states, whose
owners and managers receive the limited liability.
A lawful arrangement in which an individual called trustor, gives fiduciary control of property to a person or institution called trustee, for the benefit of beneficiaries. It is a monopolistic corporation, prior to the enactment of antitrust laws
Society is an assembly of people shaped as a separate organization having as a stated purpose, some openhanded or benevolent purpose either in regards to the public in general or in regards to the common interests of its members.
Partnership-Relation between persons who have agreed to share the profits of a business carried out by all or any of them functioning for all. Firm-Persons who have entered into partnership with one another are called individually "partners" and jointly a "firm", and the name under which their business is
carried on is called the "firm name". Partnership firms- are those firms having relation between its partners who have agreed to share the profits of a business carried out by all or any of them functioning for all members.
LLP is a separate legal entity having limited liability aspect of a Company. It is a distinct legal entity from its partners,
can own assets in its name, sue and be sued. Unlike corporate shareholders, the partners have the right to manage the business directly. It has minimum of 2 partners and there is no limit as to maximum number of partners. It is governed in India by Limited
Liability Partnership Act 2008 notified on 31.03.2009. The rights and duties of partners in LLP, will be governed by the agreement between partners and the partners have the flexibility to devise the agreement as per their choice. The duties and obligations of Designated Partners shall be as provided in the law.
The Registrar of Companies (ROC) is the authority having jurisdiction over the incorporation. The steps required for LLP Incorporation are as follows:
1. Checking availalbity of name
2. Obtaining Designated Partner Identification Number (DPIN) and a digital signature certificate
3. Drafting the LLP agreement and filing same along with incorporation documents to obtain the Certificate of Incorporation.
Sole Proprietorship is a business owned by a single individual. For purpose of tax and any liability, the owner and the business are one and the same. The liability is unlimited in case of proprietorship. The proprietorship is not taxed as separate entity.
Limited Liability Proprietorship LLP is a separate legal entity having limited liability aspect of a Company. It is a distinct legal entity from its partners, can own assets in its name, sue and be sued. Unlike corporate shareholders, the partners have the right to manage the business directly. It has minimum of 2 partners and there is no limit as to maximum number of partners. It is governed in India by Limited Liability Partnership Act 2008 notified on 31.03.2009. The rights and duties of partners in LLP will be governed by the agreement between partners and the partners have the flexibility to devise the agreement as per their choice. The duties and obligations of Designated Partners shall be as provided in the law.
