Choosing the Right Type of Company Registration for Your Business in India

A number of criteria, including the magnitude of capital investment, the liability of the proprietor, the pre-requisite for registration, and the processes for registration, are to be looked into classify businesses in India into diverse categories. In order to comply with the legal requirements for registration in India, corporations are obligated to submit applications in the specified manner. The eligibility requirements, registration procedures, and associated costs for each category of company in India are detailed below, along with the documentation and information that must be provided during the registration process.

Types of Company Registration in India For Different Types of Companies

1. Public Limited Company 

Under the Companies Act of 2013, public limited companies are the companies that are registered and formed as separate legal entities. These businesses are held by a group of shareholders, whose liability is limited to the amount of capital subscribed by them. The shares of the public limited companies can be easily transferred, traded, and subscribed for by the general public on stock exchange market places, if listed. Otherwise also, the transfer of shares of public limited companies is simpler. The prerequisites for establishing a Public Limited Company in India are as follows.

• Minimum Requirements:

1. Seven shareholders at least
2. Three directors at minimum, with at least one being an Indian resident 
3. DIN of each of the directors
4. DSC for every promoter (subscriber to Memorandum)
5. The Company's Registered Office

• Required KYC/ Official Papers:

1. Passport Size Photograph, PAN, Aadhar, identification proof (DL/ Passport/ Voter Id card) as address proof of each subscriber/ director 
2. Verification of the Registered Office Address (Utility Bill like Electricity Bill) and the Office Premises Owner's No Objection Certificate/ Rent Deed 
3. Articles of Association and Memorandum of Association 

• Step-by-Step Procedure:

1. Get the DIN and DSC for each subscriber/ director
2. Go to the MCA website, sign in with your credentials, and take use of the INC 32 / SPICe+ Form. 
3. Submit PART A of SPICe+ to the ROC for the company's name approval. 
4. After name approval, submit PART B of SPICe+ for company registration within 20 days. You will receive the company registration certificate generally in 1-2 weeks.

2. Private Limited Company

Similar to Public Limited Companies, the private limited companies are also registered under the Companies Act of 2013 but are generally smaller is size. These companies are not permitted to list their shares on stock exchanges; instead, they trade their shares privately. Additionally, the general public is not able to subscribe for their shares. In Private Limited Companies, the responsibility of the shareholders is restricted to the amount of their outstanding subscribed capital. The prerequisites for establishing a Private Limited Company in India are as follows:

Also Read: How to Download GST Certificate from GST Portal Without Login

• Minimum Requirements:

1. Two shareholders at least
2. Two directors are required, at least one of whom must be an Indian resident 
3. DIN of each director approved by RoC
4. DSC for every director/ subscriber to Memorandum
5. The Company's Registered Office

• Required KYC/Official Papers:

1. Passport Size Photograph, PAN, Aadhar, identification proof (DL/ Passport/ Voter Id card) as address proof of each subscriber/ director 
2. Verification of the Registered Office Address (Utility Bill like Electricity Bill) and the Office Premises Owner's No Objection Certificate/ Rent Deed
3. Articles of Association and Memorandum of Association

• Step-by-Step Procedure:

It has the same procedure as followed by a public limited company. 

3. One Person Company

One Person Company is a Private Limited Company with a single owner that is registered under the Companies Act of 2013. The company has a single shareholder that owns 100% of the company and shares in its profits. The benefit of forming OPC is that the liability of the shareholder of the OPC is limited to the unpaid portion of subscribed capital. The prerequisites to establish a One Person Company are quite similar to those of a Private Limited Company and are listed below.

• Minimum Requirements:

1. One shareholder who is an Indian citizen.
2. At least one director is a resident Indian. 
3. An ROC-approved name for the company 
4. A registered office for the company, as well as the DIN and DSC of all directors. 

• A person need the same number of documents which we have talked about in the above section of private limited company. Of course, it follows the same step-by-step procedure to get registered. 

4. Section 8 Company

Section 8 of the Companies Act of 2013 includes provisions for establishing companies as non-profit organizations owned by individuals or groups of persons. The primary goal of these businesses will be to promote arts, commerce, education, sports, science, research, social welfare, religion, charity, and environmental conservation. All income, gifts, and grants received by a section 8 company must be used to promote the above-mentioned objectives.The business can be incorporated and run as a separate legal entity. Donors to the companies can claim tax breaks under Sections 12A/12AB and 80G of the Income Tax Act if the company has been registered/ exempted under these sections.

The requirements, documentation, and processes for the incorporation of a Section 8 Company are similar to the process of incorporating private/ public limited companies. However, Section 8 company is required to obatin a license from the Central Government to function as a Section 8 company additionally.

5. Limited Liability Partnership

A Limited Liability Partnership is a modified form of partnership firms, which is formed under LLP Act, 2008. It is a separate legal entity registered as a partnership firm under this Act. Furthermore, the partners in an LLP have limited or restricted responsibility based on their capital share ratio. Before forming an LLP, the partners jointly agree to particular terms and conditions, just as they would in any other partnership. All of these terms and conditions are outlined in a written agreement signed by the partners and stamped by a public notary. Here are the pre-requisites for establishing an LLP in India.

• Minimum Requirements:

1. Minimum of two partners. 
2. A minimum of two designated partners, one of whom must be a resident Indian. 
3. A unique name approved by RoC 
4. A Registered Office
5. DPIN for all Designated Partners. 
6. DSC for all Partners  

• Documents Required:

1. Photographs, proof of identity, and proof of addresses of all partners
2. PAN card and Aadhar Card of all partners/ designated partners.
3. If the partner is a foreigner, passport is also must 
4. Proof of address for the Registered Office (Utility Bill such as Electricity Bill)
5. Rent Deed/ No Objection Certificate from the owner of office premises. Additionally, the LLP Agreement must be filed within 30 days of registration.

• Step-by-Step Procedure:

1. Acquire the DSC and DPIN of all Designated Partners. 
2. Apply for name approval of the LLP in the RUN-LLP form.
3. After the name is authorized, go to the MCA website, log in to your account, and find the FiLLiP form for LLP registration.
4. Fill out the Registration registration, upload all of your documentation, and attach the DSC of the permitted designated partner to submit the registration. 
5. Get your LLP registration certificate within two weeks. 
6. Submit the LLP Agreement to the ROC in Form 3 within 30 days of registration.

6. Partnership Firms

Two or more people (maximum of 20) create a partnership firm and divide their revenue or profits based on a predetermined profit-sharing ratio. Partnership firms are registered under the Partnership Act of 1932. However, registration for partnership firms is optional under the Act. Such businesses may be formed and begin operations after preparing and signing a partnership deed or agreement and having it approved/stamped by a notary.

Nonetheless, obtaining Certificates of Registration or Incorporation is suggested for Partnership firms because the document is accepted in a court of law and allows firms to file cases against other parties as needed. Registered businesses can also make valid invoices, receive tax registrations, claim tax deductions, file tax reports, and improve their trust with customers.

• Minimum Necessities:

1. Minimum of two partners. 
2. A legitimate and available name for the firm. 
3. A Registered Office. 
4. A Sealed and Notarized Partnership Agreement signed by all partners.

• Documents Required:

1. Form 1 for RoF application,  PAN Cards and ID evidence of all partners.
2. Address proof for all partners. 
3. Proof of address of the registered office. 
4. If the place is rented out, a stamped and notarized rental deed
5. No Objection Certificate from the owner of the premises, if rent deed is not available
6. Property Stamped and notarized partnership agreement. 

• Step-by-Step Procedure:

The procedure, costs, and stamp duty charges for registering partnerships vary depending on the state in where the firm is located. An application for registration must be submitted to Registrar of Firms along with the applicable fees. The application form must be signed by all partners and attested by a notary public. After the Registrar of Firms has verified your paperwork and application, you will be issued a certificate of registration.

7. Sole Proprietorship

Sole proprietorships are businesses that are owned, managed, and controlled by a single individual or proprietor. They are unregistered business entities and hence lack a distinct identity. They operate under the identities of their owners. The proprietor is entitled to 100% ownership and earnings from the business. However, the proprietor's liability is unlimited, and his personal assets are at stake while repaying the business's debts.

A sole proprietorship lives and dies with the proprietor, which means that it cannot exist beyond the proprietor's lifetime. Proprietorships can be established by both Indian citizens and NRIs. Additionally, there is no minimum capital requirement to start a firm as a proprietorship.

As previously stated, there is no provision to establish and incorporate a proprietorship business. However, proprietorships are advised to obtain further registrations to confirm their legal existence. GST registration, MSME or Udyam registration, Shop and Establishment Registration, and so on. The paperwork required to secure these registrations or create a bank account in the name of the Proprietorship are listed below.

• Documents Required:

1. Proprietor’s PAN card
2. Proprietor’s identity proof
3. Address proof of the business place

If you lack the ability, experience, and awareness of the required procedures, registering your company can be costly and time-consuming. Hopefully, our attempt in this blog to provide you with concise information about these processes will be useful.

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