COMPANY FORMATION
In the fast-paced world of today, businesses are vital to every community. The most admired company structure is the corporate structure, which is accepted in practically every society on the planet. Therefore, incorporating a company is a good first step if you want to launch a business and your goal is to build a reputable enterprise.
The Companies Act of 2013 governs the formation of companies in India. The main responsibility of Registrars of Companies (ROC), who are appointed in different states and union territories under the Companies Act, is to register companies and limited liability partnerships (LLPs) that are floated in those states and union territories and to make sure that they adhere to the Act’s statutory requirements. Through the corresponding Regional Directors, the Ministry of Corporate Affairs, on behalf of the Central Government, maintains administrative responsibility over these offices.
Types of Companies: Based on their constitution, Indian-incorporated businesses can be broadly divided into the two (2) types listed below:
Private Limited Company: A private limited company is a company owned and operated by a small group of people, usually no more than two. It limits its membership to 200 people, forbids inviting the general public to subscribe for shares, debentures, or deposits, and restricts the free transfer of its shares. This structure works best for medium-sized to large firms when a relatively small number of members are supposed to have influence over the company.
Within the Private Limited corporation class, a new class of corporation known as “One Person Business (OPC)” was introduced by the Companies Act of 2013. Primarily, OPC is a business with a single shareholder who is an Indian citizen and a natural person.
Public Limited Company: Businesses of medium to large sizes, where a relatively significant number of members band together to share the business’s risk and rewards, are best suited for a public limited company. In contrast to a private limited company, this form permits access to public funds but is subject to strict regulations, rigorous disclosure requirements, and other requirements.
Depending on their size and nature, these businesses are governed by various laws and rules. By creating job opportunities, boosting GDP, and encouraging innovation and entrepreneurship, they are essential to India’s economic growth and development.