Registering your company should be the first step in the process of starting a business to ensure legal compliance, as different types of businesses have different regulations and rules to abide by in India.
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In India, businesses are classified into three distinct categories.
- Businesses in India are categorized by the size of their workforce
- What are the types of businesses based on members’ liability in India?
- Incorporation modes of companies in India
These are the company types in India, which can be broken down further. Now let’s discuss how these different types of companies in India are subdivided depending on your startup.
- The minimum requirement is two directors and two shareholders.
- The group is strictly organized and does not allow new members to share capital.
- The death of a company member does not impact the longevity of the business, as they are two distinct entities.
- In the event of liquidation, the personal property of any shareholder in a private company is protected due to limited liability.
- A public limited company in India must have at least three directors and seven shareholders, although there is no maximum amount of members.
- Shares are available to the public.
- Public limited companies in India can be found on the stock market.
- This type of company is run by a single person and is most favored by entrepreneurs.
- The Companies Act, introduced in 2013, had the biggest impact on small business owners.
- In these types of corporations in India, personal assets are not held liable when the company liquidates.
- A shareholder is only held responsible to pay a certain, predetermined number of shares per contract, and they cannot be obligated to pay more than that amount.
- A majority of private limited companies are classified under this category.
- In the event of liquidation, the company must pay a set amount to its shareholders.
- In the event of bankruptcy, the company’s assets will be divided equitably between the shareholders.
- Investing in this type of company carries a huge amount of risk.
- In the event of liquidation, members can be held liable for payment from their own personal assets.
- This type of company is very rare because of the high risk involved.
- India has the least number of these companies due to the control of King and Queens through Royal charters.
- East India Company is an example of this type of company in India.
- Royal Charter Companies still exist, like the Bank of England in India.
- These businesses in India are expected to serve particular obligations for the country.
- Specific guidelines are implemented by the state or government.
- The Reserve Bank of India is one example of this type of company.
- Corporations that have been formed according to the Companies Act fall under this category.
- Companies only become legally recognized when they register under this Act.
- For example, Google India is one type of company in India.
Here is a list of the various kinds of companies in India.
It’s easy to register your company with just 4 steps. You’ll need to obtain
- Director Identification Number (DIN)
- A Digital Signature Certificate(DSC)
- Registration on MCA Portal
- Certificate of Incorporation
You must submit all necessary documents to the MCA (Ministry of Corporate Affairs) in order to officially register your new company.
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