Entrepreneurs need expert advice before they choose any entity for their business. The right form of entity will help your enterprise to operate efficiently meeting your desired targets. In India there are multiple options for formation of business entity and each entities will have separate sets of rules, regulations and governance under the law.
a. Basics and types of companies
One Person Company (OPC) : Under the Companies Act, 2013 ( CA, 2013) this is a new form of entity which is allowed in India. This is more suitable for the sole-proprietor or single promoter.
Limited Liability Partnership (LLP): In 2008, LLP Act was enacted in India which allowed LLP formation. This is suitable for professionals, traders and small business owners with advantage of having limited liability unlike traditional partnership firm and having a separate legal entity with perpetual succession.
Private Limited Company (PLC): This type of company are recognized world wide. It is legally consider as distinct from its owners and managed by the Board of Directors under the overall supervision and direction of supreme authority of shareholders.
Public Limited Company (PLC): This type of company are also recognized world wide. It also has a separate legal existence then its owners. This type of company are allowed to use public money in the form of issue of shares, accepting deposits from the public and having borrowing above the threshold of limits. The governance and accountability is high on this type of entity.
Entrepreneurs must choose the entity suitable to their business needs and accordingly we can assist in registering your business.
The company can be wholly owned subsidiary of foreign company for which it has to be as per sector specific limit to be confirmed as per Foreign Exchange Management Act, 1999 (FEMA)
b. Deciding factors for your choice
· Type of business, short term or long term, manufacturing or trading
· Number of owners/ promoters/ founder
· Risk appetite
· Likely to get Investors in near future
· Income Tax planning
· Cost of set up vs benefits
· Foreign Investment
c. Benefits of company formation
· Separate/ distinct legal entity
· Limited liability
· Better credibility
· Perpetual succession with transferability of shares
· Ownership is separate from management
d. Flip side of company formation
· High operational cost and legal compliances
· Higher rate of tax
· Dividend Distribution Tax
· More governance and paper work
· Closure is not easy
e. Minimum Requirements for company formation
· Two Directors for private limited company and Three Directors for public limited company.
· Two Subscribers / shareholder for private limited company and seven for public limited company.
· Registered Office address.
· Digital Signature (DSC) and Directors Identification Number (DIN) of proposed Directors.
· One Resident Director
· Any amount to start as Authorised Share Capital
Our Expert Services includes
· Assisting in choosing the right entity as per client requirements
· Assist in obtaining Digital Signature and Apply for Directors Identification Number(DIN)
· Drafting and Preparing of Memorandum and Articles of Association
· Formation of Company
· Maintaining all Secretarial Records upon formation of Company
· Assist in opening Bank account, issue of share certificates, if any
· Obtaining shops & Establishment License