Types of Companies in India

Updated on Wednesday 21st November 2018

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Being one of the largest emerging markets in Asia, India can offer numerous business prospects for investors who want to establish a company here. When starting a company in India, the first aspect that should be decided by the investors is the legal entity under which their business will operate.

The Commercial Law in India offers numerous types of companies, but the one preferred by most of the businessmen is the private limited company. Our team of specialists in company formation in India can offer assistance on the main regulations available for each Indian company type, which is incorporated following the provisions of the Companies Act 2013
 

What are the main legal entities in India? 
 

The procedure on how to form a company in India requires investors to perform a set of actions, including in choosing a legal entity. The business form should be chosen depending on the business plans of the investors, the capital they are willing to invest, the liability on the company’s debts and others. 

The video below offers a short presentation on the Indian legal entities:

 

According to the Indian Companies Act 2013, a company is defined as an association which can be formed by natural persons, legal entities or a mixture between the two, and the main purpose of the company is to develop commercial activities. The Companies Act 2013 provides the following types of business forms:
 
  • private limited company - a business form which is most suitable for small companies, as the investors will be liable for the company’s debts only in the extent of their participation at the company’s capital
  • public limited company – the legal entity can be formed by at least seven shareholders;
  • unlimited company - in this type of company, the investors will become fully liable for the company’s debts;
  • limited liability partnership – it represents a mixture between the characteristics of the limited liability company and the ones of a partnership;
  • sole proprietorship – it is the simplest way to set up a business in India and it is addressed to natural persons;
  • joint venture company – in order to establish this type of legal entity, it is necessary to obtain governmental approval; 
  • Section 8 company - a legal entity that is usually selected when entering the market as a non-profit organization.
     

Are there any legal forms for foreign companies in India?   


Although foreign companies can easily establish a business through one of the above mentioned legal entities, there are other types of structures that can be employed, as prescribed by the Indian legislationForeign companies can set up the below mentioned business forms and our team of specialists in company formation in India can advise on how to register the following: 
 
1. representative office   it is used only for non-commercial purposes and it can be set up by foreign companies only with the approval of the Indian government
2. project office   it can be set up for a specific amount of time, in order to complete a certain project
3. branch office   the branch office in India may enter most of the commercial sectors available here, but certain fields of activity may not be carried out through this business structure
4. subsidiary   the subsidiary is an independent structure from its parent company abroad


What are the characteristics of the private limited company in India?  
 

As mentioned at the beginning of the article, the private limited company is the most popular business form registered in India, as it offers numerous advantages to its founders. Those who want to แอพ Fishing Masteropen a company in India under this business form should know that the founders (who have the quality of shareholders) are not allowed to transfer their shares. This business form may be set up with minimum two members and a maximum of 200 and it may be registered as a private company limited by shares or as a private company limited by guarantee.
 
Each founder becomes a shareholder after acquiring shares in the company, which will provide ownership rights. The main advantage of this type of company is that the legal entity offers separate liability, as the shareholders will only be liable for the business’ debts in the amount to which they have subscribed to the company’s capital. Our team of agents in company registration in India can offer further information on the characteristics of the private limited company
 

How to register a Section 8 company in India   

 
The Section 8 company in India refers to a non-profit business form, which can be used to promote culture, arts, sports, research, charity and other types of activities which are prescribed under the Companies Act. Those who want to open a company in India as a Section 8 company should know that this business structure does not allow the payment of dividends to its members. 
 
Investors are invited to contact our team of consultants in company formation in India for further information on the Indian business formsOur representatives may also assist with advice on the taxation system and the accounting procedures applicable to each structure; investors can address to our specialists for tailored advice in choosing a specific type of legal entity
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