Ministry of Corporate affairs is an Indian ministry that is primarily concerned with Companies Act, 2013, Companies Act, 1956, Limited Liability partnership act 2008 and other rules and regulations. The responsibility of this Ministry is regulation of Indian enterprises in Industrial and Services sector.
Companies can be registered in India
Private Limited Company-It is the type of company recommended for Business. The cost of registration of the private limited company is cheaper than other forms of a company. Private limited should have a minimum of 2 members and can have maximum 200 members. In this company liabilities are limited and it has some features of a partnership.
People mostly prefer this of the company for fundraising. The degree of operation and ownership can easily separate in this type of company. Business can be exited without any hassle. In this members are limited to only contribute towards a number of shares.
One Person Company-It is the type of company which can be started by a Single member.OPC is the latest form of company in Companies Act, 2013. One person can become the director as well as the shareholder. Similar to the private limited company as the degree of operation and ownership are on the separate basis.
OPC gives wings in the hand of Sole proprietor to form the company under with full control. It is done without any interference of the third person. This type is easy for an entrepreneur to directly target the market. Fundraising from banks and the financial institution is easy. People who are Indians and resident in India can form OPC.
Public Limited Company-This is a publicly held company. A large amount of capital investment can easily be obtained. These types companies are considered to be a more transparent business model as compared to other business structures. Investors get the choice of transferring their ownership in the company without any hassle by just selling the shares.
Section 8 Company-These companies are basically formed to encourage arts science, sports, education, research, social welfare, religion, charity, etc. These kinds businesses do not play any vital role in profit. Company Intends to prohibit the payment of any dividend to its members. These companies are the non-profit making company.
Section 8 company was incorporated mainly for welfare purposes. Previously, it was defined as Section-25 Company. Due to commencement of Companies act, 2013 it was called as Section-8 Company
Nidhi Company- Nidhi Company comes from the Hindi word ‘Nidhi’ means fund. These are the NonBanking financial corporation. These are also known as mutual benefit funds. Nidhi company is known in the corporate scenario is member benefits company. Companies are formed for the welfare of the members and to increase saving habits.
Other types of Companies
There are some more types companies which can be registered in India.
One person Company is a new venture for Start-ups .OPC can be formed by a single person. This concept which was proposed under the Companies act 2013.Person gets privilege to form a company by making a combination of sole proprietor and entrepreneur. OPC is a hybrid structure of the combination of many benefits of limited liabilities.
OPC is a new concept which will take around few years for expansion between its audience. By the time this will be common between the public then it will have a rapid explore. OPC is an opportunity for those who want to take their business on an international level.
In OPC investors have to deal with only one member which do not create any disturbance amongst idea of Business. The concept of OPC is a success in many of the countries Outside India where people have given their business a drastic growth.
Advantages of OPC
Steps to form OPC
Disadvantages of One Person Company
One person company encourages small scale businessman to form company and expand it on a larger scale .OPC has given many entrepreneurs a chance to form their company and built their business with their own name being the director of the company. Business growth is the agenda of every company.OPC keeps the audience confident about the brand.
A business entity run by a sole owner with the benefit of limited liability, offering protection to its shareholders is a One Person Company. Only one Director is required to form a One Person Company.
With supporting documents such as DIN, DSC, etc., an OPC can be registered within two weeks.
Features of One Person Company
As the name suggests, a minimum of one Director and one member is required to form a One Person Company. Hence, the sole shareholder can be the Director itself. A maximum number of 15 Directors are possible for a One Person Company.
A person of Indian origin and an Indian citizen can form a One Person Company.
A shareholder may appoint another person as a shareholder in case of death or incapacity of the original shareholder. The nominee shall give its consent to be appointed as the sole shareholder.
As the government has not strictly specified, the tax rates for any Private Limited Company are applicable to a One Person Company.
One Person Company has the leverage of not complying with many requirements that are applicable to a Private Limited Company.
Terms and Restrictions of One Person Company
Advantages of One Person Company
Process to Incorporate One Person Company
With innovation and IT boom in the country more and more people are taking up entrepreneurship and starting their own business. However, one of the most important questions for a new entrepreneur is to find out which sort of company he should float in the contemporary scenario. Going by the recent trend and business environment, the best advice one can give a nascent entrepreneur is to opt for OPC (One Person Company). There are various benefits of OPC. Some of them are listed below. Have a read:
A separate entity for law
One of the major benefits of opting for an OPC is that according to law a separate legal entity is created. And it means that the company will be legally equipped to do almost everything a person is allowed to do in a legal set-up.
Getting funding is relatively easier for an OPC. It can manage funding from financial institutions, angel investors etc. Thus an OPC, gradually over the course of time, can even turn itself into a Pvt ltd company.
Every start-up dreams of being as little risk prone as possible. Hence it is always on a lookout for limited liability. OPC promotes its owner to go an extra mile without having to care for the liabilities it may incur in case of failure. In case of OPC, even if the company falters, liability will only affect the capital of the company and not disturb the personal assets of the owner.
Minimum regulations, maximum results
Since in OPC is under the control of one person, there are various regulations which are eased for it. Thus a new entrepreneur can always be more focused on his business rather than losing his sleep over never-ending list of regulations and laws for starting a new business in a growing economy like India.
Perks of a Small Scale Industries (SSI)
The government is always willing to promote small scale industries and has often gone extra yards to see that the everyday furnishing small scale industries grow at a decent pace. After all, SSIs form the backbone of an agrarian economy like India. An OPC falls under the category of a SSI thus it can avail all those benefits which are there for SSI units. Some of those perks include loans at lower interest rates, funds without any security from banks up to a certain limit, benefits under FTP (Foreign Trade Policy). Once a company gets these earlier benefits it goes a long way in providing it the much sought early boost.
The Sole owner
Being the sole owner of the company gives you full control over the business. While it also puts your leadership and entrepreneurship skills at test, it ensures that the decision making is quicker. Also in OPC whatever the results are you are going to be responsible for it. It makes sure that the credit for the company’s growth goes to the sole owner.
Free from the hassle of credit limit
When an OPC files for loan, the credit limit of the owner does not affect that. To put things in simpler words, even if the credit limit of the owner is not that great, his OPC will be able to generate good funds.
Favourable Income Tax Laws
Once the company is registered as an OPC, any money being spent on the salary of the director will be allowed as tax deduction. There are certain other benefits available too which are subject to income tax act.
Interest on late payment
Since almost all the start-ups fall in the category of SSI, they receive protection under Small and Medium Enterprises Development act 2006. If a buyer of the service fails to pay for it under a certain period as specified by the seller, the seller is free to charge interest on his product.
No trust deficit
If there’s a business which runs in the name of company, naturally people have more faith in it.
Also before we wind up, here is another note: Any existing business can convert it as OPC and thus avail all the aforementioned benefits.
However the type and size of business, it is valued by its owner(s) and as the business grows, the bigger the value gets and hence higher the protection needed. The owner must understand the vulnerability that comes along with the success of a business, such as with success comes competition, risks, legal obligations, reputation sustenance, vigilant, etc.
An owner must be prepared to face the difficulties that come in building a successful business. There are no strict rules to be followed, however, certain aspects of protecting ones business remain constant in all cases.
Protection against legal threats
Organize your Finances
Protection against technological threats
Protection against reputation threats
Protecting a business can be a task but the efforts will make the success of a business only smoother. If the above major aspects are taken care of, the business is well protected and any hassle on its way of progress can be dealt with ease.
Every entrepreneur will agree that the procedure of incorporating a Company can be tedious and cumbersome despite the necessity of the steps involved. Even though, a Company can now be incorporated online as well as offline, the steps remain the same.
The government of India has taken a significant step in easing the procedure of incorporation of a Company. On the occasion of Gandhi Jayanti, the government launched SPICe that is simplified proforma for incorporating Company electronically.
Ministry of Corporate Affairs has simplified the procedure by introducing filing of pre-dated Memorandum or Articles of Association electronically. It will further simplify the earlier procedure of incorporating a Company using form Inc-29. As per the latest update, earlier forms may be replaced with newer SPICe form Inc-32.
There are certain features of SPICe that are as follows.
This initiative is a bold step and will increase gains with faster review of Memorandum and Articles of Association making SPICe the sole procedure to incorporate a Company in India.
Importance of Annual Filing
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Legal Requirements for Company Registration
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Maintenance of Minutes of a Company
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