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Types of Companies under Ministry of Corporate Affairs

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.

  • Companies that have unlimited liability
  • Producer Company
  • Joint Venture Company
Why should entrepreneurs prefer one person company?

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

  • Only 1 person can be director or shareholder.
  • Easy to manage continuity and incorporate.
  • Easy to transfer to another person.
  • No professional qualification required to become a director.
  • Confidential sense is provided towards customer and suppliers.
  • Lesser compliance cost.
  • Separation of juristic person and legal entity
  • The company is kept uninterrupted until it is dissolved.
  • Access to credit, bank loan, market, etc.

Steps to form OPC

  • Obtain Digital Signature Certificate.
  • Obtain Director Identification Number.
  • Select the name and make an application to the ministry of corporate affairs office name availability.
  • Sign and file various documents including MOA-Memorandum of association & AOA- Articles of Association with the Registrar of Companies electronically.
  • Pay the Requisite fee and Stamp duty to Ministry of Corporate Affairs.
  • Collect Receipt of Certificate of Registration/Incorporation from ROC.

Disadvantages of One Person Company

  • Setting up an OPC is not an easy task.
  • More Formalities are required as in the comparison of other forms Private Company.
  • Investment in the shares and securities of the corporate which is not a good part for OPC.
  • OPC cannot be converted into the public company or a private company once it has been incorporated.
  • Higher tax rate which causes disinterest to form OPC.

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. 

What is One Person Company in India?

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

  • Director

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.

  • One Shareholder

A person of Indian origin and an Indian citizen can form a One Person Company.

  • Nominee for the Shareholder

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.

  • Taxation

As the government has not strictly specified, the tax rates for any Private Limited Company are applicable to a One Person Company.

  • Compliance

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

  • A person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company.
  • Only a person who is not a minor is eligible to be a nominee of the One Person Company
  • One Person Company cannot be incorporated or converted into a limited company
  • A One Person Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate.
  • Such a company cannot convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, unless the capital is increased beyond Rs.50 Lakhs or its average annual turnover during the relevant period exceeds Rs.2 Crores

Advantages of One Person Company

  • One Person is a separate legal entity from its members
  • Liability of member is limited
  • One Person Company being a Private Limited Company is best suited for new entrepreneurs
  • As in the case of any other Company, mandatory requirement of an auditor is not applicable
  • The necessity to hold a number of Board Meetings and General Meetings does not apply to One Person Company

Process to Incorporate One Person Company

  • Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the proposed Director(s) in case it is not already available
  • Check for Company name availability by filing form INC-1
  • Obtain consent of nominee for the sole shareholder
  • Draft Memorandum of Association and Articles of Association
  • Once the name of the Company is approved, sign and file various documents electronically including MOA and AOA along with form INC-2, which is required for the incorporation of the Company, with the Registrar of Companies
    • Form INC-2 must be filed within 60 days of filing form INC-1
  • Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty
  • The Registrar of Companies scrutinizes and validates the documents
  • Receipt of Certificate of Registration/Incorporation from the Registrar
10 Reasons why start-ups should choose One Person Company (OPC) as their form of business

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.

Smooth funding

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.

Limited liability

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.

How to Protect Your Business

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 

  • Physical assets are one of the most important assets of a business as they are worth a lot of money. For example, they not only include the office space but also the things that fill up the office. All physical assets belonging to the business must be insured to avoid any loss in case of any natural disaster or theft.
  • A legal attorney who is well versed with local laws and policies must be hired to handle any legal actions that may arise at any time of the business operation. A legal attorney will also help in foreseeing any potential legal threat and help in implementing the task at hand accordingly.
  • In case of sole proprietorships, it is important that the owner separate its personal assets from that of the business. Any attack on the business finances will directly impact the personal finances in case the separation is not clearly defined and limited. 

Organize your Finances 

  • Finances of a business must be documented and organized time to time to avoid any threats not only from the outside but also from the conflicts that may rise among the stakeholders of the business.
  • Hiring an accountant is a good start to protecting finances.
  • Finances in sole proprietorships must be specially monitored as the finances of the business may be linked with the personal finances. It is preferred and suggested to keep both the finances separate to avoid loss on the other when one is under attack. 

Protection against technological threats 

  • Technology has reached such heights that it is difficult to run a business without a strong technological support. This may include software that is needed in every domain of running a business. For example, a good software system is needed not only for business documentations but also strong software is needed to run a security check in the office space. Considering the high level cyber attacks and crimes in todays’ times,protection of such technology is needed to protect the business.
  • Protection of intellectual property is highly critical to avoid risking any legal action and theft from any seekers. Trademarks and copyrights are also a major part of technological assets and if these are not protected, they can land a business in a lawsuit against their favor. There are experts available to help protect a business trademark, copyrights, and intellectual property.
  • An IT expert must be hired to ensure any technology used and applied in a business is highly protected from hackers and cyber criminals. 

Protection against reputation threats 

  • Running a business successfully requires that it makes its presence felt in the market at almost all times. Offline marketing that includes display of brand on its products or service material and online marketing that includes its presence on social media platforms are one of the most common and beneficial marketing techniques. Hence, the representation of the business on such platforms must be protected. Simply by using the right language favoring in the progress of business is protecting the business.
  • A social media manager or public/business relations’ manager understands the operations of such platforms to help maintain the reputation of the business. Hiring of such an expert will help the business from being attacked by any reputational threats that are sometimes the most probable causes of the downfall of a business. 

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. 

  • Simplified and completely digital form of Company incorporation
  • Standard format of Memorandum and Articles of Association
  • Memorandum and Articles will now be filed as linked e-forms
    • For Memorandum of Association, an applicant must only copy paste the necessities
    • For Articles of Association, an applicant may choose the clauses that are applied and choose that are not applied or need alteration
  • Provision to apply for Company incorporation with a preapproved Company name
  • Digital Signature Certificates of subscribers and witnesses will now be affixed
  • Detailed and informative Inc-32 as compared to older form Inc-29
    • Older form, Inc-29 fulfills all purposes of Company registration that is application for DIN allotment, reservation of Company name, incorporation and even PAN and TAN
    • New form, Inc-32 provides the same facility, further including the filing of Memorandum and Articles of Association electronically 

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.

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