Various types of Companies you can register for your Business

The term Company denotes any entity which is formed under the Companies Act, 2013. Most people equate word with a Private Limited Company; however, a company could broadly be a Private Limited Company or One Person Company or Limited Company or Section 8 Company on the activity/requirement of the promoters.

Various types of company can be incorporated under the Companies Act, 2013. They are briefed as follows:

Private Limited Company

Private Limited Company can be of three types:

  1. Company limited by shares
  2. Company limited by guarantee
  3. Unlimited company

The private limited company is those types of companies that have a minimum of two members and a maximum of 200 members.

Company limited by shares

Company limited by shares is the most common type of Private Limited Company. A company limited by shares means a company which is having the liability of its members limited by the memorandum to the account, if any, unpaid on the shares respectively held by them.

Company limited by guarantee

Company limited by guarantee indicates a company having the liability of its members limited by the memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event of it being wound-up.

Unlimited company

Unlimited company means a company which does not have any limit on the liability of its members.

One Person Company

One Person Company (OPC) is a newly introduced type of company in India. OPC was introduced in the Companies Act, 2013 in order to support the entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity.

One of the biggest advantages of an OPC is that there can be only one member in an OPC, while a minimum of two members is required for incorporating and maintaining a Private Limited Company or a Limited Liability Partnership.

Similar to a company, an OPC is a separate legal entity from its members, offers limited liability protection to its shareholders, has continuity of business and is much easy to incorporate.

Limited Company

The limited company requires a minimum of three directors and has absolutely no limit on the maximum number of members (shareholders). A limited company has more stringent and compliance requirements in comparison to a private limited company.

Section 8 Company

A Section 8 Company of Companies, 2013 is the same as Section 25 Company under the old Companies Act, 1956. Section 8 Company is one of the most popular forms of Non-Profit organizations in India.

A Section 8 company can be easily incorporated for “promotion of commerce, art, sports, science, research, education, religion, charity, and protection of the environment or any such object. In order to register a section 8 company in India, the complete process is however similar to the incorporation of other companies except for the matter that an additional license is required.

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