Types of Business Registrations in India

Best Suitable Business Registrations in India for Your Company

Business owners must first decide how many members do they have for any business registration in India. Also, they determine the capital investment and operations of the business. Today, entrepreneurs are expanding their businesses and are willing to enter the Corporate World, thus giving a good competition to the existing decade-old companies.

Based on the needs of the business and the activities carried by, it is easy to form different sorts of companies.

Indian Companies Act, 2013 states that a company is considered only when it is incorporated under the Companies Act, 2013. The Act specifies the types of companies in India given below:

Types of Business Registrations in India Based on the Number of Members:

The Private and Public Companies can be registered on the basis of the count of the members. Any individual can hold membership in any company, except in OPC. NRI or foreigners can also become a member of these companies. Here is how you can do business registration in India based on headcount:

The Private and Public Companies can be registered on the basis of the count of the members. Any individual can hold membership in any company, except in OPC. NRI or foreigners can also become a member of these companies. Here is how you can do business registration in India based on headcount:

1. Private Company
   The least number of members for registering a private limited company is two, and a maximum number of 200 is allowed during this business registration in India. The firm should follow the set statutory limit to ensure smooth functioning of the firm at all times.
2. Public Company
   Public companies enjoy the freedom to engage in any number of members as per their business requirement. However, it is mandatory to have at least seven members while doing a business registration in India. These companies attract funds from the public offering (IPO or FPO) as they can be listed under stock markets.
3. One Person Company
   Often known as OPC, this firm is quite different as it can begin with one existing member during business registration in India. The existing member must be an Indian resident.

Types of Companies Based on Liabilities:

The capital investment required by the firm is divided into small portions, called shares. Shares play a significant role in business registration in India as the capital investment comes in the form of dividends.

1. Company Limited by Shares

The ownership of shareholders in the firm is calculated based on the number of equity shares held by members of the business. Whenever there is a need for investment or funding, the shareholders can apply for subscription to issue the shares. The liability in such a form of company is only restricted to the unpaid capital of the subscribed shares.

Based on the number of members and business nature, this type of business registration in India can either be private limited, public limited or OPC (One Person Company).

2. Company Limited by Guarantee

The capital brought in the business is not in the form of the shares but guarantee. Companies can either be a private limited or public limited, and the percentage of ownership is based on a guaranteed amount.

Whenever there is a requirement of shares, the members can bring in funds. The liability of the members is limited only up to the amount of guarantee that they provide. These companies can also issue share, but shareholding does not decide the ownership in this business entity.

3. Unlimited Company

As the name suggests, the liability is not limited to the shareholdings of the members. It means the firm can also extend to the personal assets of the members. Due to the risk of losing a particular asset, these types of companies are not preferred for business registration in India.

In cases such as bankruptcy or winding the business, the capital amount needs to pay, and the debts need to clear by all company members.

Final Words:

Companies Limited by Shares is regarded as one of the popular ones for business registration in India.

Based on the nature of the firm, it can be divided as private limited or public companies. In contrast, based on activities, the firm can be a Charitable company or any other.

Other Types of Companies:

1. Foreign Company

When a foreigner wants to access the Indian markets, the best way to do a business registration in India is by setting up a foreign company. These companies are essentially owned by foreigners, where their shareholding is more than 50%. Usually, these international companies are registered as Indian subsidiaries of the foreign parent company.

2. Subsidiary Company

Here the nature of its Board of Directors or more than 50% of voting powers is in control of other companies. The Subsidiary is known as a Wholly Owned Subsidiary (WOS) when 100% of voting powers are in control of a single holding company.

3. Holding Company

It is also known as the Parent Company as it has the controlling power or majority of voting powers of another company such as a subsidiary.

4. Producer Company

This firm is registered to deal with primary production related to farming. The firm also allows additional operational activities such as selling and exports.

For this kind of business registration in India, the firm must have at least ten or more members as producers or any two or more in producer institution. The combination of these two is also permitted. The liabilities are limited to the unpaid share capital of the members.

5. Small Company

Small Company has this name due to its financial condition. Thus there is no need to register as a new corporate entity. However, to be a small company, the following requirements are to be fulfilled:

• Should not be a public company
• The capital investment should not be more than INR 50 lacs
• The profit and loss statement shouldn’t exceed a turnover of more than two crores

The companies Act of 2013 gives certain exemptions to small companies for complying with their stated terms.

6. Section 8 Company

Section 8 Company has its name because it is registered under Section 8 of the Companies Act. These companies are registered as Non-Profit Organizations during their business registration in India. Being registered for charitable purposes, the government gives these companies a special status along with exemptions to keep up the excellent work. Section 8 registration needs special approval to ensure that there are no fraudulent or misleading activities conducted in the name of charity!

There are several aspects to consider when you want to register your business in India, such as several members, limitations of liability and shareholdings. Foreigners can also do business registration in India as they get to enjoy more than 50% of the shareholding in the company. 3E Accounting provides complete assistance registering your company, and you can get in touch with us for any such related queries.

3E Accounting India

3E Accounting India is a corporate service provider and accounting firm assisting clients with company formation and incorporation. We offer company secretary and business-related services in India.