Types of Company Registration in India (Latest Guide 2023)

A company means a legal entity established under the rules and regulations of the Companies Act 2013. When starting a business or legal entity, it is important to make sure you meet all the business requirements. After that, it’s time to choose the right type of company registration according to the company’s business and activities.

However, if you don’t know the types of company registration in India, don’t worry. This article explains you in detail. Let’s dive into it.

How Many Types of Company Registration Are There in India

A business or company must be legally registered under the Companies Act 2013. In all, there are seven types of company registrations in India. With multiple options, choosing the right type of company registration can be a daunting task.

In other words, there are 7 types of company registrations in India.

1. Private limited company
2. Public limited company
3. Partnerships company
4. Limited liability partnership
5. One Person Company
6. Sole Proprietorship
7. Section 8 Company

What Are the Types of Registered Company

There are 7 types of registered companies:

Private limited company:

A limited liability company is suitable for companies that require PVT company registration as a private company. In this type of company, a group of shareholders divides responsibilities to protect their personal property. The total capital of such a business type is the sum of all shares held by each member of the company. 

The personal and business assets of the members are also considered separate, providing greater protection and security. Shares in such companies may not be publicly traded or transferred. According to the Companies Act, this type of business registration must meet the following criteria:

1. Minimum 2 and maximum 15 directors
2. Minimum one of the directors must be a resident of India
3. At least 2 and a maximum of 200 shareholders or members
4. An authorized capital fee of at least Rs. 1 lakh
5. A company address registered in India is required.

Public limited company:

A Public limited company is a company in which the public can buy shares. There is no limit to the number of shares that can be sold or traded in such a business entity. The company’s shares are listed on the stock exchange and can be freely traded, giving shareholders joint ownership of the company. Such a company must obtain a registration certificate from its ROC before starting business operations.

According to the Companies Act 2013, to be registered as a public company, the following criteria must be met:

1. At least three directors
2. A minimum of one of the directors must be a resident of India
3. Minimum of 7 shareholders with no cap
4. Approved capital of at least ₹5 lakhs
5. A company address registered in India is required.

Partnerships company:

In a partnership, this operation is performed by partners who agree on roles and profit sharing. The roles, duties, powers, and number of shares owned are all clearly defined in a verbal contract called a partnership deed. These companies fall within the scope of the Indian Partnership Act, of 1932.

A partnership company can operate with or without a license if it has a valid and registered partnership deed. However, most partnerships register because they provide additional rights and benefits. The eligibility criteria for establishing a partnership are

1. At least 2 partners, at most less than 10 partners
2. Must have a company address registered in India
3. A registered partnership deed should be signed by all partners is required.

One-Person Company:

The latest entry into the different types of company registrations allowed in India is the One Person Company, ideal for small businesses such as agricultural companies. For entrepreneurs who want to run their own business, this is the best option. OPC has its own legal status. Entrepreneurs benefit from liability protection without having to collaborate with anyone else.

OPC is easy to incorporate and regulate It essentially functions as a combination of the sole proprietorship and private limited company model of business entities. To register as an OPC, you must meet the following conditions:

1. Minimum authorized capital of at least Rs. 1 lakh.
2. The person must be a natural citizen and resident of India
3. Founders must appoint candidates at incorporation
4. A financial company cannot be integrated as an OPC.

Sole Proprietorship:

A sole proprietorship is when one person takes over the management of a company. The company and the owner are treated as one and all the responsibility for profit and loss lies with the owner. Because the registry is named for the owner, tax returns and financial reports will also be named for the owner, creating unlimited business liability.

In other words, it’s the easiest form of business to get started and run. Home business owners and small business owners with a supermarket business plan prefer this because it doesn’t require much investment or compliance.

Limited liability partnership:

A Limited Liability Partnership, commonly referred to as LLP, is a new legal form in India. It enjoys a unique legal status, helps distinguish between personal and business assets, and provides limited liability protection for entrepreneurs. In an LLP, each partner’s liability depends on the number of share capital.

To form an LLP, the following criteria must be met:

1. The minimum authorized capital is up to Rs. 1 lakh.
2. At least one of the designated partners must be a resident of India
3. Minimum of 2 partners, no maximum
4. At least one individual shareholder if the other person is a legal entity
5. No share capital is required as each partner must make an agreed contribution.

Section 8 Company:

Section 8 companies, commonly referred to as non-profit organizations, work for charitable causes. Its purpose is to promote the arts, science, literature, education, care for those in need, and environmental protection. Furthermore, the profits they earn will be used to meet these goals and members will not receive any dividends themselves.

To register a Section 8 entity, the following criteria must be met:

1. At least two shareholders.
2. It should be 2 or more directors who are also shareholders.
3. Minimum one of the directors must be a resident of India.
4. No minimum capital requirement.
5. A company address registered in India is required.

Can 2 Companies Have the Same Name in India

As an entrepreneur, your legal right to incorporate a company affects every aspect of your business, including your company name.

If you register your business name as a sole proprietorship or partnership, you get the benefits of a business owner, but there is no business name protection. This allows your company to have the same name as another company and vice versa without claiming trademark infringement.

However, if your business uses the same business name as another incorporated business, you may face lawsuits and be unable to legally use your business name.

What Are the Types of Startups

There are six types of startups:

1. Scalable startups
2. Small business startups.
3. Lifestyle startups.
4. Buyable startups.
5. Big business startups
6. Social startups.

Conclusion

Now you got to know about the types of company registration in India. In India, entrepreneurs can incorporate their company into one of seven different types of companies and can use the registration process in various ways. Each way must be registered with an Indian government agency.

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