Private Limited Company / Pvt Ltd:
What is that?
A Private Limited Company is a business structure where the liability of the members is limited to the amount of shares they hold. It is a separate legal entity with a minimum of two and a maximum of 200 shareholders.
Eligibility
Any individual, company, or entity can be a shareholder in a Private Limited Company, and there must be a minimum of two directors. Foreign nationals can also be directors or shareholders.
Documents required
- PAN Card and Address Proof of Directors
- Address proof of the registered office
- Memorandum of Association (MOA) and Articles of Association (AOA)
- Duly filled incorporation forms and documents
Process & Procedure
1. Obtain Digital Signature Certificates (DSC)
2. Apply for Director Identification Number (DIN)
3. Name approval and reservation
4. Filing of incorporation documents with the Registrar of Companies (RoC)
5. Obtain the Certificate of Incorporation
Common misconception/mistakes while applying
A common mistake is underestimating the importance of a well-drafted MOA and AOA. Also, not checking the availability of the desired company name beforehand can lead to delays.
One Person Company / OPC:
What is that?
An OPC is a type of business structure where a single individual can form a company with limited liability. The OPC structure allows a single person to operate a corporate entity.
Eligibility
Only a natural person who is an Indian citizen and resident in India can form an OPC. A person can be a member in only one OPC.
Documents required
- PAN Card and Address Proof of the member
- Address proof of the registered office
- Consent and nomination of the nominee
- Memorandum of Association (MOA) and Articles of Association (AOA)
Process & Procedure
1. Obtain Digital Signature Certificates (DSC)
2. Apply for Director Identification Number (DIN)
3. Name approval and reservation
4. Drafting and filing of MOA and AOA
5. Obtain the Certificate of Incorporation
Common misconception/mistakes while applying
A common misconception is that an OPC can have multiple directors or members, which is not the case. Additionally, overlooking the importance of appointing a nominee can be a mistake.
Public Limited Company / Ltd:
What is that?
A Public Limited Company is a company whose shares are traded on the stock exchange, and it can have an unlimited number of shareholders. It is a separate legal entity.
Eligibility
There is no specific eligibility criteria for shareholders, and the minimum number of members is seven. A Public Limited Company must have a minimum of three directors.
Documents required
- PAN Card and Address Proof of Directors
- Address proof of the registered office
- Memorandum of Association (MOA) and Articles of Association (AOA)
- Declaration of compliance with statutory requirements
Process & Procedure
1. Obtain Digital Signature Certificates (DSC)
2. Apply for Director Identification Number (DIN)
3. Name approval and reservation
4. Filing of prospectus and other documents with the Registrar of Companies (RoC)
5. Obtain the Certificate of Commencement of Business
Common misconception/mistakes while applying
A common mistake is underestimating the complexity of the compliance requirements for a Public Limited Company. Additionally, not adhering to the timelines for filing documents can lead to penalties.
Sole Proprietorship:
What is that?
Sole Proprietorship is the simplest form of business where an individual owns and manages the business. The proprietor and the business are considered the same legal entity.
Eligibility
Any individual who wants to start a business alone can opt for a Sole Proprietorship. There is no specific eligibility criteria.
Documents required
- PAN Card and Address Proof of the proprietor
- Business registration or trade license (if applicable)
- Partnership deed (if the business is under a partnership)
Process & Procedure
1. Choose a business name and register it (if required)
2. Obtain necessary licenses and permits
3. Open a business bank account
4. Keep track of business income and expenses
5. File income tax returns as an individual
Common misconception/mistakes while applying
A common mistake is not separating personal and business finances, which can lead to accounting difficulties. Additionally, not obtaining required licenses on time can result in legal issues.
Partnership Firm:
What is that?
A Partnership Firm is a business structure where two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Deed.
Eligibility
Two or more individuals can form a Partnership Firm. There is no specific eligibility criteria, and the partners can be individuals, companies, or other entities.
Documents required
- Partnership Deed
- PAN Card and Address Proof of the partners
- Registration certificate (if the firm is registered)
Process & Procedure
1. Draft a Partnership Deed specifying the terms and conditions
2. Register the Partnership Deed with the Registrar of Firms (optional but advisable)
3. Obtain PAN for the Partnership Firm
4. Open a bank account in the name of the partnership
5. Obtain any necessary licenses and permits
Common misconception/mistakes while applying
A common misconception is that a Partnership Firm does not require formal registration, but registration is advisable for legal recognition. Additionally, not clearly defining the roles and responsibilities in the Partnership Deed can lead to disputes.
Incorporation for Foreigners:
What is that?
Incorporation for foreigners refers to the process of establishing a business entity in a country by individuals or entities that are not native to that country.
Eligibility
Foreign individuals or companies are eligible to incorporate in a foreign country based on the specific regulations and criteria set by the host nation.
Documents required
- Passports
- Proof of address
- Incorporation-related documents, as outlined by the foreign country's regulatory authorities.
Process & Procedure
The process involves submitting the necessary documents, obtaining approvals, and adhering to the legal and regulatory steps outlined by the foreign country's business registration system.
Common misconception/mistakes while applying
A common mistake is underestimating the importance of understanding and complying with the local business laws. Failing to engage with local legal counsel can lead to errors in the application process.
Liaison Office of Foreign Company:
What is that?
A Liaison Office of a foreign company serves as a representative office to facilitate communication between the parent company and local entities in a foreign country.
Eligibility
Foreign companies meeting specific criteria, such as having a track record and financial standing, are eligible to open a Liaison Office.
Documents required
- Application form
- Parent company details,
- Financial statements demonstrating the parent company's financial stability.
Process & Procedure
The process involves obtaining approval from the host country's regulatory authorities, submission of required documents, and compliance with local regulations.
Common misconception/mistakes while applying
A common mistake is assuming a Liaison Office can engage in commercial activities. However, its purpose is limited to representation and cannot undertake business transactions.
Project Office of Foreign Company:
What is that?
A Project Office of a foreign company is established for a specific project or contract in a foreign country, allowing temporary operations for project-related activities.
Eligibility
Foreign companies involved in specific projects or contracts in a host country are eligible to set up a Project Office.
Documents required
- Project details
- Parent company information
- Financial statements demonstrating the ability to fund the project.
Process & Procedure
The process involves obtaining project approval, submitting necessary documents, and complying with local regulations for temporary operations.
Common misconception/mistakes while applying
A common mistake is assuming that a Project Office can engage in activities beyond the specified project. It is essential to adhere strictly to the scope defined during the application.
Branch Office of Foreign Company:
What is that?
A Branch Office of a foreign company is an extension of the parent company that conducts similar business activities in a foreign country.
Eligibility
Foreign companies meeting specific eligibility criteria can establish a Branch Office in a foreign country.
Documents required
- Application form
- Details of the parent company
- Financial statements demonstrating financial viability.
Process & Procedure
The process involves obtaining approval, submitting the required documents, and complying with local regulations for the establishment and operation of the Branch Office.
Common misconception/mistakes while applying
A common misconception is that a Branch Office operates independently of the parent company. In reality, it is a direct extension and must align with the parent company's activities.
NBFC Company:
What is that?
A Non-Banking Financial Company (NBFC) is a type of financial institution that provides banking services without meeting the legal definition of a bank.
Eligibility
Entities meeting the regulatory criteria, such as net owned funds and business plan, are eligible to register as an NBFC.
Documents required
- Application form
- Business plan
- Financial statements demonstrating the financial soundness of the NBFC.
Process & Procedure
The process involves submission of the application, scrutiny by regulatory authorities, and obtaining the necessary approvals to operate as an NBFC.
Common misconception/mistakes while applying
A common mistake is assuming that an NBFC has the same regulatory framework as traditional banks. Understanding and complying with specific NBFC regulations is crucial to avoid errors during the application process.
Producer Company:
What is that?
A Producer Company is a type of business entity formed by farmers or producers to collectively engage in agricultural or related activities, promoting mutual welfare.
Eligibility
Farmers, producers, and agriculturists can become members of a Producer Company. There is typically no restriction on the maximum number of members.
Documents required
- Identity and address proofs of members
- The proposed business plan
Process & Procedure
The process involves drafting the Memorandum of Association and Articles of Association, obtaining Digital Signature Certificates, and filing incorporation documents with the Registrar of Companies.
Common misconception/mistakes while applying
A common mistake is assuming that a Producer Company is only for large-scale farmers. It is open to farmers of all scales, and the misconception may hinder smaller farmers from benefiting.
Nidhi Company:
What is that?
A Nidhi Company is a type of mutual benefit company in India, primarily dealing with borrowing and lending activities among its members, with the aim of cultivating the habit of thrift and savings.
Eligibility
Members must be individuals, and the company must have a minimum of 200 members within a year of incorporation.
Documents required
- PAN cards
- Address proofs of members
- Incorporation documents
- Declaration stating compliance with Nidhi rules.
Process & Procedure
The process involves obtaining Digital Signature Certificates, Director Identification Numbers, approval of the name, and filing incorporation documents with the Registrar of Companies.
Common misconception/mistakes while applying
A common mistake is assuming that a Nidhi Company operates similarly to a traditional bank. Nidhi Companies have specific objectives and are subject to different regulations.
Non-Profit Company:
What is that?
A Non-Profit Company is an organization formed for charitable, educational, or social purposes, where profits, if any, are utilized for promoting the objectives and not distributed among members.
Eligibility
There is no specific eligibility criterion, and individuals or entities committed to non-profit objectives can form a Non-Profit Company.
Documents required
- Identity and address proofs of members
- A declaration of charitable objectives
Process & Procedure
The process involves obtaining Digital Signature Certificates, Director Identification Numbers, approval of the name, and filing incorporation documents with the Registrar of Companies.
Common misconception/mistakes while applying
A common mistake is assuming that a Non-Profit Company cannot generate revenue. While profit distribution is restricted, non-profits can generate income for their charitable activities.
Trust:
What is that?
A Trust is a legal arrangement where a person (the settlor) transfers assets to another (the trustee) for the benefit of a third party (the beneficiary), managed according to specified terms.
Eligibility
Any person capable of holding property can create a trust. The trustee can be an individual or a corporate entity.
Documents required
- Trust deed specifying terms
- Identity proofs of trustees
- Declaration of the trust's objectives.
Process & Procedure
The process involves drafting the trust deed, obtaining necessary signatures, and registering the trust with the local registrar or sub-registrar.
Common misconception/mistakes while applying
A common mistake is assuming that trusts are only for large endowments. Trusts can be established for various purposes, regardless of the scale of assets.
Society:
What is that?
A Society is a voluntary association of individuals formed for promoting charitable, educational, cultural, or recreational objectives, with members working together for a common cause.
Eligibility
Any group of individuals with a common objective can form a society. Membership is open to individuals interested in promoting the society's objectives.
Documents required
Documentation includes the memorandum of association, rules and regulations, identity proofs of members, and the registration fee.
Process & Procedure
The process involves drafting the memorandum of association, adopting rules and regulations, and filing the necessary documents with the Registrar of Societies.
Common misconception/mistakes while applying
A common mistake is assuming that societies are only for social causes. Societies can be formed for a range of objectives, including cultural, educational, and recreational pursuits.