Types of busness entities

Private Ltd Company

A private company has the following features:

  1. Restricts the right of the shareholders to transfer their shares.
  2. Has a minimum of 2 and maximum of 50 members.
  3. does not invite public to subscribe to its share capital
  4. Must have a minimum paid up capital of Rs. 1 lakh or such a higher amount which may be prescribed from time to time.

Public Ltd Company :

A public Ltd company has the following characteristics:

  1. It allows the shareholders to transfer their shares.
  2. Has a minimum of 7 members, and for maximum there is no limit.
  3. it invites the general public to subscribe to its shares
  4. Must have a minimum paid up capital of Rs 5 lakh or such a higher amount as may be prescribed from time to time.

Unlimited Company

Unlimited Company is a form of business organization under which the liability of all its members is unlimited. The personal assets of the members can be used to settle the debts. It can at any time re-register as a limited company under section 32 of the Companies Act.

Sole proprietorship

Sole proprietorship is a form of business entity where a single individual handles the entire business organization. He is the sole recipient of all profits and bearer of all loses. There is no separate law that governs sole proprietorship.

Joint Hindu Family

Joint Hindu Family is a form of business organization wherein the members of a family can only own and manage the business. It is governed by Hindu Law.

Partnership

Partnership is “the relation between persons who have agreed to share the profits of the business carried on by all or any one of them acting for all”. It is governed by the Indian Partnership Act 1932.

Co-operatives

Co-operatives is a form of voluntary organization, wherein the members work together for the promotion of the interests of its members. There is no restriction to the entry or exit of any member. It is governed by Cooperative Societies Act 1912.

Limited Liability Partnership

Under LLP (Limited Liability Partnership) the liability of at least one member is unlimited whereas rest all the other members have limited liability, limited to the extent of their contribution in the LLP. Unlike general partnership this kind of partnership does not get terminated by the death or insolvency of the limited partners. It is governed by Limited Liability Partnership Act of 2008.

Liaison Office
Liaison Office is a kind of representative office which is set up to understand the business and investment environment. It is barred from taking up any commercial/industrial/trading activity and its role is limited to aggregation of information and promotion of exports/imports. It has to maintain itself out of inward remittances received from the parent company.

Branch Office

Foreign companies which are into manufacturing and trading activities abroad are permitted to set up branch offices in India for various purposes like rendering of professional and consultancy services, export/import of goods etc. Branch offices are not permitted to carry out manufacturing activities on their own. RBI is the statutory body that grants permission to foreign companies for setting up branch offices in India.

Project Office

Foreign companies can set up temporary project offices in India for carrying out activities related to that specific project.

Subsidiary Company

In India the sectors where 100% foreign direct investment is permitted there foreign companies can set up wholly-owned subsidiary. The wholly-owned subsidiary can be either of the following business entities:

  • Private Ltd Company
  • Public Ltd Company
  • Unlimited Company
  • Sole Proprietorship