Setting up an entity under the right business structure is important as it will allow your entity to operate efficiently and meet your required business objectives. The three most popular forms of business structure prevalent in India are Private Limited Company, Public Limited Company and Limited Liability Partnerships (LLPs). Each of these has its unique characteristics and advantages. These structures need registration as part of the mandatory legal compliance.
A private limited company is the most preferred entity structure due to the ease of formation and limited compliance requirements. It is a separate legal entity with limited liability and perpetual succession. Shares of a private limited company are not freely transferable. The maximum number of shareholders in a private limited company is 200 and the minimum is two. At least two directors are required to register a private limited company of whom, at least one must be a Resident in India.
A public limited company operates as a separate legal entity, separate from its shareholders. A public limited company structure is preferred for businesses that intend to operate on a higher scale and are subject to greater legal and regulatory compliances. They can opt for the issue of shares to the public to get shares listed which are traded on a stock exchange. A minimum of seven shareholders can start and there is no cap on the maximum number of shareholders. A minimum of three directors are required to incorporate a public limited company of whom, at least one must be a Resident in India.
An LLP has the advantages of both a company and a partnership. It provides an alternative to the traditional partnership firm with unlimited liability. LLP is a body corporate and has a legal entity distinct from its partners. The rights and duties of partners in an LLP are governed by the agreement between the partners, who have the flexibility to formulate their agreement. An LLP must have at least two designated partners, and one Designated Partner (DP) must be an Indian resident.
An OPC is a private company that only has one person as a shareholder, who owns, manages and controls the company. The entire shareholder provides the entire capital of the business.
Our Team at SimplyBiz operating from various locations in India has been extensively advising start-up founders on the right entity structure based on their business objectives. Our team has also analysed some of the complex entity structures and offered them solutions. We can seamlessly handle incorporations within strict timelines and ensure all the post-incorporation registrations are facilitated so that you can readily commence your business operations. We also facilitate Resident Director, Nominee Shareholder and Registered Office facility to clients. With experience in handling over 300 incorporations from various sectors, we are the right people to guide you and to work with.
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