Need to Know before Starting a Business in India
One Person Company
The concept of One Person Company (OPC) in India was introduced through the Companies Act, 2013 to support entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity. One of the biggest advantages of a OPC is that there can be only one member in a OPC, while a minimum of two members are required for incorporating and maintaining a Private Limited Company or a Limited Liability Partnership. Similar to a Company, a OPC is a separate legal entity from its members, offers limited liability protection to its shareholders, has continuity of business and is easy to incorporate.
Though a One Person Entity allows a lone Entrepreneur to run a business with Limited Liability protection, a OPC does have a few limitations. For instance, every OPC must nominate a nominee Director in the MOA or AOA who will become the owner of the OPC in case the promoter Director is disabled. Also, a OPC must be converted into a Private Limited Company if it crosses an annual turnover of Rs.2 crores and must file audited financial statements with the Ministry of Corporate Affairs at the end of each Financial Year. Therefore, it is important for the Entrepreneur to carefully consider the features of a OPC prior to incorporation.
One Person Company
Private Limited Companies are those types of companies where minimum number of members is two and maximum number is fifty. A private limited company has the limited liability of members but at the same time it has many characteristics as those of a partnership firm. A private limited company has all the advantages of partnership namely flexibility, greater capital combination of different and diversified abilities, etc., and at the same time it has advantages of limited liability, greater stability and legal entity. In this sense, a private limited company stands between partnership and widely owned public company. Identifying marks of a private limited company are name, number of members, shares, formation, management, directors and meetings, etc., The maximum number of directors shall have to be mentioned in the Articles of Association. In the grand of privileges and exemptions, the Companies Act has drawn a distinction between an independent private company and other private company which is a subsidiary to the other public company.
Frequently Ask Questions(FAQs)
FAQ:- How many people are required to incorporate a Private Limited Company?
ANSWER:-To incorporate a private limited company, a minimum of two people are required. A private limited company must have a minimum of two Directors and can have upto a maximum of fifteen Directors. A minimum of two shareholders and a maximum of upto 200 shareholders are allowed in a private limited company.
FAQ:- What are the requirements to be a Director?
ANSWER:- The Director needs to be over 18 years of age and must be a natural person. There are no limitations in terms of citizenship or residency. Therefore, even foreign nationals can be Directors in a Indian Private Limited Company.
FAQ:-What is the capital required to start a private limited company?
ANSWER:-You can start a Private Limited Company with any amount of capital. However, fee must be paid to the Government for issuing a minimum of shares worth Rs.1 lakh [Authorized Capital Fee] during the registration of the Company. There is no requirement to show proof of capital invested during the registration process.
FAQ:-Is an office required for starting aPrivate Limited Company?
ANSWER:-An address in India where the registered office of the Company will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received.
FAQ:-Do I have to be present in person to incorporate a Private Limited Company?
ANSWER:-No, you will not have to be present at our office or appear at any office for the registration of a Private Limited Company. All the documents can be scanned and sent through email to our office. Some documents will also have to be couriered to our office.
FAQ:-What are the documents required for registration?
ANSWER:-Identity proof and address proof is mandatory for all the proposed Directors of the Company. PAN Card is mandatory for Indian Nationals. In addition, the landlord of the registered office premises must provide a No Objection Certificate for having the registered office in his/her premises and must submit his/her identity proof and address proof.
FAQ:-How long will it take to incorporate a Company?
ANSWER:-The time taken for registration will depend on submission of relevant documents by the client and speed of Government Approvals. To ensure speedy registration, please choose a unique name for your Company and ensure you have all the required documents prior to starting the registration process.
FAQ:-What do I need to quickly incorporate my Company?
ANSWER:-To incorporate a Company quickly, make sure the proposed name of the Private Limited Company is very unique. Names that are similar to an existing private limited company / limited liability partnership / trademark can be rejected and additional time will be required for resubmission of names.