Category: Company Registration

Copyright Definitions & Registration Procedure Renew IEC?

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Copyright Definition : The word copyright is a combination of two words – ‘duplicate’ and ‘right’. To be more exact copyright signifies the ‘right to duplicate’, wherein just the maker or his approved individual has the privilege to replicate work. In straightforward words, a legitimate right that is moved by the proprietor of Intellectual property is copyright.

With the assistance of a critical mental or scholarly capacity, when an individual makes a special item that item is seen to be unique. The interesting manifestations include sites, PC programming, melodic verses, craftsmanship, writing, verse, realistic plans, melodic arrangements, books, unique engineering configurations, films, and so forth Further, a copyright is a shield that safeguards a unique work from getting copied.

Copyright in various fields

1. Copyright In Literary work 

Abstract works are safeguarded by copyright as they are available in the actual structure. Artistic works incorporate books, magazines, papers, diaries, treasuries, books, PC programming and projects, letters, messages, verses, verses of melodies, tables, and accumulations. Artistic works are bound to the previously mentioned things as well as edited compositions, reference book sections, word reference implications, and individual sonnets are safeguarded inside the safeguard of intellectual property regulations.

2. Copyright in dramatics

Dramatizations incorporate inside itself dance, emulating covering screenplays, ballet productions, shows, and so forth Copyright in the field of sensational shields the makers, writers, choreographers, screenwriters, artists, writers, and others from replication of their work.

The various sorts of distributed and unpublished work might be submitted for enrollment including emulates, medicines, plays, movements, and contents ready for radio, film, and TV. They might accompany music or without music.

3. Copyright in Musical Work

Musical work implies a work that comprises music and for a work to be melodic it requires a mix of graphical documentation. Notwithstanding, it prohibits any activities or words which are expected to be sung/spoken with the music.

4. Copyright In Sound Recordings

Sound recording involves any individual’s discourse, or tune sung by any individual regardless of the music, any sound, or any web recording. The sound accounts are exposed to copyright

5. Copyright In Cinematograph Films

Cinematograph films incorporate plenty of exercises to be specific:

• • Any work of visual recording shown on any medium from which any moving item can be envisioned.

• • Work including sound accounts.

Characteristics of Copyright

(i). Exclusive right-Copyright means the exclusive right to do or authorize others to do certain acts in relation to (a) literary, dramatic, or musical works; (b) artistic works (c) cinematograph films (d) sound recording. Such select ideal for doing individual demonstrations stretches out not exclusively to the entire work, but to any significant part thereof.

(ii) Negative right- It is a negative right, i.e. a right to prevent others from copying or reproducing the work.

(iii) Monopolistic right- Copyright like the patent is a monopoly restraining the public from doing that which, apart from the monopoly, it would be perfectly lawful for them to do.

(iv) Copyright is a form of I.P.R. – Just like trademark, trade name, and patent right, copyright is a form of I.P.R.

The Registration Procedure of Copyright

Stage 1: File an Application

The creator of the work, copyright inquirer, proprietor of a select appropriate for the work, or an approved specialist documents an application either actually in the copyrights office or through speed/enlisted post or through e-recording office accessible on the authority site (copyright.gov.in).

For enlistment of each work, a different application should be recorded with the recorder alongside the specifics of the work. Alongside this, the essential expense should likewise be given; Different kinds of work have various charges.

For instance, getting the copyright for a creative work enlisted, the application charge is INR 500 while forgetting the copyright for a cinematograph film enrolled is INR 5000. The application charges range from INR. 5000 to INR. 40000. It tends to be paid through an interesting draft (DD) or Indian postal request (IPO) addressed to the Registrar of Copyright Payable at New Delhi or through the e-instalment office. This application should be recorded with every one of the fundamental reports.

Toward the finish of this progression, the enlistment center will give a dairy number to the candidate.

Stage 2: Examination

In the subsequent stage, the assessment of the copyright application happens.

When the dairy number is given, there is a base 30 days holding up period. In this time span, the copyright analyst surveys the application. This holding-up period exists so protests can emerge and be investigated. Here the interaction gets separated into two portions:

On the off chance that no complaints are raised, the analyst goes on to audit and investigate the application to track down any error.

Assuming there is no issue and every one of the fundamental reports and data is given along the application, it is an instance of zero inconsistencies. For this situation, the candidate is permitted to go ahead with the following stage.

On the off chance that a few errors are found, a letter of disparity is shipped off to the candidate. In light of his answer, a conference is directed by the recorder. When the inconsistency is settled, the candidate is permitted to push ahead to the subsequent stage.

In the event that protests are raised by somebody against the candidate, letters are conveyed to the two players and they are called to be heard by the enlistment center.

After hearing in the event that the protest is dismissed, the application goes on for examination and the previously mentioned inconsistency system is followed.

In the event that the protest isn’t explained or disparity isn’t settled, the application is dismissed and a dismissal letter is shipped off the candidate. For such candidates, the copyright enlistment system closes here.

Stage 3: Registration

The last advance in this cycle can be named enlistment. In this progression, the enlistment center could want more archives. Once totally happy with the copyright guarantee made by the candidate, the Registrar of Copyrights would enter the subtleties of the copyright into the register of copyrights and issue an endorsement of enlistment.

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What Is A Corporate Identification Number (CIN) Of Company?

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A Corporate Identification Number (CIN) is a unique identification number that’s assigned by the Registrar of Companies (ROC) to the companies registered in India. The Registrar of Company gives the CIN to the companies while issuing their Registration Certificate.

The CIN is an important number as every company must mention this unique CIN in the forms to be submitted to the Ministry of Corporate Affairs, particularly in audits and reports.

What Is A Corporate Identification Number (CIN)?

Corporate Identification Number (CIN) is an alpha-numeric code of 21 digits issued to companies incorporated within the country on being registered by the ROC situated in numerous states across India under the MCA.

CIN is provided to all or any companies registered in India, which include:

 Private Limited Companies (PLCs)

One Person Companies (OPCs)

Companies owned by the Govt. of India

State Government Companies

Not-for-Profit Section 8 Company

Nidhi Companies, etc.

However, CIN isn’t given to the Limited Liability Partnerships registered in India. For the LLPs, the ROC gives the LLPIN (Limited Liability Partnership Identification Number) that acts as a unique 7-digit identification number of the Limited liability partnership.

Importance of Corporate Identification Number

CIN is used for tracking all the facets and activities of a company from its incorporation by the ROC and is required to be provided on all the transactions with the respective ROC.

The 21 digit CIN has its own meaning which is effortlessly translatable and which helps in finding basic information about a company. It is used to find out the primary details of the companies which are registered within the country under MCA.

CIN is a unique number that will be used for identifying or tracking companies for several levels of data that ROC / MCA holds. The CIN contains the identity of an organization and extra information regarding the registered company under the ROC.

Example of a  CIN issued by ROC – L01631KA2010PTC096843

Corporate Identification Number

The CIN represents and provides information about the company. The CIN can break down into six sections.

 Section-1: The first character is – L

Section-2: The next five digits are – 01631

Section-3: The next two letters are  – KA

Section-4: The next four digits are – 2010

Section-5: The next three characters are – PTC

Section-6: The last six digits are – 096841

Each section provides the following information:

Section-1: The first character of CIN that reveals whether a company is “Listed” or “Unlisted” on the Indian stock market. just In case, a company is listed, the CIN would start with the letter ‘L’ and in case a company is not listed it’d start with the letter ‘U’.

Section-2: The next set of 5 numeric digits that categorize the economic activity of a company. This classification depends on the nature of the economic activities which would be carried out by such an establishment. The Ministry of Corporate Affairs (MCA) has allotted a number to every industry.

Section-3: The next two letters denote the state where the company is registered for e.g. KA is for Karnataka, MH is for Maharashtra, DL is for Delhi, Section-3: The next two letters denote the state where the company is registered for e.g. for Karnataka KA, MH is for Maharashtra, DL is for Delhi, etc.

Section-4: The next set of 4 numeric digits that signify the year of incorporation of a company.

Section-5:The following three letters that denote the company classification. These three letters help to identify whether a company is a private Ltd or a public Ltd. If the CIN number here is FTC, it’d mean that such a company is a subsidiary of any foreign company it’d imply that such company is owned by the Indian Government.

Section-6: Consists of the remaining 6 numeric digits that denote the registration number provided by the respective Registrar of Companies.

Abbreviations in CIN number

The abbreviations used in Section-5 of the CIN.

FLC: Financial Lease Company as Public Ltd.

FTC: Subsidiary of a Foreign Company as Private Ltd. Company

GAP: General Association Public

GAT: General Association Private

GOI: Companies owned by the Government of India

NPL: Not-for-Profit License Company (Section 8 Company)

OPC: One Person Company

PLC: Public Limited Company

PTC: Private Limited Company

SGC: Companies owned by State Government

ULL: Public Limited Company with Unlimited Liability

ULT: Private Company with Unlimited Liability

Usage of Corporate Incorporation Number

Every company that’s established in India has to quote its  CIN on various Documents which include:

On invoices, bills, and receipts

On notice

On memos

On letterheads

Annual Reports and audits

Every e-form submission on the MCA portal

Company’s official publications

Any other company publications

Penalty for Non-compliance of Mentioning CIN

In case the above-mentioned requirements are not adhered to, there’s a penalty of INR 1,000/day on the defaulting company and on its, every officer is in default, till such default continues. However, the max penalty for this default is  INR 1,00,000.

How to apply for CIN?

A CIN is an alphanumeric no. assign to the company on the date of its registration by the Registrar of Companies. The company’s CIN is mentioned in its incorporation certificate. Thus, a CIN no. is automatically allotted to the company when it’s incorporated and approved by the Registrar of Companies.

Are CIN and GST the same?

No. A CIN is a number allotted to registered companies by the Registrar of Companies at the time of issue of the company registration certificate. On the other side, GSTIN is the number issued to companies and businesses registered under the GST law. Hence, both are different and have different functions.

Is CIN mandatory to be mentioned on the company’s bills, invoices and receipts?

Yes. As per section 12(3)(c) of the Companies Act 2013, the company must print its name, address of its registered office, and also the CIN in all its business letters, billheads, letter papers, notices, and other official publications. Thus, a company must mandatorily mention its CIN on its bills, invoices, receipts, and e-mails sent to outside parties.

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How Do You Dissolve A Partnership Firm?

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A partnership firm is a type of business where at least two individuals share possession, as well as the obligation regarding dealing with the organization and the payor misfortunes the business produces. That pay is paid to accomplices, who then, at that point, guarantee it on their own expense forms – the business isn’t burdened independently, as organizations are, on its benefits or misfortunes.

What is a Partnership Firm?

An association firm is an association that is formed with at least two people to maintain a business so as to acquire benefits. Every individual from such a gathering is referred to as an accomplice and is altogether known as an association firm. These organizations are represented by the Indian Partnership Act, 1932.

What is the Dissolution of Partnership firm?

Dissolving an association firm means suspending the business under the name of the said organization firm. For this situation, all liabilities are at last settled by auctioning off resources or moving them to a specific accomplice, settling all accounts that existed with the organization firm.

Why does Dissolution occur?

As we probably are aware that after the disintegration of the organization firm the current connection between the accomplice’s changes. Be that as it may, the firm proceeds with its exercises. The disintegration of association happens in any of the accompanying ways:

 

• • Change in the current benefit sharing proportion.

• • Affirmation of another accomplice

• • The retirement of a current accomplice

• • Passing of a current accomplice

• • Indebtedness of an accomplice as he becomes inept to contract. Along these lines, he can at this point not be an accomplice in the firm.

• • On fulfillment of a particular endeavor in the event that, the association was shaped explicitly for that specific endeavor.

• • On expiry of the period for which the organization was framed.

How can Partnership firms be dissolved?

 According to Partnership Act 1932, Dissolution of partnership can be done accordingly:

(a). Dissolution by agreement (Section 40)

(b). Compulsory dissolution (Section 41)

(c). Dissolution on the happening of certain contingencies (Section 42)

(d). Dissolution by notice of partnership at will (Section 43)

(e). Dissolution by the court (Section 44)

Dissolution by agreement

Firm is broken up in the event that:

 

• • every one of the accomplices give assent or

• • according to the terms association understanding

Compulsory dissolution

A firm is broken down obligatorily in the accompanying cases

 

• • At the point when every one of the accomplices or all with the exception of one accomplice becomes indebted or of unstable brain.

• • Whenever the business becomes unlawful.

• • At the point when every one of the accomplices with the exception of one chooses to resign from the firm.

• • At the point when every one of the accomplices or all aside from one accomplice kick the bucket.

• • A firm is additionally broken up necessarily assuming the organization deed incorporates any arrangement with respect to the incident of the accompanying occasions

(a) Expiry of the period for which the firm was framed,

(b) The culmination of the particular endeavor or venture for which the firm was

shaped.

Dissolution on the happening of certain contingencies

After occurring of specific occasions, a firm might be expected to get broken up:

 

• • Expiry of fixed-term-Partnership framed for a proper term will get disintegrated once the term moves past.

• • Culmination of an errand- Sometimes, an organization is shaped for a specific undertaking or goal. When the errand is finished, the organization will naturally get broken down.

• • Passing of the accomplice- If there are just two accomplices, and one of the accomplices dies, the organization firm will naturally disintegrate. Assuming that there are multiple accomplices, different accomplices might keep on running the firm. In such a case, just the organization will get broken up, and different accomplices will go into another arrangement.

Dissolution by Notice

In the event that the organization is voluntary, the association firm is broken up if any accomplice pulling out is recorded as a hard copy to the wide range of various accomplices communicating his/her intention to break up the firm.

Dissolution by Court

The disintegration of an association firm might be requested by the court on the accompanying grounds:

 

• • Whenever an accomplice ends up being crazy

• • At the point when an accomplice turns out to be for all time unequipped for playing out his obligations as an accomplice.

• •  At the point when an accomplice is at real fault for unfortunate behavior which is bound to influence the standing and business of the firm.

• •   At the point when an accomplice consistently submits a break of the organization’s understanding.

• •  Whenever an accomplice moves the entirety of his advantage or offer in the firm to an outsider.

• •   At the point when the matter of the firm can’t be continued besides confusion.

• •   At the point when the court’s perspective with respect to the disintegration of the firm to be simply and impartial on any ground.

What is the liability of A partner after dissolution?

Section 45 of the Indian Partnership Act, 1932 gives liabilities to a demonstration of the accomplices after the disintegration of the firm. As per this segment, the accomplices of the firm are at risk to the outsider for any demonstration done by any of them except if they give public notification of the disintegration of the firm.

It additionally expresses that the accomplice who passes on, retries, becomes bankrupt or that a third individual party doesn’t know about being the accomplice of the firm, isn’t responsible under this segment.

In basic words, it safeguards the outsider who has close to zero insight into the disintegration of the firm.

There is a distinction between the company’s obligation and private obligation.

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Authorized Capital and Paid-up Capital

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Companies issue their shares of stock or equity to boost capital for various purposes like to fund their expansion, paying off debts, etc. no matter the scale of a corporation or the sort of business, every company has to classify its share capital under various categories within the financial plan. 

The capital structure of a corporation is broadly classified into two categories – authorized share capital and paid-up share capital.

What is Authorized Capital?

Authorized capital is the maximum amount of capital a corporation is allowed to lift from its shareholders by issuing shares to them. a corporation doesn’t need to issue its entire authorized capital within the public subscription. it’s going to opt to issue capital at different stages as per the wants and demand.

A company has to mention the number of authorized capital in its Memorandum of Association (MOA) under the Capital Clause. 

Why should authorized share capital be increased?

Authorized Share Capital is the maximum amount of share capital that a corporation is allowed to raise. This limit is made public in its constitutional documents and might only be modified with the approval of the shareholders. Before a publicly-traded company can sell the stock, it must specify a particular limit to the quantity of share capital that it’s authorized to raise. A company doesn’t usually issue the complete amount of its authorized share capital. Instead, some are going to be held in reserve by the corporation for possible future use. the number of share capital or equity financing an organization has can change over time. an organization that wishes to lift more equity can obtain authorization to issue and sell additional shares, thereby increasing its share capital.

What is Paid-up Capital?

Paid-up capital is the amount paid by the shareholders for the shares held by them within the company. It’s the particular fund that the corporation receives from the difficulty of shares. Typically, an organization raises finance by way of issuing fresh share capital which becomes a part of its paid-up capital. 

Why is authorized capital the upper limit on feasible paid-up capital?

Paid-up capital is the amount of cash a corporation has been paid from shareholders in exchange for shares of its stock. Paid-up capital is formed when a corporation sells its shares on the first market, to investors. Paid-up capital is very important because it’s capital that’s not borrowed. an organization that’s fully paid up has sold all available shares and thus cannot increase its capital unless it borrows money by taking up debt. Paid-up capital can never exceed authorized share capital. In other words, the authorized share capital indicates the maximum amount of paid-up capital that can be raised.

As per the amendment within the Companies Act, 2013, there’s no requirement for a personal and public company to carry a minimum paid-up capital which was earlier 1 lac and 5 lac respectively. they’re liberated to choose their paid-up capital which might be as low as ₹20.

Example to know Authorized Capital and Paid-up Capital 

Let’s say XYZ Ltd. has an Authorized Capital of ₹60,00,000 that- it issues 2,00,000 shares @ ₹10 each which makes its paid-up capital as ₹20,00,000. Though, it still has the space of ₹40,00,000 paid-up capital by issuing 4,00,000 shares @ ₹10 each. 

So during this case,

– the authorized capital is ₹60,00,000, and

– paid-up capital is going to be ₹20,00,000

Difference Between Authorized and Paid-up Capital

 

• • Authorized capital is the utmost value of the shares that a corporation is legally authorized to issue to the shareholders. Whereas, paid-up capital is the number that’s paid by the shareholders to the company.

 

• • At any point, the paid-up capital of an organization can never be quite its authorized capital but it’ll be capable of the authorized capital. On the alternative hand, a company isn’t authorized to issue shares beyond the authorized share capital.

 

• • A corporation can increase its authorized share capital within the long run by following the procedure mentioned within the businesses Act, 2013. Whereas, a company can increase its paid-up capital by way of issue of shares to existing shareholders or by private placement to 3rd parties.

 

• • Authorized capital cannot be utilized within the calculation of the net worth of a company, while paid-up capital is taken into consideration for net worth calculation.

What is the process for increasing authorized capital?

 

• • To increase the authorized capital, the company needs to obtain approval first from its Board of Directors and eventually from its shareholders.

• • Furthermore, the company must call a general meeting during which the amount to be increased is about bypassing a typical resolution by shareholders.

• • It is also required that the company file Form SH-7 on the MCA’s online portal. This has to be done within 30 days of passing the resolution. 

Benefits of rising the Authorized Capital 

Business Growth

With the additional funds received by way of stock sales, the company can target its business growth without borrowing loans or obtaining funds from other traditional sources.

Additional funds for Shareholders and Others

With extra cash inflow, the company can give additional compensation to its investors, shareholders, partners, and senior management, employees enrolled in available ownership plans, founders, and owners.

Enhances Borrowing Capacity

The company’s overall net worth improves when more share capital is added. As a result, the company’s borrowing capacity increases.

Increases Share Capital

It is only via authorized capital that a corporation can raise its share capital beyond what it’s prescribed in its MOA. Thus, increasing authorized capital boosts the share capital of the company. 

Features of an authorized Capital

 

• • Authorized capital is about the Formation and incorporation of the company. 

• • because the number of authorized capital increases, ROC fees will increase.  Authorized Capital is mentioned within the Memorandum of Association and Articles of Association of the company.

• • The authorized share capital denotes the number of share capital that the company can have and set because of the face value of each share. 

• • it’ll be changed at any point in time after the incorporation of the company. 

• • Authorized capital cannot be used within the calculation of the net worth of the company.

• • it is not required for a corporation to issue shares up to authorized capital, the company can issue shares of less value than authorized capital.

Features of Paid-Up Capital 

 

1. 1. It falls within the category of Called-up capital which has been paid by the shareholders and received by the company. 

1. 1. The company must issue shares within 60 days of incorporation of the company, the amount decided as paid-up capital during incorporation.

1. 1. Paid-up capital can’t be over authorized capital. 

1. 1. The quantity received as a paid-up capital is employed for meeting the business expenses of the company.

1. 1. Paid-up capital is included within the calculation of the net worth of the company.

Characteristics of Paid-Up Capital 

 

• • Paid-up capital mustn’t be repaid, which can be a significant advantage of funding business operations during this fashion. Also called paid-in capital, equity capital, or contributed capital, paid-up capital is solely the general amount of money shareholders have acquired shares at the initial issuance. It doesn’t include any amount that investors later pay to shop for shares on the open market. 

• • Paid-up capital may have costs associated with it. In capital budgeting, paid-up capital is most often stated as equity capital. Within the nice debate on the relative benefits of debt versus equity, the absence of required repayment is among equity’s main advantages.

• • However, shareholders expect a selected amount of return on their investments within the sort of capital gains and dividends. While the business isn’t required to return shareholder investment, the value of equity capital can still be quite high. 

• • Paid-up capital is listed under the stockholder’s equity on the record. 

• • This category is further subdivided into the standard shares:- additional paid-up capital & sub-accounts

 

• • The price of a share of stock consists of two parts:- the face value and so the extra premium paid that’s above the face value. 

 

• • The complete face value of all shares sold is entered under stock, while the remainder is assigned to the additional paid-up capital account. 

• • Paid-up capital is used in fundamental analysis. Companies that rely heavily on equity capital may have less debt than those that do not. A company with a debt to equity ratio that’s common for its industry is additionally an honest candidate for investing because it indicates prudent financial practices and a decreased debt burden relative to its peers.

Comparison Between Authorized and Paid-up Capital

Basis	Authorized Capital	Paid-up Capital
Scope of capital	It could be a wider term if compared to the paid-up capital of the corporation.	Paid-up Capital is within the range of or appreciates the Company’s authorized capital.
Nature of capital	The maximum amount of cash that a corporation can raise through the issuance of shares.	the complete amount of cash raised by a company through the issuing of stock to shareholders.
Increase in Capital	The company can increase the authorized share capital. However, this is often possible on the condition that the articles permit it. In addition, for a rise in Authorized Share Capital, the firm must adopt a normal resolution in an exceedingly general meeting.	The company can increase the paid-up capital. However, the paid-up capital cannot exceed the authorized capital.
Alteration of Capital	Any alteration during this amount also requires an amendment within the Memorandum of Association and spending of the resolution within the general meeting of the members of the corporate.	No such alterations are needed.
Which forms to file?	The form that must be filed in the event of a rise in ASC is SH-7.	PAS 3 is the form to be filed in the event of a rise in Paid-up Capital.

Conclusion

In a nutshell, Authorized Share Capital denotes the utmost amount of capital that a corporation can raise from its shareholders by issuing shares to them reciprocally. Paid-up Capital, on the other hand, refers to the amount of share price paid by shareholders for the shares owned by them. 

Further, the members must decide the quantity of Authorized Share Capital and Paid-up Capital at the time of registration itself, as they need to induce identical records within the MOA of the company.

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All Type of Company Registration

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Company registration is a primary process by which business owners establish or incorporate their company. Since there are several kinds of companies in India, entrepreneurs must ensure they choose a business type that suits their operations. In India, the Companies Act, 2013 lays down guidelines for various types of company registration.

Types of Company Registration in India are: 

An individual can be founded as a sole trader, as a Partnership, Private Limited or indebtedness  Partnership, etc. Each format has its advantages and drawbacks. There are multiple styles of company registration mentioned below:- 

• Private Ltd. (Most Common) 

• Limited Liability Partnership 

• Partnership 

• One person Company

• Public Ld. 

• Nidhi Company 

• NBFC Company 

• Finance Company 

All these above-mentioned companies are different from one another. they need different kinds of formations, rules, and regulations. So, it’s very crucial to know every detail like their documents,  forms, etc. specializing in the procedure of Online Company Registration, other companies’ processes may also be understood as all of them have an identical process. 

But the foremost widely use and in common is Private Ltd. Registration Online. Whenever the new company registration process proceeds, it’s highly recommended to the applicant to settle on  “Private Limited Company”. the explanation being, it’s more tax benefits than others. 

Steps of Company Registration process in India 

Private Ld. Private Limited Companies are suitable for tiny businesses that need registration as non-public entities. during this sort of company, a bunch of shareholders distributes the liability amongst themselves to assist protect their personal assets. the whole capital of such business types is the total of all the shares held by each member of the corporate. Also, the private and business assets of the members are considered separate, with better protection and security. The shares of such an organization can’t be publicly traded or transferred. As per the businesses Act, 2013 to be eligible for this kind of business registration, the private Ld. must meet the subsequent criteria;

1. Minimum of two and maximum of fifteen directors 

2. At least one among the administrators must be an Indian resident 

3. Minimum of two and maximum of 200 members 

4. Additionally, an authorized capital fee amounting to a minimum of INR 1 Lakh

5. Must have a registered office address within India 

Types of Private Companies 

1. Limited By Shares: In such private limited companies, the liability of the members is set by the memorandum to amount unpaid on shares allotted to them.

2. Limited By Guarantee: during this case, the liability of members is proscribed by the memorandum of the number of members who will contribute or guarantees to pay if the corporate goes bankrupt.

3. Unlimited: Moreover, such varieties of business entities don’t have any limit on the liability of their members. As a result, if the corporate assets fail to pay off creditors, members will need to use their private assets to clear debts, increasing the chance factor involved.

Public Ltd. 

A Public Ld. is one whose shares could also be purchased by members of the overall public. In such business entities, there’s no limit on the number of shares that may be sold or traded. Since the shares of the corporate are listed on the stock market, they will be traded freely, making the shareholders part-owners of the corporate. Such companies must obtain a Certificate of Registration from the RoC before commencing business operations. Further, as per the businesses Act, 2013 to be eligible for this kind of business registration, the general public Ltd. must meet the subsequent criteria;

 1. Minimum of three directors

2. At least one of each of the administrators must be an Indian resident

3. Minimum of seven shareholders with no cap on the most limit

4. Moreover, an authorized capital fee amounting to a minimum of INR 5 Lakhs

Partnerships

Hence, the functions, duties, powers, and number of shares held are all clearly defined in an exceedingly verbal contract referred to as the Partnership Deed. Additionally, these businesses make up the purview of the Indian Partnership Act, of 1932. Partnership firms can function with or without a license as long as they need a legitimate and registered Partnership Deed. However, most partnerships do register themselves as that offers them additional rights. Moreover, to be eligible for this kind of firm registration, the partnership must meet the subsequent criteria;

1. must have a signed registered Partnership Deed by all partners

Limited Liability Partnership 

Popularly called an LLP, indebtedness Partnerships also are a brand new kind of company in India. Moreover, it enjoys a separate position, helping distinguish between personal and business assets, and granting the entrepreneur’s liability protection. In such firm types, the liability of every partner depends on the amount of share capital, helping provide more protection than a Sole Proprietorship. Moreover, to be eligible for this kind of business registration, the LLP must meet the subsequent criteria; 

1. Minimum authorized capital amounting to INR 1 Lakh

2. At least one amongst the Designated Partners must be an Indian resident

3. Minimum of two partners and no cap on the utmost number 

4. At least one individual partner, if the remainder is corporate bodies

One person company

The newest entry into the various varieties of company registration allowed in India, OPCs are great for little businesses. Additionally, it became an element of the businesses Act 2013, to assist entrepreneurs who wish to run a business single-handedly. Since such a firm type has separate status, entrepreneurs get the good thing about liability protection without having to partner with anyone else. Furthermore, since they involve just one individual, this sort of firm registration is straightforward to include and regulate. Moreover, this essentially is a mixture of the Sole-Proprietorship and Company model of business entities. Additionally, to be eligible for this sort of firm registration, the One Person Company must meet the subsequent criteria;

1. Minimum authorized capital amounting to a minimum of INR 1 Lakh.

2. Further, a private must be a natural Indian Citizen and resident

3. Additionally, Financial businesses cannot incorporate as an OPC.

4. Further, should convert to a personal company if paid-up capital exceeds INR 50 lakhs or turnover exceeds INR 2 crores.

Sole Proprietorship 

This is another kind of business entity wherein one individual handles the running of the business. However, during this firm type, the corporate and also the owner is considered as one entity, making them solely chargeable for profits and losses. Moreover, since the registration bears the name of the owners, tax filings and accounting reports also will bear the name of the owner, resulting in unlimited business liability. As a result, this sort of company doesn’t have a separate business registration process. 

Section 8 Company

Commonly called a Non-Profit Organisation, they are mainly working for charitable purposes. Moreover, it involves promoting arts, science, literature, education, and protecting the environment. Also, all the profits generated by such forms of companies are accustomed achieve these objectives, and therefore the members don’t take dividends for themselves. To be eligible for this kind of firm registration, the Section-8 Company must meet the subsequent criteria;

1. Minimum of two shareholders 

2. Minimum of two Directors and that they may be shareholders further

3. At least one amongst the administrators must be an Indian resident

4. No minimum capital requirement must have a registered office address in India

What do we provide? 

We, at Finaxis, have developed an internet service marketplace where people can get online directory services from our well-versed professionals like Chartered Accountants or Company  Secretaries and Advocates, etc. you’ll be able to avail of cost-effective customized services as per your requirements. you’ll be able to expect services like Online Firm Registration Process in India,  Company Incorporation, Start-up Registration, Proprietorship Firm Registration, Online Company  Registration in India, etc.

We have the answers to all of your queries like the way to register a corporation name in India? a  way to register a company? Company Registration Process, a way to get a Registration Certificate,  Company Incorporation in India, etc. 

Why finaxis? 

The company registration process is a completely online process so have so you don’t have to leave your home to register your company. At Finaxis we complete the registration process within 14 days.

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Private Limited Company

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A Private Limited Company or PLC is a business substance that either trades its insurance the protections trade or offers its bits to individuals overall. PLC raises a huge proportion of resources through the Public Issue of Shares. The clarification for the omnipresence of a Public Limited Company in India is that it is easy to join. A Public Limited Company can be outlined with a base of 3 Directors and 7 Shareholders close by a Registered Office.

Characteristics of Private Limited Company

1. Members: To start an organization, a base assortment of two individuals are required and an assortment of 200 individuals according to the arrangements of the Companies Act, 2013.
2. Restricted Liability: The risk of each part or investor is prohibited. It implies in the event that an organization faces misfortune under any conditions, its investors are inclined to sell their own resources for instalments. The individual, individual resources of the investors aren’t at serious risk.
3. Unending progression – the organization continues to exist inside the eyes of regulation even in the instance of death, indebtedness, the insolvency of any of its individuals. These outcomes are in the interminable progression of the organization. The lifetime of the corporate continues to exist until the end of time.
4. The file of individuals – a privately owned business incorporates an honour over the overall population organization as they don’t need to keep a partner list of its individuals though the overall population organization is expected to deal with partner record of its individuals.
5. Number of Directors: when it includes executives a privately owned business must have exclusively two chiefs. With the presence of two heads, a privately owned business will acquire activities.
6. Settled up Capital: It ought to have a base paid capital of Rs 1 lakh or such a higher amount which can be recommended every once in a while.
7. Name of Company: It’s mandatory for all privately owned businesses to utilize the word private restricted after their name.

Features of Private Limited Company

There are different sorts of highlights of Private Limited Company which are as per the following:

• Simple development:

There are fewer conventions in shaping a private restricted organization, so its arrangement interaction is very simple. It can begin its business just subsequent to getting the ‘Testament of Incorporation’ from the recorder.

• A set number of individuals:

There is a necessity for a specific number of least individuals for beginning a privately owned business. The individuals from Private restricted Companies are confined to at least two and most extreme 50-200 as it were. Additionally, there is a breaking point to the greatest number of individuals in a privately owned business. In any case, it can’t have in excess of 200 individuals; this is as far as possible.

• Least Paid-Up Capital

Privately owned businesses require a specific measure of least capital for beginning their business. The restriction of settled-up capital for these organizations is recommended occasionally.

Types of Private Limited Company

The Private Limited Company in India can be arranged into the accompanying three sorts:

Organization restricted by shares: Here, a part’s obligation is restricted up to the neglected measure of the offers held by him. This extraordinary sum can be called up whenever either during the Company’s life or at the hour of its liquidation.

Organization restricted by ensure: Here, a part’s obligation is restricted up to the assurance given by him. This sum must be called at the hour of liquidation.

Limitless obligation organization: Here, the individuals have limitless responsibility. In any case, these kinds of Private organizations exist in principle as it were.

Documents required for registration of Private Limited Company

In India, private restricted organization enrollment isn’t possible without appropriate character and address confirmation. Recorded beneath are the archives acknowledged by the MCA for the internet-based organization enrollment process:

• Personality and Address Proof
• Examined duplicate of PAN card or identification (outside nationals and NRIs)
• Examined duplicate of elector ID/identification/driving permit
• Examined duplicate of the most recent bank articulation/phone or portable bill/power or gas bill
• Analyzed visa assessed photograph model mark (clear report with signature [directors only])
• Enlisted Office Proof
• Examined duplicate of the most recent bank explanation/phone or portable bill/power or gas bill
• Filtered duplicate of authenticated tenant contract in English
• Examined duplicate of no-complaint testament from the landowner
• Examined duplicate of offer deed/property deed in English (if there should arise an occurrence of possessed property).

Process Of Registration

Organization enlistment in India benefits new businesses since it offers them a benefit over the individuals who have not enrolled. The most common way of enrolling your organization is mind-boggling and includes numerous compliances.

Stage 1: Obtain DSC

Stage 2: Apply for the DIN

Stage 3: Application for the name accessibility

Stage 4: Stage 4: Submission of MoA and AoA to enroll a private confined association

Stage 5: Request for the PAN and TAN of the association

Stage 6: RoC gives a declaration of fuse with a PAN and TAN

Benefits Of Company Registration

Enrolling in an organization offers many advantages. A selected association extends the validity of your business. It helps your business:

1. Safeguard from individual responsibility and shield from different dangers and misfortunes
2. Draw in more clients
3. Get bank credits and wise ventures from dependable financial backers effortlessly
4. Offers obligation security to safeguard your organization’s resources
5. More noteworthy capital commitment and more prominent solidness
6. Builds the possibility to become enormous and extend

Advantages Of Private Limited Company

Reliable Business Growth: Private Limited Companies can change tech-driven strategies and expand their business rapidly with the accessibility of an acceptable proportion of capital.

Raise Capital through Issue of Shares: Insufficiency of capital is unavoidable while maintaining a business; however, a Public Limited Company has the choice to raise capital by the public issue of shares, rather than a Private Limited Company.

Reserves are effectively Transferable: The Shares of a PLC can be moved without any problem. Since the provisions of a Public Limited Company are recorded on a stock exchange, it drives more anticipated financial backers.

Admittance to extra Funding: Banks and monetary organizations by and large render credit/advances to Public Limited Companies at good loan costs. Additionally, the power lies in the possession of PLC to organize the terms of conditions for advance repayment.

Disadvantages Of Private Limited Company

More generously compensated Up Capital: The arrangement cost of a Public Limited Company is a lot higher (INR 5 Lakh) rather than a Private Limited Company (INR 1 Lakh).

More Stringent Regulations: A PLC needs to adjust to a couple of legitimate rules. Such legitimate standards are set to defend the interest of the Company’s investors.

Straightforward Dealing is Required: Since Public Limited Companies issue their Shares to the general society, so they are expected to unveil total data about their likely development and business tasks. PLC has is not secure and can’t disguise anything; even their record nuances get media incorporation.

 

 

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What Is DIN

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Introduction

The director of a corporation is accountable for managing the day-to-day affairs of the corporate. he’s the one who gives directions to managers regarding any decision or about-face undertaken by the shareholders or promoters of the corporate. they will be promoters of the corporate, especially in the case of personal companies, or an employee of the corporate.

The businesses Act, 2013 also recognizes the position of director within the company and fixes the minimum and therefore the maximum number of directors allowed within the company. A director apart from the promoter could also be appointed by the corporate by passing a resolution within the general meeting. Therefore, so as to be appointed as director, a private have to obtain a Director number (DIN) after the approval from Central Government.

Meaning

Director number (DIN) may be a singular 8-digit number allotted to someone who is appointed the director of an organization. The validity for such variety is for a lifetime. He/She must make an application within the shape DIR-3 (in case of an existing company) keep with Section 153 and 154 of Companies Act, 2013. However, within the case of the formation of a replacement company, the application is formed only through SPICe (Form INC-32) at the time of its incorporation. DIN remains identical for every individual irrespective of the number of companies he has served or is serving as a director. DIN application is prepared by Central Government under the Ministry of Corporate Affairs.

Uses Of DIN

Wherever there is any need for a return, filing an application, or any information related to a company under any law, then the director has to sign such return, application, or details with his DIN number underneath the signature.

Purpose Of Obtaining DIN By A Director

The basic purpose of obtaining DIN administrators is to urge them to register within the database of the govt authorities in order for they’ll identify themselves before signing a return, information, or application associated with the corporate by mentioning their DIN underneath their signature.

How To Apply For DIN?

SPICe Form: Application for allotment of DINs to the proposed first Directors in respect of recent companies shall be made in SPICe form only.

DIR-3 Form: someone desiring to become a director in an already existing company shall make an application in eForm DIR-3 for allotment of DIN.

DIR-6 Form: Any changes within the particulars of the administrators shall be filed in form DIR-6.

To apply for DIN, the above forms are to be filed online. it’s to be digitally signed so uploaded on the MCA21 portal 

Documents required

For SPICe Form

Attach proof of identity and address proof. DIN would be allocated to an applicant only after approval of the shape.

For Form DIR-3

a. Attachments:

Photograph

Identity proof

Residence proof

Verification (Name, father’s name, current address, DOB, text of declaration, and signature of the applicant)

In the case of foreign nationals, they’re required to submit their passport as identity proof.

b. Documents to be attested by a CMA or CA or CS:

Photograph, identity proof, and residence proof must be attested by a controller or an organization Secretary, or a value Accountant, in whole-time practice.

In the case of foreign nationals, their documents are attested by the Consulate of the Indian Embassy and Foreign Public Notary.

After uploading DIR-3 and therefore the supporting documents, the applicant pays the fee within the next screen. it’s to be paid through net banking, MasterCard, or NEFT. Manual(offline) payment isn’t allowed.

c. Generation of DIN:

Once the appliance fee is paid and therefore the application is submitted, the system will generate an application number. Central Government will process the appliance and choose the approval/ rejection.

If the DIN application is accepted, the central government will communicate the DIN to the applicant within 1 month.

If the DIN application is rejected, it’ll e-mail the rationale for rejection to the applicant and can also put the explanation on the website. The applicant will get 15 days to rectify the rationale. If he rectifies such reasons and is ready to satisfy the central government, he is going to be allotted DIN otherwise the central government will label the applying INVALID.

d. Intimating DIN to company:

Within one month of receiving DIN from the central government, the director needs to intimate about his DIN to all or any companies where he’s a director.

The company will intimate RoC about DIN within 15 days from the date when the director intimates his DIN to the corporate.

Failure of the director to intimate DIN to the corporate or failure of the corporate to intimate RoC about DIN will lead to penalties.

For Form DIR-6

For changing any details mentioned within the DIR-3 form/ SPICe with regard to Directors, then Form DIR-6 must be submitted online. With the shape, the attested supporting document is additionally required to be submitted

Conditions to get DIN

Rules for obtaining DIN:

In the case of recent companies, first Directors up to a number of three can apply for a DIN number only through the SPICe plus Form.

In the case of already existing companies, the administrators can apply for a DIN number only through the DIR-3 Form.

In the case of already existing companies, the applicant director must attach a signature of any existing company director wherein he wants to induce added.

For E.g. Mr Manoj wants to use DIN wherein he wishes to be a director in ABC company. Here, Mr. Manoj would require a board resolution of “ABC’ company together with the digital signature of any of the present directors of ABC company.

Validity of DIN:

Once the DIN number is given to a Director, it doesn’t require any reactivation or renewal and has lifetime validity.

However, the MCA may deactivate or disqualify the Director if the Director or the corporate is in violation of any of the laws or, its guidelines or notifications.

How to make changes in DIN

Whenever it’s required to form any changes within the details of the DIN then it’s required to intimate such to the Central Government through filing Form DIR 6 within the MCA (Ministry of Corporate Affairs) portal. Such form DIR 6 must be verified through Digital signature Certificate (DSC) and acquired Digitally verified by Practicing CA or CS or CMA while making changes within the DIN (Director Identification Number).

What is the role of DSC in DIN?

A DSC ( Digital Signature Certificate) is within the kind of a USB which is critical for applying for the Director number (DIN) and is valid for a period of 1 to 2 years.

To obtain a DSC, you need to file an application that can include your signature and also identity proof, and residence proof. All documents that may be submitted have to be self-attested by the applicant. For foreigners and NRIs, the self-attested copies and identity proofs must be notarized by a functionary or verified by their respective embassy, or just in case of NRI, Indian Embassy verification is critical.

Reasons for Surrendering or canceling the DIN

The Central Government may cancel the DIN because of the subsequent reasons:

If a replica DIN has been issued to the director

DIN was obtained by fraudulent means

On the death of the concerned person

The person has been announced unsound mind by the court

The person has been adjudicated as insolvent

The director also can surrender the DIN in Form DIR-5. With the shape, he needs to submit a declaration that he has never been appointed as a director within the company and therefore the said DIN has never been used for filing any document with any authority. Upon verifying the e-records, the central government will turn off the DIN.

Note that, once an individual is appointed as a director in any company as per the businesses Act 2013, he cannot give up his DIN in the future. whether or not he doesn’t remain a director anymore in this company or in the other company, his DIN will exist because it is.

Conclusion

The process of obtaining DIN from the Central government has been made easier after the businesses Act, of 2013 by introducing eforms that application may be made only through electronic mode.

This has also resulted in an increase in transparency and speeding from the entire process. Moreover, the applicants can keep a track of their application through the MCA website and take away any discrepancy indicated by the office of the regional director.

Why Finaxis as your service provider for “DIN Application”? 

finaxis is an eminent business platform and a progressive concept, which helps companies and startups to end-to-end incorporation, compliance, advisory, and management consultancy serves in India and across the globe. Getting DIN (Director Identification Number) is easy, seamless, cheaper, and quickest with finaxis.

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What is Pitch Deck?

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A pitch deck, known as a startup pitch deck or slide deck, is a visual document that informs investors about your business plan, products or services, financing needs, and critical metrics like value, target market, and financial goals.

Size of a Pitch Deck

The average length of a pitch deck is 12 to 14 slides (but never more than 20), with each slide conveying one distinct idea. Based on how you choose to convey your narrative, the sequence can alter.

The following points must contain in your slides:

·      The company’s mission

·      The difficulty

·      Market potential and target market

·      The solution or product

·      Business plan

·      The opposition

·      Marketing & sales plan

·      The team

·      Financials

Kinds of Pitch Deck

You can practice by creating two separate pitch decks.

A document with a lot of information and details that are emailed to interested parties is known as an Email Deck.

You can use it to show investors in person if you add more graphics to it. Less text and more pictures draw in more attention, and the Presentation Deck helps to strengthen the points.

How to create a Pitch Deck

1.     Make sure you understand the issue and the solution.

What problem are you focusing on, why does it need to be addressed, and how is your business or product the solution? This is the most important question your pitch deck should answer. Think about the verifiable documents you’ll need to show to the individuals you’ll be presenting to as you write down the answers to those essential questions.

2.     Gather the information you’ll need.

Gather the relevant information and data for each slide based on the core slides you’ll be using. This will almost certainly include information about the market, your competitors, and potential clients. Create tasks and ideas for areas such as marketing and sales to show possible investors how you expect to sell products and services, create income, and expand your company.

3.     Construct a story.

Determine how you could make a fascinating story out of the information you’ve gathered. Consider the essential insights you want an entrepreneur to have at the end of the presentation, as well as the logical order in which they’ll need to learn things to get there.

4.     Make it look different From Others.

There are some basic fundamentals that must be mastered: Font styles and sizes should be consistent; the colour scheme you employ should be consistent and visually pleasing; and you should include photographs, charts, and graphics where applicable to make it as visual as possible.

5.      Practice, Practice, Practice

When your deck is finished, make sure you’re ready to present it.

Pitch Deck do’s

1.    Tell the story to create an emotional response from your audience.

Everyone, including investors, likes hearing stories. So, tell a compelling tale about your company.

 2.  Each slide should only express one idea.

You want to make sure that everyone in your audience is on the same page.

3. Make sure you’re ready to stand out from the crowd.

The importance of first impressions cannot be overstated. It’s true. The first two and a half minutes are crucial.

4. Demonstrate who is behind your concept.

Concentrate on a big, important accomplishment for each team member that distinguishes them as a winner.

5. Maintain a Consistent presenting style.

Across all slides in your investment pitch deck, use the same font, size, colour, and punctuation format.

6. You have a better understanding of your metrics than Anybody else.

When it comes to impact, actions speak louder than words.

Pitch Deck don’ts

1. Use a limited number of bullet points.

Bullets should be kept to a minimum. A presentation will be ruined if there are too many bullet points.

2. Make it as short as possible.

The average entrepreneur pitch consists of 38 slides. 10 slides are the maximum ability to focus. Make the calculations.

3. Don’t read your script word by word.

You’ll sound robotic and miss out on crucial eye contact with the audience.

Aim or importance of Pitch Deck

A pitch deck is designed to spark investors‘ interest and even enthusiasm in a firm, potentially leading to a second meeting and investment conversation. A pitch deck is an important tool for generating funds for a firm, but it’s simply the first step. The goal of the pitch deck is to inform a compelling story and generate interest in your company; you are not getting to cover every detail.

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What is Private Company

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A private company may be a privately held corporation for little businesses. A member’s liability in an exceedingly Private Ltd. is restricted to the number of shares that he or she owns. Shares during a private Ld. Cannot be exchanged publicly. A private Ltd. could be a privately held corporation for little businesses. A member’s liability in an exceedingly Private Ltd. is proscribed to the number of shares that he or she owns. Shares in a very private company can’t be exchanged publicly.

Characteristics of a Private Limited Company

Members

According to the Companies Act of 2013, a minimum of two members and a maximum of 200 members are necessary to form a business.

Restricted Liability

Each member’s or shareholder’s liability is limited. It means that if a corporation suffers a loss in any way,its shareholders may be forced to sell their own assets to cover the loss. The shareholders’ own, individual assets are not in jeopardy.

Perpetual succession

The corporation continues to exist in the eyes of the law even if one of its members dies, becomes insolvent, or files for bankruptcy. As a result, the company will continue to exist in perpetuity. The company’s life will continue to exist indefinitely.

Index Of member

A private company has an advantage over a public company in that it is not needed to keep an index of its members, but a public company is compelled to do so.

Number Of Directors

A private firm simply requires two directors when it comes to directors. A private business can begin operations with the presence of two directors.

Paid-up capital

It must have at least Rs 1 lakh in paid-up capital or such a higher amount as may be prescribed from time to time.

Prospectus

A prospectus is a thorough summary of a company’s affairs that is issued to the public by the company. A prospectus is not required to be issued in the case of a private limited company because the public is not encouraged to subscribe for the business’s shares.

Minimum Subscription

The minimum subscription is the amount received by the corporation that equals 90% of the shares issued in a given period of time. If the company does not obtain 90% of the funds, it will be unable to continue doing business. A private limited corporation can issue shares to the public without having to meet the minimum subscription requirement.

Name

The usage of the word “name” is required for all private companies.

Requirements for Private Limited Company Registration

Members

Before a company may be registered, it must have a minimum of two and a maximum of 200 members or shareholders, according to the Companies Act of 2013.

Directors

A minimum of two directors is necessary for the registration of private limited company. Each director must have a DIN, or director identification number, issued by the ministry of corporate affairs. One of the directors must be an Indian resident, which means he or she must have spent at least 182 days in India in the previous calendar year.

Name

A private limited company’s name is one of its most important components. The firm’s name is made up of three parts: the name, the activity, and the private limited company. All private limited companies must include the phrase “private limited company” at the end of their company name. Every corporation must submit 5-6 names to the registrar for approval, and each name must be distinct and expressive. The approval name should not be similar to any other company’s name. As a result, picking the appropriate company name is crucial because it will be associated with the company for the rest of its existence.

Registered office address

When applying for a company’s registration, the owner should specify the company’s temporary address until it is officially registered. However, once the business has been registered, the registrar of the company should be informed of the permanent address of the company’s registered office. The company’s registered office is where the majority of the company’s business is conducted, as well as where all of the company’s paperwork are kept.

 Advantages of Private Limited Companies

Ownership

Regulation and ownership of shares in a public corporation can be sold on the open market. In a private corporation, on the other hand, the owner has the option of selling or transferring shares to other persons.

Minimum Number of Shareholders

The minimum number of shareholders required is two.

Management and Decision Making

In public corporations, management and decision-making get increasingly complex and confusing as more shareholders are consulted. Because the number of stockholders in a private corporation is smaller, this complicated procedure is eliminated.

Minimum Share Capital

 A public corporation will necessitate an outsized sum of cash. A minimum share capital of Rs. 5,00,000 is required for a public business. The minimum share capital requirement for a non-public business accustomed be Rs. 1,00,000, but this can be not the case. As a result, there’s no have to worry about meeting money requirements.

Disadvantages of a Private Limited Company

• • One of the most significant disadvantages of a Private Limited Company is that its articles limit the transferability of shares.

• • In any event, a Private Limited Company cannot have more than 50 shareholders.

• • A Private Limited Company also has the disadvantage of not being able to submit public prospectuses.

• • Shares cannot be quoted on the stock exchange.

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What is One Person Company

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The Companies Act, of 2013 completely revolutionized corporate laws in India by creating several new concepts that did not exist previously. One such game-changer was the creation of the One Person Company concept. This led to the recognition of a really new way of starting businesses that accorded flexibility which a corporation reasonably entity offers, while also protecting economic obligation that sole proprietorship or partnerships lacked.

Several other countries had already recognized the flexibility of individuals to create a corporation before the enactment of the new Companies Act in 2013. These included the likes of China, Singapore, the UK, Australia, and also the USA.

Definition

Section 2(62) of the Company Act defines a “one-person company as an organization that has only 1 person as to its members.” So, an OPC is effectively an organization that has only one shareholder as its member.

Such companies are generally created when there’s only 1 founder/promoter for the business. Entrepreneurs whose businesses contain the primary stages value more highly to make OPCs instead of sole proprietorship businesses, because of the several advantages that OPCs offer.

Difference Between One Person Company And Sole Proprietorships

A sole proprietorship type of business may appear very slightly like one-person companies because they both involve one person owning the business, but there exist some differences between them. The foremost difference between the two is the nature of the liabilities they carry. Since an OPC could even be a separate legal entity distinguished from its promoter, and his assets and liabilities. The promoter isn’t personally at risk of repaying the debts of the corporation.

On the selection hand, sole proprietorships and their proprietors are identical persons. So, the law allows attachment and sale of the promoter’s assets (in case of non-fulfillment of the business’s liabilities.

Features of One Person Company

Single-Member:

OPCs can have only 1 member or shareholder, in contrast to different non-public companies.

Nominee:

a completely unique feature of OPCs that separates it from other kinds of companies is that the sole real member of the company possesses to say a nominee while registering the Company.

No perpetual succession:

Since there’s only 1 member in an OPC, his death will end within the nominee choosing or rejecting to become its sole member. 

Minimum one director:

OPCs must have a minimum of 1 person (the member) as director. They’ll have a maximum of 15 directors. 

No minimum paid-up share capital:

minimum paid-up capital for OPCs – not prescribed any amount.

Special privileges:

OPCs enjoy several privileges and exemptions under the Companies Act that differing types of companies don’t possess.

Formation of One Person Company

One person can form an OPC by subscribing his name to the memorandum of association and fulfilling other requirements prescribed by the Companies Act, 2013. Such a memorandum must state details of a nominee who shall become the company’s sole member, in case the primary member dies or becomes incapable of going into contractual relations.

This memorandum & the nominee’s consent to his nomination should be filed to the Registrar of Companies along with an application of registration. His nomination may later be cancelled by the member.

Procedure for OPC Registration

1. Complete OPC Form

2. Get DSC and DIN for Director of OPC

3. Verification and Name Approval of OPC

4. Apply for the COI of OPC

5. Your OPC is now ready

Benefits of One Person Company

• Less ROC Compliances Burden

• Organized format of Proprietorship

• Liability

• Separate Legal Entity

• Perpetual Existence

• Enjoys Social Recognition

Membership in one Person Company

Only natural persons who are Indian citizens and residents are eligible to make a one-person company in India. The identical condition applies to nominees of OPCs. Further, such a natural person cannot be a member or nominee of over one OPC at any point in time. It’s vital to notice that only natural persons can become members of OPCs.

Further, the law forbids minors from being a member or nominees of OPCs. 

Cessation of One Person Company Status:

As per rule 6(1) of the businesses incorporation rule 2014, OPC shall cease to be entitled to continue as an OPC if:

1. Its paid-up capital exceeds ₹50 lacks, or

2. Its average annual turnover during the particular period i.e. immediately proceeding 3 consecutive financial years exceeds ₹2 crores. 

Conversion of OPCs into other Companies

Laws regulating the formation of OPCs expressly limit the conversion of OPCs into Sec 8 companies, i.e. companies that have charitable objectives. OPCs also cannot voluntarily convert into different varieties of companies until the expiry of two years from the date of their incorporation.

Privileges of One Person Company

OPCs have the following privileges and exemptions under the Companies Act:

• They need to not hold annual general meetings.

• Their financial statements need not include income statements.

• A company secretary isn’t required to sign annual returns; directors can even do so.

• Provisions regarding independent directors don’t apply to them. 

• Several provisions regarding meetings and quorum don’t apply to them.

• They pay more remuneration to directors compared to other companies.

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