The most essential step in starting a business in India is incorporating an entity to undertake business activities. The type of entity one chooses to incorporate decides the nature of the relationship its promoters would have with the created entity as as well amongst themselves.
The registration of an entity is done under the Companies Act, 2013, Limited Liability Partnership Act, 2008 as well as the Indian Partnership Act, 1932 in the case of LLPs and Proprietorship firms, respectively.
[NOTE] It is important to note that while we include Partnership firms and Sole-Proprietorships under the ambit of the definition ‘Company’, they are not legally Companies and are not incorporated under the Companies Act, 2013.
With each type of entity having its pros and cons, and differing rules governing them, it becomes pertinent to understand which one would be more suitable for you.
We shall guide you in terms of the different options you have, the advantages and disadvantages of each type of company registration, as well as the documents required for their registration.
Types of Companies
The Companies incorporated under the Companies Act, 2013 could also be classified under the following heads-
On the basis of the number of members.
- One-Person Company– The company is formed with just one member.
- Private Company– The company is formed with 2 or more members.
- Public Company– The company is formed with 7 or more members.
On the basis of control.
- Holding Company– It is a parent company that owns controlling interest in other companies.
- Subsidiary Company– The parent company holds a majority stake in such a company.
- Associate Company– The parent company holds a minority stake in such a company.
On the basis of liability.
- Limited Liability Company– In this type of company, the liability of the promoters is limited to the capital they have invested.
- Unlimited Liability Company– In this type of company, the liability of the promoters is the same as that of the company.
On the basis of size.
- Micro– The investment in plant and machinery or equipment is less than 1 crore and the turnover is less than 5 crores.
- Small– The investment in plant and machinery or equipment is less than 10 crores and the turnover is less than 50 crores.
- Medium– The investment in plant and machinery or equipment is less than 50 crores and the turnover is less than 250 crores.
On the basis of access to capital markets.
- Listed– Companies listed on the Stock market exchanges.
- Unlisted– Companies not listed on the Stock market exchanges.
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7 Types of Company Registration in India: A Comprehensive Guide
In this section, we shall cover the types of entities that are registered in India under the Companies Act, 2013 and the Indian Partnerships Act, 1932 and understand their features as well as the documents required for each of them.
The following 7 types of Company Registrations are allowed in India–
- Private Limited Company.
- Public Limited Company.
- Partnership Firm.
- Limited Liability Partnership.
- One-Person Company.
- Sole Proprietorship.
- Section 8 Company (Charitable Organisations).
1. Private Limited Company
These are the types of companies in which the liability of the promoters is limited by the ratio of their shareholding, or as specified in the Articles of Association (AoA) of the company.
The shares of such a company cannot be traded on the share market and thus, the total capital of such companies is the total value of shares held by each shareholder.
| Persons concerned | Minimum | Maximum |
| Members | 2 | 200 |
| Directors | 2 | 15 |
Documents required and the process to get registered
- PAN Card of all directors.
- Utility bills.
- Passport-size photographs of all the directors.
- Aaadhar numbers of all the directors.
- Property documents/Rental Agreement.
Process for Private Limited Company Registration
- All the directors must first get a DIN (Director Identification Number) from the Ministry of Corporate Affairs (MCA).
- Then, 3 possible names are submitted to the MCA. Once a name has been allotted by the MCA, the directors must submit an AoA and MoA.
- The directors would then receive a certificate of registration along with a CIN (Corporate Identification Number) which could be used by the directors to apply for the company’s PAN, TAN, and Bank account.
2. Public Limited Company
These are the types of companies in which the shares can be traded on the share market and thus, public shareholding is allowed. It is similar to a Private Limited Company in all respects other than the fact that it’s allowed to raise capital from the stock market and has different requirements for minimum/maximum directors and members.
If a Private Limited Company wishes to change its structure to a Public Limited Company, it must first acquire an ROC Certificate to do so.
| Persons concerned | Minimum | Maximum |
| Members | 7 | No limit |
| Directors | 3 | 15 |
Documents required and the process to get registered
- PAN Card of all directors.
- Utility bills.
- Passport-size photographs of all the directors.
- Aaadhar numbers of all the directors.
- Property documents/Rental Agreement.
- Digital Signature Certificate.
Process for Public Limited Company registration
- All the directors must first get a DIN (Director Identification Number) from the Ministry of Corporate Affairs (MCA).
- It must be ensured that the company fulfills the capital requirement of Rupees 5,00,00 for a Public Limited Company.
- An application must be submitted to acquire an ROC certificate with relevant documents.
- Once ROC Certificate is received, an application for the Certificate of Business Commencement must be submitted along with the registration fee.
3. Partnership Firm
These are the entities that are registered under the Indian Partnerships Act, 1932. A Partnership firm consists of partners who have decided to incorporate an entity to undertake business operations. The partners in a Partnership Firm are bound by a partnership deed.
| Persons concerned | Minimum | Maximum |
| Partners | 2 | Less than 50 |
A partnership can function with or without registration. However, most partnership firms decide to register themselves since it gives them an official recognition.
Documents required and the process to get registered
- Partnership Deed.
- Aadhar Card of partners.
- PAN Card of partners.
- GST Registration Certificate.
- Rent Agreement/Property documents.
Process for Partnership Firm Registration
- The Partners must submit Form-1 to the Registrar of Firms.
- A signed copy of the Partnership deed must be submitted to the Registrar.
- Relevant fees and stamp duties must be paid.
- The partnership firm is then entered into the records.
4. Limited Liability Partnership (LLP)
It is a hybrid entity having the features of a Partnership and a Company. Unlike a Partnership firm wherein the liability of the partners is the same as that of the firm, an LLP limits the liability partners may have.
While the partners in an LLP are bound by a partnership deed, the firm has a separate legal entity like a Company.
An LLP is registered under Limited Liability Partnership Act, 2008
| Persons concerned | Minimum | Maximum |
| Partners | 2 | No limit |
An LLP could also have corporate bodies as partners. However, at least one partner must be a natural person.
Documents required and the process to get registered
- Proof of Address (Firm).
- Digital Signature Certificate.
- Address/Residence proof of partners.
- PAN Card of partners.
- Passport-size photographs.
- Rent Agreement/Property documents.
Process for Limited Liability Partnership (LLP) Registration
- Obtain a Digital Signature Certificate.
- Apply a DIN (Director Identification Number)
- A proposal for a name must be submitted to the Registrar along with the Form for Incorporation of Limited Liability Partnerships(FiLLip).
- Once the name proposed has been approved, an LLP agreement must be filed in Form-3 on the MCA portal.
5. Sole Proprietorship Company Registration
It is an organisational structure in which the identity of the director/promoter is the identity of the firm. It is the simplest and easiest to incorporate and can be started by anybody. The tax liabilities and returns would bear the name of the owner and the promoter has unlimited liability.
Documents required and the process to get registered
- Aadhar Card.
- Bank Statement.
- PAN Card.
- Registered Office proof.
- GST details.
Process for Sole Proprietorship Company Registration
Although it is not mandatory for a person to register themselves as a Sole-Proprietor, it is beneficial to do so to avail of different schemes by the government.
- The person concerned can register themselves as an MSME under the MSME Act.
- If the Sole-Proprietor runs a shop, they can register themselves under the Shop and Establishment Act according to the local laws.
6. One-person Company
It is a hybrid entity having the features of a Sole-Proprietorship and a Private Limited Company. It is incorporated under the Companies Act, 2013 and allows individuals to incorporate a company just by themselves. It creates a separate legal entity for the enterprise and limits the promoter’s liability which is not absent in a Sole-Proprietorship entity.
Documents required and the process to get registered
- Identity Proof (person)
- Utility bills (person)
- Bank Statement (person)
- PAN Card (person)
- Digital Signature Certificate
- Address Proof (company)
Process for One-person Company Registration
- Obtain a Digital Signature Certificate.
- Apply a DIN (Director Identification Number)
- A proposal for a name must be submitted to MCA.
- Once the name proposed has been approved, an application along with MoA and AoA is submitted to the MCA.
- Once the application is approved, Incorporation Certificate is received.
7. Section 8 Company Registration
It is a not-for-profit company. Its reasons for incorporation could include charitable activities, promotion of science/arts/education, religion, formulation of a pressure group or forum for an industry, and so on.
A Section 8 company can only be a limited liability company and must not pay dividends to its shareholders.
Documents required and the process to get registered
- Digital Signature Certificate
- Passport Size Photographs
- Aadhar Card
- PAN Card
- Address Proof
- Director Identification Number
Process for Section 8 Company Registration
- The directors must apply for a DIN (Director Identification Number).
- A proposal for a name must be submitted to MCA.
- An application must be submitted to the Registrar of Companies along with MoA and AoA. The application must also include an estimation of the company’s income and expenditure for the next three years.
- In case an already existing company (Private Limited/Public Limited), desires to turn into a Section 8 company, it must follow the procedure as mentioned in Section 8(5) of the Companies Act, 2013 read with Rule 20 of the Companies (Incorporation) Rules, 2014.
Conclusion
The type of company registration a person chooses to incorporate has a bearing on the rules to be followed, the tax to be paid, as well as the ability to raise capital in future.
Thus the final decision must be taken after taking into cognisance the size of the entity, its future plans, its manpower, as well as the capital available.
To recapitulate, we’ve covered the following 7 types of company registration and explained briefly their nature, the documents required, as well as the procedure to be followed for their incorporation-
- Private Limited Company.
- Public Limited Company.
- Partnership Firm.
- Limited Liability Partnership.
- Sole Proprietorship.
- One-person Company.
- Section 8 Company.
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1. Can a corporation be registered without an office?
Yes, it can be registered without an office.
2. Can a business operate without being registered?
Aside from operating as a single proprietor, it is necessary to register any business you operate as a company, firm, or LLP (Limited Liability Partnership).
3. In India, is it possible to register two businesses under the same name?
Yes, you can register two businesses under the same name but under one condition that, both companies should follow different structures.
4. How many people are allowed in a company?
As per the provisions of the Companies Act 2013, a private limited company can have minimum 2 and maximum 200 members.
5. Which type of company registration is ideal for a new business?
Private Limited Corporations and LLPs are the most popular business forms for startups.
6. Which is the No 1 Corporate company in India?
The largest business in India is Reliance Industries.
7. How can I register an Indian Company?
The default option to incorporate a company electronically is through Simplified Proforma (SPICe -INC-32), with eMoA (INC-33), and eAOA (INC-34).
