What is a Company and what are different types of Companies?

According to the Companies Act, 1956, a Company is an association of people which is formed and registered under this Act or any previous company laws. A company is a separate legal entity which is different from its shareholders. It is an important feature of Company that there is a difference between people who have control over the affairs of a Company and the people who actually own it.

Different types of Companies are as follow:

• Private Limited Company
• Public Limited Company
• Limited Liability Company
• Unlimited Liability Company
• Non-Profit Organizations (which are also known as Sec.25 Companies)

What are the types of Companies that I can register in India?

Here are the various types of companies you can register in India:

• One Person Company (OPC)
• Private Limited Company
• Public Limited Company
• Limited Liability Partnership (LLP)
• Non-Profit Organizations (Sec. 25 Companies)

What is MOA and AOA?

MOA stands for Memorandum of Association whereas AOA means Articles of Association. Both these documents act as important source of information for various shareholders and other stakeholders associated with a Company.

MOA reveals the name, aims, objectives, registered office address, clause regarding limited liability, minimum paid up capital and share capital of a Company. In short, it explains the relationship of a Company with outside world.

AOAs are the necessary documents to be submitted when the company is incorporated with the registrar of Companies (ROC). When AOAs are in conjunction with the MOA, they are called the Constitution of the Company.

What is DSC?

DSC stands for Digital Signature certificate. DSC is the digital equivalence of physical papers or certificates. It is needed to file the form electronically with the concerned department. For the purpose of Company Registration of a private company, DSC for one of the Directors is required.

What are the Different Classes of Digital Signature Certificates?

In this age of information technology and online (electronic) filings and transactions, Digital Signature Certificates (DSCs) have become immensely useful and beneficial, and even inevitable in certain cases and circumstances. A DSC is used for signing a document or application digitally for sending the same electronically to the concerned people or entity. For example, the Ministry of Corporate Affairs (MCA) has recommended online filing of all relevant reports, documents, statutory compliances, and forms with ROC and MCA21 Portal.

Based on specific requirements, a person may obtain anyone of more of the following three classes of digital signature certificate in India:

• Class-1 DSC: This class of DSCs is issued to private subscribers and individuals to help them in securing their email communications, and authentication of their individual identity.
• Class-2 DSC: These DSCs are issued to company directors and other signatory authorities of a company/firm/organization.
• Class-3 DSC: This class of DSC is useful for participation in e-Tenders and e-Auctions, conducted anywhere in entire India.

What is a Directors Identification Number (DIN)?

DIN, Directors Identification Number, is actually an identification number issued to a Director or a prospective Director of a Company by the Ministry of Corporate Affairs, Government of India. The concept of DIN was introduced for the first time when Sections 266A and 266G were inserted in Companies Act.

To obtain a DIN, one needs to make an online application to the Ministry of Corporate Affairs and submit the required documents related to Identity and Address Proof. Once the Ministry verifies these documents, the DIN will be allotted to the person.

What is DPIN?

The DPIN (Designated Partner Identification Number) used for identifying a designated partner in a Limited Liability Partnership (LLP) firm, is equivalent to the DIN (Director Identification Number) of a director of a private or public limited company. Both of these identifying numbers are issued by the Ministry of Corporate Affairs (MCA), Govt. of India.

What is a One Person Company (OPC)?

The concept of One Person Company is the new vehicle of doing business introduced by the Companies Act, 2013. The old Companies Act, 1956, required at least two directors and shareholders to form a private limited company. In OPC, there is only one person who will act in the capacity of a Director and a shareholder as well. Such type of a company is formed as a Private Limited Company.

What is a Private Limited Company?

A Private Limited Company has a minimum of two members and two Directors. Maximum number of members that a Private Limited Company can have is 50. Total capital of such a company is formed with shares and every shareholder is a partner. Directors of a Pvt Limited Company should meet at regular intervals and all its transactions should be audited. The name of such a company ends with the words ‘Private Limited’.

What is a Public Limited Company?

A Public Limited Company is a Company which is limited by shared and has no restrictions on the maximum numbers of shareholders. It can be formed with minimum of seven members and three Directors. It should be registered with the Registrar of Companies of the particular State under the Companies Act, 1956.

Such type of Company can offer its shares to the Public, accept deposits from it and there is no restriction on transference of shares.However, minimum share capital requirement for such a Company is Rs.50, 000.

What is a Limited Liability Company?

A Limited Liability Company is governed by the Limited Liability Partnership Act, 2008. It is a corporate structure that encapsulates flexibility of a partnership and benefits of limited liability to the owners at a low cost. In other words, it’s a combination of a Company and Partnership where one partner is not liable for misconduct or negligence of another partner.

What is Sec. 8 Company? (Earlier Known as Section 25 Company)

A non-profit organisation in India can be registered as a Trust or as Society under the Registrar of Societies as a private limited non-profit company under Section 8 of the Companies Act, 2013.

Earlier, this Section 8 was popularly known as Section 25 of the old Companies Act, 1956. Now, according to the Section 8 (1a, 1b, 1c) of the new Companies Act, 2013, a Section 8 Company can be incorporated to promote commerce, art, science, research, sports, social welfare, education, charity, religion, protection of environment or any such object. The condition is that such a Company should use its profits (if any) for promoting its objects and should not pay any dividends to its members.

What is Micro Finance Company and How to Register it in India?

A Micro Finance Company (MFC), which is also called as a micro finance institution (MFI), is a non-deposit taking and non-banking company which provides loans up to Rs. 50,000 to people with low incomes, and residing particularly in rural and semi-urban areas, where the regular banking facilities are not easily available. Farmers, agriculturists, horticulturists, small businesspersons, and so on, are usual clients of these micro finance companies. Just reasonable rates of interest, and easy repayment facilities, are other welcome features associated with these MFCs. In India, these MFCs or MFIs are registered and regulated as per the provisions and rules given in the RBI Act of 1934.

To know about the registration procedure and the documents required, please click on the link given here below.

What is the procedure for acquisition and merger for companies?

Mergers and Acquisitions (M&A) are ways of strategic management, where consolidation of two companies or their individual assets is resulted. In general, the most common goal of all mergers and acquisitions (regardless of their structures or categories) is synergy generation; and thus, success of any merger or acquisition is decided by the fact that whether the desired synergy is achieved or not. This synergy is nothing but enhancement of certain capabilities of the consolidated company and achieving specific advantages, which were not accessible by the individual companies prior to merger or acquisition.

What is the Company Law Act 2013?

The Companies Act, 2013, passed by the Indian Parliament consolidates and amends the law relating to the companies. The new Act has introduced several concepts. For instance, the Companies Act 2013 Act has introduced a new concept of class action suits which can be initiated by shareholders against the company and auditors.The provisions of Companies Act, 1956 are still in force.

What are key Highlights of Companies (Amendment) Act, 2015?

To promote ease of doing business and make India an investor-friendly country, the Government of India has amended the old Companies Act and has come up with new Companies (Amendment) Act, 2015. Let’s look at the highlights of this new Act.

• No minimum paid-up capital required to start a Private Limited Company in India.
• The need to obtain the Commencement of Business Certificate post registration has been withdrawn in the new Act.
• Common seal has become optional now and signatures of the Directors are acceptable.
• Now there is stringent penalty for Companies that invite or accept deposits from Public with any approval from the Regulatory Authorities.
• The holding Company can provide loans or guarantees to the subsidiary Company.
• Company having losses or negative reserves cannot declare dividends.
• Board Resolutions will be confidential from now.

What is Authorized Capital and what should be the minimum authorized capital for registering my company?

When you register a Private limited Company, the promoters of your Company need to decide on the amount of authorised capital and the share value they will get in return if they invest in your Company.

Authorised Capital or Registered Capital is the maximum ceiling limit of the capital up to which a Company can issue shares and collect money from its shareholders. The authorised capital can also be enhanced by passing a resolution at a meeting of the shareholders.

The minimum Authorised Capital of a Private Limited Company is Rs. 1 lakh and the Ministry of Corporate Affairs charges an amount of Rs 5,000/- as fee for allotting this minimum authorised capital.

Is it possible for two foreign nationals to register a company in India?

Yes, two foreign nationals can register a Company in India.

What is Start-Up India initiative?

On 69th Independence Day of India, the Prime Minister of India Mr. Narendra Modi proposed a programme called Start-Up India to encourage entrepreneurship in the country. Later on January 16, 2016, the Government of India formally launched the Start-Up India initiative celebrating the entrepreneurship spirit of country’s youth to unveil the Start-Up Action Plan.

Start-Up India programme ensures government’s support to the people who want to revolutionize India’s massive consumer industry with creative ideas and products promoting Make in India policy of the government. The programme will promote bank financing for start-ups in order to boost entrepreneurship and job creation.

WHAT IS A NIDHI COMPANY?

A Nidhi Company is different from a regular finance investment company or a non-banking financial company (NBFC), as it deals only with its members or shareholders, for the main purpose of mutual benefits of its all members. A nidhi company accepts deposits only from its members, and lends funds only to them on demand. Again, a Nidhi company is not entitled to carry out businesses/activities related with hire purchase financing, insurance, leasing finance, chit funds, acquisition of securities issued by any corporate body, etc., or issue any debt instruments (such as preference shares, debentures, etc.) in any form.

What are Authorized Capital and Paid-up Capital?

Both these categories of Capital are required to be specified in the Capital clause of the Memorandum of Association (MOA) of a company, at the time of incorporation of the company. In general, the Capital of a company is the sum of money which has been received from its shareholders, to carry on its activities and business.

The main differences between the authorized capital and the paid-up capital of a company are described below.

The Authorized Capital is the maximum value of the securities, which the concerned company is legally authorized to issue to the shareholders. This authorized share capital should be more than the paid-up share capital. Again, the authorized capital can be augmented anytime with prior permission of the shareholders and passing a resolution.

On the other hand, The Paid-up Capital is the amount of money actually paid/funded/invested by the shareholders of the company. The authorized capital encompasses the paid-up capital of the company. Here, it may also be added that the Companies Amendment Act of 2015 has removed the requirement of having a minimum prescribed paid-up share capital at the time of incorporation of the company anywhere in India.