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Business Entity Details
Business Entity Details
REGISTERED PARTNERSHIP
The minimum number of persons required for forming a partnership firm is 2 and maximum 100. The
partnership Deed is to be prepared in Rs. 5,000/- worth stamp paper and have to get it registered with
the Registrar of Firms, Thiruvananthapuram. The entity is formed under Indian Partnership Act and as
you may be aware, the partners will be equally and severally liable for all the debts of the firm.. and it is
the main disadvantage of a partnership. The percentage of share, profit / loss sharing pattern, banking
operations, and all the affairs of the business will be traversed through the Deed.
The actual details of a limited liability partnership depend on where you create it. In general, however,
your personal assets as a partner are protected from legal action. Basically, the liability is limited in the
sense that you may lose assets in the partnership, but not those outside of it (your personal assets).
The partnership is the first target for any suit, although a specific partner could be liable if
they personally did something wrong.
A Private limited company is formed lawfully with limited liability or legal protection for its shareholders
but that places restrictions on its ownership.
A Private Limited Company is a company which is privately held for small businesses. The liability of
the members of a Private Limited Company is limited to the number of shares respectively held by
them. Shares of Private Limited Company cannot be publicly traded.
Private Limited Company is the simplest and a very popular form of Business Registration in India. It
can be registered with a minimum of two people. Limited liability protection to shareholders, ability to
raise equity funds, separate legal entity status make it the most recommended type of business entity
for millions of small and medium-sized businesses that are family owned or professionally managed.
Minimum Requirement for Private Limited Company:
A minimum number of two Directors who are adults.
One of the Directors of a private limited company has to be an Indian Citizen and Indian Resident.
The other director(s) can be a Foreign National.
It is also required to have two shareholders of a company.
The shareholders can be natural persons or an artificial legal entity.
Advantages of Private Limited Company:
Here are some advantages to a Private Limited Company.
There is a Limited risk to personal assets in Private Limited Company.
Pvt. Ltd. Co. is a Separate Legal Entity.
In the Private Limited Company there would Limited Liability for members.
Shares of a company limited by shares are transferable by a shareholder to any other person.
The transfer is easy as compared to the transfer of interest in business run as a proprietary concern or
a partnership
Just as one person can bring a legal action in his/her own name against another in that person’s name,
a company being an independent legal entity can sue and be sued in its own name.
A company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally
dissolved.
For a private company, the earlier minimum number of the share capital was Rs. 1,00,000, but now
there is no such minimum capital compulsion. Therefore there is no pressure of fund requirements.
It is easy to fetch funding in a private limited company by transferring of shares.
According to the Indian Companies Act, 2013, a ‘public company’ means a company which is not a
private company. It is governed under the provisions of the Companies Act, 2013.
A Public Limited Company (PLC) is the legal designation of an Limited Liability Company (LLC) that has
limited liability and offers shares to the general public. PLCs can be listed or unlisted on a stock
exchange. They are strictly regulated and must publish their true financial health.
They are required to have two directors and are bound by much more transparency. The biggest
advantage of forming a PLC is the ability to raise capital by issuing public shares.
While there is no limit on the number of members, it is formed by the association of persons voluntarily
with a minimum paid up capital of 5 lakh rupees. Transferability of shares have no restriction. The term
public limited is added to its name at the time of incorporation.
Regards.
Shyam Prasad P
Tax Practitioner and Business Consultant
shyampuravankara07@gmail.com