BUSINESS ENTITIES AVAILABLE IN INDIA AND HOW TO INCORPORATE THEM

Introduction
A Business Entity also know as an enterprise or firm is an organization designed to provide services, goods or both to the consumer. Company is a voluntary association of persons formed for the purpose of doing business having a distinct name and limited liability. However, company is not a citizen so as to claim fundamental rights granted to citizens.

Types of Business Entities in India

Private Limited Company Public Limited Company Unlimited Company Limited Liability Partnership (LLP) Partnership

-------- Sole Proprietorship Liaison Office/Representative Office Project Office Branch Office Joint Venture Company Subsidiary Company

Classification of companies
On the basis of business activities undertaken: Manufacturing Service Non-banking finance Non-profit making producer

On the basis of liabilities of the members and directors:

1. With limited liability. 2. With unlimited liability. a) by shares b) by guarantee & having share capital c) by guarantee

On the basis of membership pattern/size 1. Public a) unlisted b) listed 2. Private a) independent b)subsidiary of public co. 3. Government

Public Limited Company

It must have at least seven shareholders. A public company is not authorized to start business upon the grant of the certificate of incorporation. In order to be eligible to commence business as a corporation, it must obtain another document called "trading certificate".

 It must publish a prospectus or file a statement in lieu of a prospectus before it can start transacting business. A public company is required to have at least three directors. It must hold statutory meetings and obtain government approval for the appointment of the management.

Private Limited Company

A private company is a company which has the following characteristics: shareholders right to transfer shares is restricted; the number of shareholders is limited to fifty; and an invitation to the public to subscribe to any shares or debentures is prohibited.

Unlimited company
An unlimited company is a hybrid company incorporated either with or without a share capital (and similar to its limited company counterpart) but where the liability of the members or shareholders is not limited - that is, its members or shareholders have a joint, several and unlimited obligation to meet any insufficiency in the assets of the company in the event of the company's formal liquidation.

Limited Liability Partnership

LLP provides the benefits of limited liability of a company but allows its members the flexibility of organizing their internal management on the basis of a mutually-arrived agreement, as is the case in a partnership firm. no partner is liable on account of the independent actions of other partners, thus allowing individual partners to be shielded from joint liability created by another partners

Partnership
A partnership is an arrangement where entities and/or individuals agree to cooperate to advance their interests. In the most frequent instance, a partnership is formed between one or more businesses in which partners (owners) co-labour to achieve and share profits or losses (i.e. unlimited liability)

Sole Proprietorship
A sole proprietorship, also known as a sole trader or simply a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts.

Joint Venture Company

A joint venture is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They both exercise control over the enterprise and consequently share revenues, expenses and assets.

Subsidiary company
A subsidiary, in business matters, is an entity that is controlled by a separate higher entity. The controlled entity is called a company, only an entity representing a legal fiction as a separate entity can be a subsidiary.

LIAISON OFFICE The role of Liaison Office is limited to collection of information, promotion of exports/imports and facilitate technical/financial collaborations. Liaison office cannot undertake any commercial activity directly or indirectly. BRANCH OFFICE Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Offices in India. A branch office is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer. PROJECT OFFICE Foreign companies planning to execute specific projects in India can set up a temporary project/site offices in India for carrying out activities only relating to that project.

Procedure to Establish Business in India

In India establishing a business takes some time. Besides incorporation there are many other formalities in establishing a business in India. The following slide shows steps to incorporate a private ltd. Company.

Requirements for a Company

A Registered Business Name A Registered Office Shareholders Share Capital Memorandum of Association Articles of Association Certificate of Incorporation Auditors Accounts Registers, etc Company Seal

THANK YOU

- SIDDHARTH PASUMARTHY