What Are The Different Types Of Business Entities – In India, we have three main types of business frameworks namely Sole Proprietorship, Partnership and Company (Pvt or Public), but a few years ago a new hybrid form of partnership and company came into existence known as Limited Liability (LLP). Each mechanism appears to have its own pros and cons and it depends on each business owner’s specific circumstances as to which structure is more appropriate for their business. It includes the level of personal responsibility you are willing to pay for your business obligations, your personal tax status, the level of administration you want to perform and how you want your business to be perceived.
The factors listed below are important and can help you decide on the best business structure.
What Are The Different Types Of Business Entities
Dissolution on death of a partner It can be dissolved at the will of all the partners or even one partner can apply for dissolution.
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A chartered company, a type of corporation that originated in early modern Europe. It had certain rights and privileges and was governed by certain obligations in accordance with a special charter granted to it by the sovereign power of the country, and such charter defines and limits certain rights, privileges and obligations and the areas in which they must be exercised. A charter generally grants a trade monopoly to a company in a particular geographic region or a particular form of trade article.
Economic companies are established by a special law of the National Assembly. The establishment of the organization is set out in the memorandum of association (MOA). The rules regarding the day-to-day management of statutory companies are laid down in the articles of association (AOA). The audit of the statutory company will be conducted by the Comptroller and Auditor General of India (CAGI).
Under Article 25, the Government may grant by license that an association may be registered as a limited company without using the terms “community” or “private limited” in its name. A permit would only be issued in the case of a ‘non-profit organisation’. In other words, the government can only issue a permit if it is certain that:
(i) The purpose of an association incorporated as a limited company is to promote sports, commerce, literature, science, religion, charity or any other useful object.
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Me). No invitation or acceptance of statement is prohibited. (Public company name should be given as ltd. ex. National Aluminum Company Limited, Chennai)
A limited liability company is a type of company established with at least 2 shareholders and 2 directors. Required minimum authorized or paid up capital of Rs. 1 lakh was omitted in the Companies (Amendment) Act, 2015 w.e.f. May 29, 2015. Another essential component of a joint-stock company is that the statute limits the right to sell its shares and also prohibits all invitations to the market to subscribe for the company’s securities. A maximum of 200 persons can become shareholders of a private company.
A joint-stock company is a company in which the liability of the shareholders is limited by memorandum to the amount (if any) not charged against the shares they own. Limited liability companies can be public or private companies. If the member has paid the entire sum of the shares, his obligation is equal to zero.
Me). the liability of its members is limited to the amount (if any) of the unpaid interest held by them.
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Ii). Such liability may arise during the life of the company and during the liquidation of the company.
A company in which the partner’s liability is limited to a fixed amount, as defined in the company’s memorandum of association. This means that the liability of the partners is limited by the MZ to defined standards, as they are guaranteed to contribute to the company’s assets in the event of the company’s dissolution.
An unlimited company is a company whose liability is not limited. the responsibility of a partner ceases when he ceases to be a partner of this company.
State-owned companies are companies authorized under the Indian Companies Act, 1956 in which at least 51%, including their paid-up share capital, is owned by the Central Government or a State Government or partly by the Central Government and partly by any one or more State Governments . Private interests in capital and management are not allowed in this type of organization. It has financial control and an autonomous personnel structure. The company does not have to worry about auditing, accounting and budget control measures.
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A holding company is a parent company that has a dominant position in various companies. For example, if the shares of a limited liability company or a private company are owned by another company, that company is called a ‘holding company’. The established partnership is a subsidiary and holding company. In most cases, branches operate separately, except in the case of ownership.
A subsidiary company is also called a company whose share in the total share capital is more than 51 percent owned by another company, i.e.
5. Classification by nationality a. Domestic Companies A domestic company refers to a company that is organized and engaged in commercial business in its own country. b. Foreign companies
Foreign Company means a company incorporated in a country outside India under the laws of that country. The following documents must be registered with the Registrar of Companies within 30 days from the date of incorporation of the company in India.
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(i) A certified copy of the agreement or legislation under which the company is incorporated, or the memorandum and articles of association of the company, written in English.
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Different Types Of Companies Explained With Examples
In India, we are an exclusive member of the Association of International Tax Consultants, an association of independent professional firms with representation across Europe, USA, Canada, South Africa, Australia and Asia. As we now know, there are many different types of businesses. Show and try to understand each of them.
Depending on the number of members/shareholders of the company; The 3 types of companies are (1) joint stock company, (2) joint stock company and (3) sole proprietorship.
A limited liability company called “Plc” is commonly used in the United Kingdom and “Inc.” is used in the United States.
A private company is a separate legal entity that is wholly owned by a relatively small group of individuals or groups (at least 2) and whose shares cannot be publicly traded on stock markets.
Types Of Companies
Companies can go from private to public by selling stock to the public, often as a way to raise a large amount of money. Conversely, public companies can be privatized if, for example, the majority owner wants to consolidate control.
A member can practically own the entire share capital of the company. Such a company is known as a “sole proprietor”. This can happen in both a private company and a public company.
The other member/members of the company may each own only one share. Such other members may simply be puppets who meet the minimum requirements of the Act.
Depending on the type of liability and limitation of members/shareholders of the company; The 3 types of companies are (1) limited liability companies, (2) limited liability companies, and (3) unlimited liability companies.
What Are The Different Types Of Business Entities? By Aron Govil