A basic knowledge about how to lay foundation before constructing a building is required. Because we know, a weak foundation can destroy the whole building. Similarly before coming up with a startup you need to have a clear idea as to what should be your company type. All the different type of companies are mentioned in the Companies Act of 2013. The Companies Act of 2013 has brought about certain changes from the previous Companies Act of 1956. So, in provisions to the new company’s act, following are the different types of company that you need to be aware of:
One-person Company (OPC):
This is a new type of company introduced in the Companies Act, 2013. A One Person Company means that this company has only one person as a member. This gives a chance to the sole proprietors to enter the corporate market. The proprietor needs to have a minimum capital of Rs. 1 lakh. But, it has to be converted into a Private Company if the company crosses a turnover of 2 crores,
A Private company is a company which has a minimum paid-up share capital of Rs. 1 lakh. The necessary criteria for starting this company is that it should have a minimum of 2 people and the number of members should not exceed by 200. It can start its operations immediately after receiving the certificate of incorporation, thus no need to prepare a prospectus. Although, transfer of shares is restricted.
A pubic limited company is the one that has a minimum paid-up share capital of Rs. 5 lakhs. For a company to be a public company, it needs to have at least 7 members. Also, the transfer of shares is not restricted and it needs to have a minimum of 3 directors. A public company has the freedom to issue its shares for public subscription.
A dormant company is a company that is formed and registered for a future project or the one that has not been carrying out any financial transactions for the last two financial years. Such companies can apply to the ROC to gain the status of a dormant company.
This was some brief information about the different types of companies. Pick My Story will be back with such useful information. Keep reading!
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