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Important Content

What is the Companies Act?

The Companies Act, 2013 is a central law that consolidates and amends all rules related to companies in India and is administered by the Ministry of Corporate Affairs (MCA). It covers the full life cycle of a company, including incorporation, management, accounts, audits, meetings, mergers, and winding‑up, and has chapters on governance, director duties, and penalties for non‑compliance.

Company Act & LLP Incorporation Services introduced modern concepts such as One Person Company (OPC), small company, mandatory Corporate Social Responsibility (CSR) for eligible companies, and stronger protection for minority shareholders. It also provides for institutions like the National Company Law Tribunal (NCLT) to handle company law disputes more efficiently.

Introduction to Company Act and LLP

The Company Act serves as a fundamental legislative framework governing the incorporation, management, and dissolution of companies. This regulatory framework is essential for establishing a structured approach to corporate activity, ensuring compliance, accountability, and transparency in the business environment. By providing guidelines for various types of business entities, including public and private companies, the Company Act delineates the regulations that govern their operations, enabling the protection of stakeholders’ interests and promoting fair practices.

Alongside the traditional corporate structure, the Limited Liability Partnership (LLP) has emerged as a popular alternative for business operators seeking a blend of operational flexibility and the benefits of limited liability. The LLP structure offers its partners limited personal liability, safeguarding their assets from the risks associated with business activities. This feature is particularly advantageous for professionals such as lawyers and accountants who often operate in collaborative environments. The LLP framework allows for a distinct separation between personal and business liabilities, thereby enhancing overall business security.

Basic requirements to start a company

To start a private limited company, there must be at least two shareholders and two directors, with at least one director being a resident of India as per the Act and related rules. A physical registered office in India is compulsory and must be backed by a recent utility bill plus rent agreement and NOC or ownership documents.

Directors need a Digital Signature Certificate (DSC) and a Director Identification Number (DIN), and the company’s name and main objects must be approved and filed through the MCA portal using forms like SPICe+. After verification by the Registrar of Companies (RoC), a Certificate of Incorporation is issued and PAN/TAN are applied, allowing the company to start business and open a bank account.

Key features of a private limited company

A private limited company has separate legal existence, meaning it can own property, enter contracts, and sue or be sued in its own name. Shareholders’ liability is limited to the unpaid amount on their shares, so personal assets are normally protected from business debts.

The Act also prescribes rules on maximum number of directors, requirement of at least one resident director, and, for certain classes, a woman director and key managerial personnel in larger public companies. Concepts like small company and OPC allow smaller businesses and single founders to enjoy lighter compliance within the same company framework.

Advantages of a company

Main advantages of a private limited company include limited liability, separate legal personality, and better credibility with banks, investors, and corporate clients. It is easier to raise equity funding through shares, bring in new investors, and eventually list or sell the business compared to simpler forms like proprietorship.

Shares can be transferred (subject to restrictions in the articles), enabling exit of existing promoters and entry of new ones without disturbing the business continuity. The structure also gives clear governance rules, which is attractive for institutional investors, venture capital, and large customers who prefer dealing with companies.

Disadvantages of a company

The main disadvantage is higher compliance cost and complexity, as companies must maintain statutory registers, hold board and general meetings, file annual financial statements and annual returns, and comply with many disclosure norms. Non‑compliance can attract penalties on both the company and its officers, including monetary fines and, in serious cases, prosecution.

There are also restrictions on related‑party transactions, loans to directors, and certain inter‑corporate dealings which require approvals and documentation. Professional assistance from a CA/CS is usually necessary, which increases running cost compared to simpler business forms.

What is an LLP Act?

A Limited Liability Partnership (LLP) is a separate legal entity that combines the limited liability of a company with the flexibility of a partnership. In India, LLPs are governed by the Limited Liability Partnership Act, 2008 and related Rules, which set out the framework for formation, rights and duties of partners, and compliance.

Partners in an LLP contribute capital and share profits according to the LLP agreement, while their liability for business debts is generally limited to their agreed contribution. The law also recognises designated partners who are responsible for compliance and filings with the Registrar of LLPs.

Requirements to start an LLP

An LLP needs at least two partners, and at least two of them must be designated partners, with at least one designated partner being resident in India. Like companies, an LLP must have a registered office in India and file incorporation documents and an LLP agreement with the Registrar.

Designated partners must obtain digital signatures and a Designated Partner Identification Number (DPIN or DIN, as integrated now) to sign electronic forms. After verification, the Registrar issues a Certificate of Incorporation for the LLP, giving it separate legal status.

Advantages of LLP

LLPs provide limited liability similar to companies while keeping internal management flexible, as profit‑sharing and decision‑making can be customised through the LLP agreement. Compliance requirements are generally lighter than those of companies, with fewer mandatory meetings and simpler filing requirements, especially for small LLPs.

Audit is mandatory only when turnover and capital contribution exceed specified thresholds, which can reduce cost for small professional or service firms below those limits. For many start‑ups and professional practices, LLP offers a good balance between protection of personal assets and ease of operation.

Company/LLP Registration

Company Act & LLP Incorporation Services  covers name reservation, DSC, DIN, drafting MOA/AOA or LLP Agreement, ROC filing, PAN, TAN, and certificate of incorporation. We provide end-to-end professional support, ensuring legal compliance, quick approvals, post-registration guidance, and smooth business commencement across India.

Company registration includes drafting the MOA & AOA, ROC filing, PAN–TAN application, and statutory compliance. We provide end-to-end support for seamless incorporation, legal accuracy, and timely approvals to help you start your business smoothly and compliantly in India.

Benefits of Choosing Professional Company/LLP Support

Choosing professional Company/LLP support ensures accurate registration, compliance, and documentation from day one. Experts handle legal formalities, draft agreements, and assist with name approval, PAN, TAN, and GST processes. This reduces errors, saves time, and ensures your business is structured correctly according to government regulations and industry standards.

Professional support also provides ongoing compliance management, including annual filings, ROC returns, bookkeeping, and advisory services. With dedicated experts monitoring deadlines and legal updates, your business avoids penalties and stays fully compliant. This allows founders to focus on growth while professionals manage regulatory responsibilities with precision and reliability.

FAQS

Q1. What is the minimum number of directors and shareholders required for a private limited company?

A private limited company requires at least two directors and two shareholders, with at least one director being an Indian resident. Directors can also act as shareholders, and the maximum shareholders allowed is 200.

No minimum paid-up share capital is required under the Companies Act, 2013, following amendments in 2015. This makes incorporation accessible for small businesses without capital thresholds.

Key documents include PAN and Aadhaar of directors/shareholders, proof of registered office (utility bill, rent agreement, NOC), DSC for directors, and MOA/AOA. The process uses SPICe+ form on the MCA portal for name approval, incorporation, PAN/TAN, and more.

Companies must hold annual board meetings, AGM, file financial statements (AOC-4), annual returns (MGT-7), and comply with audit, CSR (if applicable), and governance norms. Non-compliance leads to penalties on the company and officers.

Yes, it can issue shares to raise equity capital, attract VC/PE investors, and is suitable for scaling or eventual listing. This gives it an edge over partnerships for growth funding.

An LLP requires at least two partners, with at least two designated partners, one of whom must be an Indian resident. Designated partners are natural persons responsible for compliance.

The LLP Agreement, filed with the Registrar, outlines profit-sharing, management, and duties, offering flexibility unlike rigid company MOA/AOA. It is not publicly accessible like company documents.

Audit is required only if turnover exceeds ₹40 lakh or contribution exceeds ₹25 lakh; smaller LLPs have lighter compliance. Annual filings include Form 8 (Statement of Account & Solvency) and Form 11 (Annual Return).

No, LLPs cannot issue shares; funding is limited to partner contributions or loans, making it less suitable for VC/PE. Conversion to company is possible for scaling.

If partners reduce to one for over six months, the LLP must wind up; designated partners ensure ongoing compliance. Small/start-up LLPs get reduced penalties for defaults.

LLP has fewer filings, no mandatory board meetings/AGM, and optional audit for small ones, while private companies face stricter annual governance under Companies Act.

Private limited company, as it allows equity issuance and Startup India benefits; LLPs are ineligible for many schemes and harder for institutional investors.

Private companies pay 25% corporate tax (with surcharge); LLPs are pass-through (30% slab on partners, no dividend tax). Both need GST if thresholds met.

Yes, but at least one resident director/partner required; 100% FDI allowed in most sectors under automatic route.Foreign LLPs need specific approvals.