Legal Company Structures in India

1. Legal Company Structures in India https://mercuriusteam.com/company-formation/ Explore the diverse legal structures available for businesses in India. This presentation provides an overview of key entity types, highlights the importance of selecting the right structure, and offers insights tailored for entrepreneurs, startups, and foreign investors.

2. Sole Proprietorship & Partnership Sole Proprietorship Partnership This is the simplest business form, owned and managed by a single individual. It offers ease of setup with minimal regulatory compliance, no formal registration required, and profits are taxed as personal income. Ideal for small-scale businesses, it comes with unlimited personal liability. Formed by two or more individuals agreeing to share profits, this structure is governed by the Indian Partnership Act, 1932. It involves joint and several liability but has moderate compliance requirements, making it suitable for collaborations.

3. Limited Liability Partnership (LLP) Limited Liability Legal Entity Partners' liability is limited to their agreed contribution. Separate legal entity distinct from its partners. No Minimum Capital Lower Compliance No prescribed minimum capital contribution. Less stringent compliance compared to private companies.

4. Private Limited Company (Pvt Ltd) A Private Limited Company (Pvt Ltd) is India's preferred business structure, especially for startups and growing enterprises seeking external capital. It offers flexibility, formal recognition, and structured governance, fostering scalability and investor confidence for long-term growth. Separate Legal Entity Limited Liability Shareholding & Capital Enhanced Fundraising Potential A Pvt Ltd has a distinct legal identity, separate from its shareholders and directors. It can own assets, incur debts, and has perpetual succession, providing immense stability. Shareholders' personal liability is limited to the unpaid value of their shares, protecting their personal assets from company debts and losses. Requires 2-200 privately held shareholders. No minimum paid-up capital, but share capital defines ownership and facilitates fundraising via private placements. Highly attractive to external investors like VCs and banks. Structured governance and ease of issuing shares make it ideal for securing equity funding and debt financing.

5. Public Limited Company Minimum Requirements Public Capital Raising Requires a minimum of 7 members and 3 directors. There is no maximum limit on the number of members, allowing for broad public participation. Can raise capital from the general public through the issuance of shares, debentures, and other securities via Initial Public Offerings (IPOs) and subsequent public issues. Free Transferability of Shares Higher Compliance Burden Shares are freely transferable, meaning shareholders can sell or buy shares without restrictions, enhancing liquidity and investor flexibility. Subject to more stringent regulatory compliance and reporting requirements under the Companies Act, 2013, and SEBI regulations, ensuring transparency and accountability to public shareholders.

6. Foreign Company Structures in India Liaison Office Branch Office For market research and promotional activities, no commercial trade. Performs business operations, subject to RBI approval. Project Office Wholly Owned Subsidiary Temporary setup for specific projects, limited duration. Full control, incorporated as an Indian company, favored for long-term presence.

7. Key Considerations for Choosing a Structure Liability & Asset Protection Taxation & Compliance Burden Evaluate the extent of personal asset exposure. Understand the differing tax implications and regulatory adherence. Fundraising Potential Operational Flexibility Assess how each structure impacts access to capital and investors. Consider the ease of management and adaptability to growth. Selecting the appropriate legal structure is a critical decision that impacts your business's future. It influences liability, taxation, and ability to raise capital.

8. Thank You For more detailed guidance and personalized business setup advisory, please visit our website. https://mercuriusteam.com