By knowing more about your vendors/partners/customers type of business you can determine your relationship risk.
|Legal Entity Type||Private Limited Company||Public Limited Company||Sole Proprietorship||One Person Company||Partnership||Limited Liability Partnership|
|Registration||MCA||MCA||Local Authority||MCA||Local Authority||MCA|
- Private Limited Company: Is a type of company whose ownership is private. This type of company can be formed with a minimum of 2 and maximum of 200 members. The shares of this type of company are not freely transferable and cannot issue a prospectus in the open market. PAN number will contain “C” as the fourth character and entity name’s first character in fifth position. Under this category members can choose below types of a private limited Company in India.
- Company Limited by shares
- Company Limited by Guarantee
- Unlimited Company
- Public Company: Is a type of company whose securities are traded on a stock exchange. This can be formed with a minimum of 7 members and there is no restrictions of the transferability of shares. This type of company requires more public disclosures and compliance’s with the government authorities. PAN number will contain “C” as the fourth character and entity name’s first character in the fifth position.
- Sole Proprietorship: This is simplest form of business one can operate. This is not a legal entity. The owner of the business becomes personally liable for debts, for taxation and for other legal purpose. That is owner and business are one and the same and proprietorship is not taxed as separate entity. PAN number will contain “P” as the fourth character and owners surname/last name’s first character in the fifth position.
- One Person Company: This type of company enables sole proprietor form of business to enter into the corporate framework, This allows a sole investor to form a company alone with limited liability. This type of company is similar to that of proprietorship concern without the ills generally faced by the proprietors. One of the most important feature of this type of company is that the risks mitigated are limited to the extent of the value of shares held by such person in the company. PAN number will contain “C” as the fourth character and entity name’s first character in the fifth position.
- Partnership: Partnership is type of relation between persons who have agreed to share the profits and losses of a business carried on by all or any of them acting for all. Partnership is not a separate legal entity and cannot own a property or incur debt. Partners of a partnership firm shall be personally and severally liable for the liabilities incurred by the firm. PAN number will contain “F” as the fourth character and entity name’s first character in the fifth position.
- Limited Liability Partnership:This is a combination of a company and a partnership firm. The liability of the partners in a LLP is limited and no partner shall be held liable for the acts of the other. It is a separate legal entity. PAN number will contain “E” as the fourth character and entity name’s first character in the fifth position.
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