Companies Act 2013 regulates Private Limited Company, Limited Liability Partnership, One Person Company and Public Limited Company in India. Many people who start their business choose Private Limited Company or Limited Liability Partnership at the beginning itself and some convert their running business into this structure later on. In this article Tax Vic will help you understand some of the important Provisions of the Companies Act, 2013 which you must know if you are associated with the company as a stakeholder.
Companies Act 2013, Provisions of the Companies Act 2013, Paid-up Capital, Company Secretary
Paid up capital as per companies Act 2013: Paid up capital in company can be as low as 10000 as per Companies Act, 2013, Paid up capital also called equity means the amount contributed by the shareholders in exchange of shares of the company.
Minimum criteria to start a private limited company: Private Limited Company which is the most popular for needs to have at least 2 directors among these 2, it is compulsory for one director to be a resident Indian.
If you are a single owner and are not going to need another person to partner with in your business, one Person Company is the most suitable structure for you. However note the below 2 important points for one person company:
i. Compulsory Conversion of an OPC into Private Limited Company: It is mandatory for an OPC to convert into a Private Limited Company within 6 months under below circumstances:
1. Paid up share capital of an OPC exceeds Rs.50 lakhs.
2. Average annual turnover of immediately preceding three consecutive financial years exceeds 2 crores.
ii. Voluntary Conversion
Voluntary conversion into a private limited company is not permitted unless 2 years is expired from the date of incorporation of the OPC.
Compliance after registration of Company: Company registered must fulfill all the compliance as prescribed by provisions of companies Act 2013 otherwise there is hefty penalty: Once you register a company you must take help of Company Secretary in filing compliance for your company. Company Secretary are professionals who are experts in any compliance matter related to your company.
Compliance Examples: Commencement of Business certificate, Director KYC to be done every year, Filing Balance sheet and Profit Loss account with the registrar of companies. Additionally, there are other compliance filing required whenever you go for change in director, removal of director, change in registrar office of the company, change in shareholding pattern and many other situational based compliances. Any changes you plan to make in your company, you should consult your company secretary.
Selecting structure under companies Act, 2013 gives your business more trust, it also helps you to go for startup recognition which will then help you apply for tax exemption as a startup but starting a company is just the small and important step. Compliance fulfillment of Companies Act,2013 is the most important thing otherwise not following compliance will cost heavy to your pocket and to your reputation. A company secretary can help you understand every aspect of Provision of companies Act,2013 in a simplest manner. Connect with Tax Vic to get free consultancy. It is very important to know important provisions of companies Act 2013 if you own a company.
Tax Vic gives you free consultancy if you have an idea and wants to start business but unsure of structure or if you are already running a business and wants any kind of help regarding Provisions of companies Act, 2013 you can connect with Tax Vic at firstname.lastname@example.org.