Company Law and Types of corporate legal entities available in India

A corporate legal entity is a setup for running and managing a business. The various types of legal entities available in India for doing the business are: 

• Sole Proprietorship
• One person Company
• Private Limited Company
• Public Limited Company
• Limited Liability Partnership
• Partnership firm
• Liaison Office
• Project Office

The formation of a corporate legal entity in India is governed under the Company law through The Companies Act, 2013. A person can choose the suitable form depending upon:

• Nature of business
• Purpose/Objective of business
• Capital available and Cost of business
• Rules and regulations to be followed
• Managing the business
• Nature of liability
• Transfer of ownership
• Whether the company has to be continuous or temporary project-based

Basic features:

• Sole proprietorship- It is suitable for small businesses and self-employed people. The business has one proprietor who is responsible for all profits, losses, decisions, and risks. There is fast decision-making and fewer regulations to be followed. Easy to start and close. The owner's liability is unlimited. 
• One Person company – It is a legal entity separate from its owner. An individual manages the business, and the liability is limited by shares.
• Private Limited Company - It is the most prevalent form of business entity. It requires a minimum of 2 members, and the maximum can be 200 members. The liability is limited to the number of shares held by each member. It has got perpetual succession. Decision-making is better, and there is control over management.
• Public Limited Company – The minimum number of members required is seven and no limit for the maximum. The company invites public participation by subscribing to shares and debentures. The shares can be transferred freely. The legal compliances and regulations are much more in public limited companies. Since public money is involved, SEBI keeps a watch on the company's affairs through scrutiny of various reports. Large businesses prefer such formations.
• Partnership firm – It is a kind of association of people running the business as co-owners. All partners/co-owners share the profits and losses as agreed. Decision-making is collective. It is better than sole proprietorship if it is a medium-size business and requires good funding. Different business functions like marketing, production, sale, etc., can be taken care of separately by each partner, and thus, the efficiency increases.
• Liaison office – Foreign Companies seeking to enter Indian markets desire to set up a liaison office in India. It is an office which represents the Head Office of the parent company. It acts as a communication channel between the principal office of the company and the parties in India. It also provides information about market opportunities to the parent company.
• Project Office – It is set up by a foreign company in India for a specific project and is temporary.
• Limited Liability partnership – It has the features of both a Company and a partnership firm. It has limited liability like a Company and managing the entity based on an agreement like a partnership firm. It has a corporate personality separate from its partners. It is preferred mainly by professionals engaged in knowledge-based businesses. 

Formalities and Compliances:

There are certain legal formalities and compliances for starting and running the business. Some of the standard procedural requirements are:

• Preparing requisite documents for submission to the Registrar of Companies/Firms
• Applying for name approval
• Applying for incorporation
• Applying for DIN
• Permissions/Approvals from departments
• Payment of taxes
• Submitting various statutory reports 

We can take the assistance of legal firms and experts to select the form of corporate legal entity as suited to the proposed business and for taking care of legal compliances.