Parent Company: Meaning, Types, & Examples

Difference between Private Limited, LLPs & OPCs

Now that we've introduced the differences between these three types, let's explore their features and registration processes more thoroughly. This will help you determine which one is the most suitable for your business needs.

Private Limited Company: Features

In India, the Private Limited Company stands as the predominant choice for company registration, governed by the Companies Act of 2013 under the jurisdiction of the Ministry of Corporate Affairs (MCA). This structure is favoured by startups and businesses aspiring for growth and stability, owing to its adaptable ownership model and efficient management practices.

Outlined below are some key characteristics of a Private Limited Company:

1. Limited Liability

• Shareholders enjoy limited liability, safeguarding personal assets from business debts.

2. Separate Legal Entity

• Regarded as a distinct legal entity from its shareholders, allowing it to engage in contracts, own assets, and litigate under its name.

3. Ownership

• Owned by shareholders who possess shares in the company, with ownership transfer facilitated through share transactions.

4. Management

• Managed by appointed Directors, while day-to-day operations are overseen by management, with significant decisions often requiring shareholder approval.

5. Shareholders

• Requires a minimum of two shareholders and can accommodate a maximum of 200.

6. Regulation and Compliance

• Governed by the Companies Act and regulated by the Ministry of Corporate Affairs, mandating compliance with annual financial filings, general meetings, and statutory record maintenance.

7. Investment and Funding

• Attracts investment and funding relatively easily due to its defined ownership structure and limited liability feature.

Private Limited Company: Registration in India

The Ministry of Corporate Affairs (MCA) has introduced a streamlined and online process for company incorporation known as Simplified Proforma for Incorporating Company Electronically Plus (SPICe+), comprising two parts: Part A and Part B.

The steps are as follows:

1. Step 1: Apply for DSC

• Obtain a Digital Signature Certificate (DSC) from Certifying Agencies (CAs) with either one or two-year validity.

2. Step 2: Apply for Name Approval

• Apply for name using SPICe+ Part A which facilitates 'Name Reservation' with the provision for two proposed names and one re-submission (RSUB).

Note: While simultaneous application for name approval (Part A) and Incorporation (Part B) through SPICe+ is feasible, only one name can be reserved.

3. Step 3: Apply for Company Registration & Other Applications

• Following name approval, apply for Company Registration using SPICe+ Part B, which also includes the application for allotment of Director Identification Number (DIN), Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), etc.

4. Step 4: Apply for a Bank Account

• Open a current account for your company to facilitate seamless financial transactions and business operations.

5. Step 5: File the Commencement of Business Certificate

• Within 180 days of incorporation, file the Commencement of Business Certificate through Form INC-20A, which is a declaration submitted by the Director of the Company to the Registrar of Companies.

Upon approval of the SPICe+ Form, the Registrar of Companies (ROC) issues the Certificate of Incorporation, confirming the successful registration of your company.

The Certificate of Incorporation includes vital information such as the Company's name, registration number (CIN), date of incorporation, registered office address, and so on.

Example of CIN: U72200KA2013PTC097389

Read more about what each letter in a CIN signifies here.

{{pvt-cta}}

Limited Liability Partnerships: Features

A Limited Liability Partnership (LLP) is a business structure that combines features from both traditional partnerships and limited companies. And, LLPs are often favoured by professional services firms, small businesses, and ventures seeking the blend of partnership flexibility and limited liability protection.

Key characteristics of an LLP include:

1. Limited Liability

• Partners in an LLP benefit from limited liability akin to private limited companies.

2. Separate Legal Entity

• An LLP exists as a distinct legal entity from its partners, capable of owning assets, entering contracts, and engaging in legal proceedings independently.

3. Ownership

• Partners own the LLP, with the ownership structure outlined in the LLP agreement. Ownership transfer typically requires consent from other partners.

4. Management

• Managed by partners or a designated management team as specified in the LLP agreement. Decision-making is often collaborative, with each partner having an equal say.

5. Number of Partners

• Requires a minimum of two partners, with no maximum limit.

6. Regulation and Compliance

• Governed by the Limited Liability Partnership Act in India, featuring less stringent regulatory requirements compared to private limited companies. Compliance entails filing annual returns and maintaining statutory records.

7. Flexibility

• Offers enhanced flexibility in internal management and decision-making processes compared to private limited companies.

Limited Liability Partnerships: Registration in India

Establishing a Limited Liability Partnership (LLP) as a legally recognized business structure involves several crucial steps. Here is a brief and comprehensive outline of the LLP registration process.

1. Step 1: Obtain a DSC

• Obtain a Digital Signature Certificate (DSC) from Certifying agencies. To know more about the process, click here.

2. Step 2: Apply for Name Reservation

• Reserve an LLP's name via the LLP-RUN form, overseen by the Central Registration Centre. Up to two names can be proposed.

3. Submit the FiLLiP Form

• Fill out the FiLLiP form and submit it to the Registrar along with the Subscriber sheet and Director's consent (Form DIR-9).

4. Draft & File the LLP Agreement

• File the LLP Agreement using Form 3 on the MCA portal within 30 days of registration.

Upon approval of the FiLLiP Form by the Registrar of Companies (ROC), you will receive the Certificate of Incorporation, which has important details such as the LLP's name, registration number (LLPIN), date of incorporation, registered office address, and so on.

Example of LLPIN: AAA-1234

{{llp-cta}}

One Person Companies: Features

One Person Companies (OPCs) present a unique business structure where a single individual can establish and manage a company. Combining aspects of a Private Limited Company and the advantages of Sole Proprietorship, OPCs cater to entrepreneurs and business owners who handle all ownership, operation, and management duties themselves.

1. Sole Ownership

• An OPC is solely owned and managed by a single individual, referred to as the sole shareholder or member.

2. Limited Liability

• Like other corporate structures, OPCs offer limited liability protection to the sole owner.

3. Separate Legal Entity

• OPCs are recognized as separate legal entities independent of the sole owner. This legal distinction enables you to enter contracts, own assets, and participate in legal proceedings under your company’s name.

4. Perpetual Succession

• Despite having only one member, OPCs feature perpetual succession. A nominee appointed during incorporation typically assumes control in the absence of the sole member.

By combining limited liability, separate legal entity status, and simplified operations, OPCs emerge as an appealing choice for small businesses and startups led by single entrepreneurs.

One Person Company: Registration in India

Due to their similarities with private limited companies, OPCs also employ SPICe+ for their company registration process.

SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) is a comprehensive online form introduced by the Ministry of Corporate Affairs (MCA) in India to streamline and simplify the company registration process.

1. Step 1: Apply for DSC

• Obtain a Digital Signature Certificate (DSC) from any Certifying Agencies in India.

2. Step 2: Submit Part A of SPICe+ Form (If filled separately)

• Apply for name approval using Part A of the SPICe+ form, allowing for submission of up to two proposed names and one re-submission.

3. Step 3: Draft the MoA & AoA

• Draft the Memorandum of Association (MoA) and Articles of Association (AoA) detailing the company's objectives and rules.

4. Step 4: Submit Part B of SPICe+ Form

• Submit Part B of the SPICe+ form along with necessary documents, including DSC, MoA, AoA, and declarations. Pay the prescribed fee for registration.

5. Step 5: Appoint a Nominee

• Appoint a nominee director as required by OPC regulations.

6. Step 6: File for the Commencement of Business Certificate

• Within 180 days of incorporation, file for the Commencement of Business Certificate (Form INC-20A) with the Registrar of Companies.

Upon successful approval of the SPICe+ Form, you’ll receive an email notification from the MCA containing the Certificate of Incorporation (COI) and PAN and TAN details of the Company.

The certificate of Incorporation (COI) includes crucial details such as the Company Name, Registration Number (CIN), Date of Incorporation, Registered Office Address, Company Structure, and more.

{{opc-cta}}

For added clarity, check out our curated collection of sample templates, where you can download and customize most of these above-mentioned templates, as required.

Company Registration with Razorpay Rize

Razorpay Rize provides a wide array of services to facilitate an end-to-end streamlined company registration process, all at the lowest fees and without any hidden charges. Explore the different legal structures below to find the one that’s best for your business.

{{company-cards}}

Our package includes:

• Company Name Registration
• 2 Digital Signature Certificates (DSCs)
• 2 Directors’ Identification Numbers (DINs)
• Certificate of Incorporation(COI)
• MoA & AoA [Applicable for Private Limited Companies and OPCs]
• LLP Agreement [Applicable for LLPs]
• Company PAN & TAN

*Prices and documents can differ based on the company type.

Find Out Which Company Type to Register

If you operate a small business with limited resources, opting for LLP or OPC registration might be more favourable due to lighter compliance requirements. However, for larger businesses with substantial capital needs, registering as a Private Limited Company provides greater flexibility in raising funds. So, before proceeding with the registration of either a Private Limited Company, LLP, or OPC, it is essential to carefully evaluate the following factors.

• Business Nature and Size
• Fundraising Requirements
• Tax Implications
• Personal Liability Protection

Ultimately, the choice between a Private Limited Company, LLP, or OPC structure depends on the unique characteristics of your business, including its nature, size, fundraising requirements, tax implications, and personal liability protection.

Still confused about which company type to register with? We’ve got you covered! Introducing our latest tool - "Know Your Company Type."

For the first time in India, answer a quick set of questions about your startup, and this tool will utilize your responses to identify the perfect company registration type for you. Find your ideal fit with just one click!

{{know-your-company}}

In summary, choosing between Private Limited Companies, OPCs, and LLPs depends on your business goals and preferences. Each structure offers unique benefits, whether it's scalability with Private Limited Companies, convenience with OPCs, or simplicity with LLPs. If you have any unanswered questions or want to get started with the company registration process, feel free to get in touch with us!

‍

Eligibility

• New and existing Micro and Small Enterprises engaged in manufacturing, service, or retail activity, excluding Educational Institutions, Agriculture, Self Help Groups (SHGs), Training Institutions, etc.
• All service sector enterprises under the MSMED Act are eligible for coverage.
• Must be a “First-generation” entrepreneur.

Application procedure for Startups

• Go to https://www.cgtmse.in/Home.
• The homepage will open.
• Click on the “Register” option seen on the homepage.
• Enter your details and click on “Get OTP.”
• After typing in the OTP, the registration will be completed.
• “Login” to the page again. You will have to fill in the required information such as GST details, Bank Account details, and ITR.
• Click on “Submit” to avail the benefits under this scheme.
• Download the financial report, calculate the guarantee, etc, if needed.

Benefits of the Scheme

• The guarantee cover available under the scheme is to the extent of 75 percent of the sanctioned amount of the credit facility.
• Credit or loans in the northeast region, UT of J&K, and UT of Ladakh for credit facilities up to Rs 50 lakh, are covered by an 80 percent guarantee.
• For micro and small businesses operated or owned by women, as well as SC/ST individuals, the guarantee cover stands at 85%.
• For up to 5 lakh micro-enterprise loans, the guarantee cover stands at 85%.
• The credit is without any collateral or third-party guarantees.

The guarantee will commence from the e-date of payment of the guarantee fee. It will run for the agreed term credit tenure in the event of term loans / composite loans and for a period of 5 years in the case of working capital facilities only granted to borrowers or for such period as the Guarantee Trust may specify in this regard.

Frequently Asked Questions

Product Mark

A product mark is a kind of trademark used exclusively on goods, helping consumers identify the origin of the product and ensuring its authenticity. It plays a crucial role in distinguishing one business's goods from another, contributing to brand recognition and reputation.

Product marks fall under trademark classes 1 to 34, which categorise various types of goods, including chemicals, machinery, and textiles. For example, the "Nike" logo on shoes is a product mark that signifies the brand's origin and quality. 

Service Mark

A service mark is a trademark used to distinguish one business's services from those offered by others. Unlike product marks, which apply to goods, service marks highlight the origin and quality of services, helping customers identify and trust a particular service provider.

These marks typically fall under trademark classes 35 to 45, covering various services such as advertising, financial services, and hospitality. For instance, the "Taj Hotels" emblem represents a service mark that signifies premium hospitality services. 

Collective Mark

A collective mark is a type of trademark used to identify goods or services offered by members of a group, association, or institution. It ensures that the products or services meet specific quality or ethical standards set by the organisation holding the mark.

These marks distinguish the collective efforts of a group rather than an individual business. For example, the Chartered Accountant (CA) designation in India serves as a collective mark in trademark, representing professionals certified by the Institute of Chartered Accountants of India (ICAI).

Certification Mark

A certification mark is a symbol used to certify that a product meets specific standards related to origin, material, quality, or manufacturing methods. It guarantees that the certified product complies with established benchmarks, regardless of the owner’s business.

Certification mark examples include the "ISI" mark on electrical appliances and the "Agmark" label on food products in India, both of which assure consumers of quality and safety. Such marks are commonly found on food, electronics, and toys.

Shape Mark

A shape mark protects the distinctive shape of a product, enabling consumers to associate it with a specific brand. It ensures that unique designs contributing to a product's identity remain exclusive to the brand. For instance, the iconic contour shape of Coca-Cola bottles and the unique design of Fanta bottles are classic examples of shape marks that enhance brand recognition and trust.

Pattern Mark

A pattern mark protects distinctive designs or patterns used on a product to set it apart from competitors. To qualify, the pattern must be unique and easily recognisable—generic or common patterns are often rejected. For example, the well-known Burberry check pattern on their clothing and accessories is a classic pattern mark that helps identify the brand.

Demonstrating the uniqueness of the pattern is essential for successful registration, as it ensures the design remains exclusive to the brand, reinforcing its identity in the market.

Sound Mark

A sound mark is a unique audio signature linked to a product or service, allowing consumers to identify its origin through sound. It plays a significant role in branding, often used as an audio mnemonic in advertisements. A well-known example in India is the IPL tune, which instantly evokes recognition of the Indian Premier League.

Arbitrary and Fanciful Trademarks

Arbitrary and fanciful trademarks are distinct categories that stand out for their unique qualities. A fanciful mark is a made-up term or word with no prior meaning, making it highly distinctive and easy to register. For example, "Google" and "Kodak" are fanciful marks, as these words were coined specifically for the brands and have no inherent connection to their respective products.

On the other hand, an arbitrary mark uses a commonly known word but has no direct relation to the product or service it represents. "Apple," for instance, is an arbitrary mark since it’s a well-known word but doesn’t link directly to computers or electronics. 

Geographical Indications (GI)

A Geographical Indication (GI) is not a type of trademark but a separate form of intellectual property protection. It denotes a product’s specific geographic origin and assures consumers of its quality or reputation linked to that region. GIs help preserve the uniqueness of products tied to their location. For example, "Darjeeling Tea" and "Banarasi Silk" are GIs that signify the products’ origins and qualities unique to those regions.

How to Choose the Right Type of Trademark?

1. Assess the Nature of Your Product/Service
   
   Determine the characteristics and qualities of your product or service. Understanding its nature helps in choosing the appropriate trademark type. For instance, if your product has a unique shape or design, a shape mark could be suitable. If your service stands out for its quality or reputation, a service mark might be more fitting.

2. Focus on Branding Goals and Industry Standards

Consider your branding goals—whether you aim to build recognition, guarantee quality, or differentiate your offering. Also, take into account industry practices.

For instance, if you're part of a group or association, a collective mark might be more suitable, whereas a certification mark may be necessary for products requiring quality assurance. Ensure that the trademark aligns with your long-term branding strategy.

3. Consult a Trademark Expert if Necessary

If you are uncertain about which trademark suits your business, it’s advisable to consult a trademark expert. They can assess your product or service and guide you on the best trademark type based on legal requirements and market needs. This ensures that your trademark selection is legally sound and provides optimal protection.

Examples of Trademarks in Action

1. Food Industry
   
   Pepsi uses a product mark that consists of its distinctive logo, which is instantly recognisable by its red, white, and blue colour scheme. This trademark is essential in helping customers identify the Pepsi brand in a competitive market filled with various soft drink options. The product mark not only includes the logo but also the unique design of its packaging, ensuring that every Pepsi product stands out on store shelves.

2. Fashion Industry

Louis Vuitton has trademarked its iconic monogram pattern as a pattern mark. This pattern, featuring the “LV” logo repeated across their products, is instantly recognisable worldwide. The distinctive design appears on bags, luggage, and other luxury accessories, making it a signature of high-end fashion.

By using this pattern mark, Louis Vuitton differentiates itself from other brands and maintains its status in the luxury market, ensuring that customers associate the design with quality and exclusivity.

3. Technology Industry
   
   The name Microsoft is a suggestive mark. It combines “microcomputer” and “software,” hinting at its products (software for small computers) without explicitly describing them. Suggestive marks require consumers to make a mental connection between the name and the product or service.

This type of trademark is distinctive while maintaining a subtle association with the brand's offerings, making it a powerful branding tool in the technology sector.

4. Hospitality Industry
   
   Marriott International uses a service mark to represent its brand and distinguish its services in the hospitality industry. The service mark covers not only the name “Marriott” but also its reputation for providing high-quality customer service, luxury, and a wide range of hospitality offerings.
   

From hotels to resorts, Marriott’s service mark assures customers of a consistent experience, helping the brand stand out in the competitive world of hotels and travel.

Frequently Asked Questions