One of the most recommended ways to start a business in India is to form a Private Limited Company. With some limits on ownership, this form of corporation has limited liability for its members. An LLP is run by partners who own and operate the business. In the case of a private limited corporation, directors may be separate from shareholders.
The Corporations Act of 2013 provides for the incorporation of different forms of companies with differing degrees of responsibility for owners and members. In addition to deciding between the organizations (LLP, Private Limited Corporation, and One Individual Company), proponents can also choose between the three types of Private Limited Companies based on the company's needs.
1. Limited Liability Partnership Members' liability in these companies is limited to the nominal share number stated in the Memorandum of Association. The shareholder cannot be found accountable or required to pay more than the amount of money he or she spent in the firm.
2. Limited Liability Partnership The members' responsibility of a private limited partnership limited by guarantee is limited to the amount of liability each member undertakes in the Memorandum of Association. As a result, members of a Private Limited Company Limited by Guarantee cannot be found liable for a sum in excess of the amount of guarantee performed by the partner in the Association Memorandum.
Furthermore, the shareholder's guarantee in a Limited by Guarantee corporation can be obtained only in the event of the company's dissolution. When a Corporation Limited by Contract is a going concern, the members' guarantee cannot be revoked.
3. Private Limited companies are organizations that have no limitations on the liabilities of their owners. Each member is directly responsible for the full sum of the company's debts and liabilities. As a result, the creditors of an unlimited corporation have the right, once the company is wound up, to place the company's debt and liabilities on shareholders.