Introduction

India's business landscape has evolved significantly, offering various company structures that cater to different needs. Whether you are an entrepreneur, investor, or business professional, understanding the different types of companies in India is crucial for making informed decisions. The Companies Act, 2013, governs corporate structures, ensuring legal compliance and operational efficiency. Today, as we move into 2025, India remains a dynamic place for startups, MSMEs, and big businesses, each within different legal frameworks.

This blog discusses the various company types in India, their advantages, and how they work.

List of Various Types of Companies in India

The above table provides a list of India's various types of companies based on various criteria:

Brief Overview of Each Company Type

1. Private Limited Company

Private Limited Company (Pvt Ltd) is among the most preferred business forms in India. It is listed in the Companies Act, 2013 and at least two shareholders and directors are mandatory. The members' liability is only to the extent of shareholding, making it a popular choice for startups and small businesses.

Key Features:

• Limited liability protection

• Separate legal entity

• Restrictions on share transfer

• Shares cannot be publicly traded.

• Requires statutory compliance (filing returns, audits, etc.)

Example: Startups, mid-sized businesses, and family-owned enterprises.

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2. Public Limited Company

A Public Limited Company is listed on the stock exchange and is able to raise funds from the public via IPOs (Initial Public Offerings). It must have a minimum of three directors and seven shareholders.

Key Features:

• Shares freely transferable

• Higher regulatory compliance

• Eligible to raise funds from the public

• Needs a minimum paid-up capital

Example: Large-sized businesses, firms seeking expansion.

3. One Person Company (OPC)

Introduced under the Companies Act, 2013, an OPC is suitable for solo entrepreneurs. It enables a single individual to operate a company with limited liability.

Key Features:

• Single owner with limited liability

• Easier to manage compared to Pvt Ltd companies

• Cannot raise funds from the public

• Best suited for small businesses and professionals

Example: Freelancers, consultants, and small entrepreneurs.

4. Companies Limited by Guarantee

A company where the liability of members is limited to the extent to which they agree to contribute  in the event of winding up.

Key Features:

• Share capital is not required.

• Mostly applied for charities and non-profit organizations.

• Liability is restricted to a stipulated amount.

Example: Schools, research foundations.

5. Companies Limited By Shares

A company where shareholders' liability is limited to the unpaid amount on their shares.

Key Features:

• Shareholders' personal assets are protected.

• Share issue is used for capital-raising.

• Most common business structure in India.

Example: Most public and private limited companies.

6. Unlimited Company

A company in which the members have unlimited liability, i.e., they are personally liable for debts of the company.

Key Features:

• No limit on member liability.

• Rarely used due to high-risk exposure.

• Ideal for companies where high trust and transparency are needed.

Example: Private professional firms.

7. Small, Micro, and Medium Companies

Companies classified according to the turnover and investment limits under MSME categorization.

Key Features:

• Small: A firm with an Investment below Rs. 10 crores, and turnover less than Rs. 50 crores per annum.

• Micro: A firm with an Investment below Rs. 1 crore, and turnover less than Rs. 5 crores per annum.

• Medium: A firm with an Investment below Rs. 50 crores, and turnover less than Rs. 250 crores per annum.

Example: Local manufacturing units, startups.

8. Holding Company

A company that controls another company by owning majority shares.

Key Features:

• Controls subsidiary company decisions.

• Used for corporate structuring and taxation benefits.

Example: Tata Sons (Holding company for Tata Group).

9. Subsidiary Company

A company in which another company possesses majority shares and control.

Key Features:

• Exists separately but is governed by a parent company.

• Can be wholly-owned or partially owned.

Example: Jio Platforms (subsidiary of Reliance Industries).

10. Listed and Unlisted Company

• Listed Company: A listed company is a type of public sector company whose shares are listed on the stock exchange and available for publicly trading at stock exchanges like NSE/BSE.

Example: Infosys

• Unlisted Company: Unlisted companies are not listed on the stock market, so they are privately owned.Unlisted companies have greater control of their operations. Their shares are held privately and are not available for trading in the public domain

Example: BYJU’S

11. Government Company

A company in which the government has a minimum 51% shareholding.

Key Features:

• Functioning under the control of the government.

• Offers major services such as energy, transport, and telecommunications.

Example: ONGC, Indian Oil Corporation.

12. Foreign Company

A company incorporated outside India but has operations in India.

Key Features:

Need to comply with Indian laws

• Can be wholly owned or a joint venture

• Subject to RBI and FDI regulations

• Need to register with the Registrar of Companies (RoC).

• Subject to FEMA and other regulatory compliances.

• Suitable for multinational corporations (MNCs).

Example: Google India, Amazon India.

13. Associate Company

A firm in which another firm holds 20-50% of shares, having an influence but not controlling it.

Key Features:

• Influence but no complete control over operations.

• Strategic investments for business growth.

Example: Maruti Suzuki (Associate of Suzuki Motors).

14. Section 8 Company

A Section 8 Company is a non-profit organization established with the aim of promoting social welfare, education, or charitable activities.

Key Features:

• No minimum capital requirement

• Limited liability protection

• Tax exemption available.

• No distribution of profits to members.

• Profits must be used for charitable purposes

Example: Charitable organizations, social enterprises, and NGOs

15. Dormant Company

A company registered but not actively conducting business.

Key Features:

• Maintains legal status for future use.

• Requires annual compliance filings.

Example: Startups waiting for funding.

Limited Liability Partnership (LLP)

An LLP combines the features of both a partnership firm and a company, offering the benefit of limited liability to its partners.

Key Features:

• Separate legal entity

• Requires at least two designated partners.

• No minimum capital requirement.

• Partners’ liability limited to their contribution

• Less compliance than a private limited company

Examples: Professional services, consulting firms, legal and accounting firms.

Partnership Firm

A Partnership Firm is a business entity where two or more people share profits and responsibilities as per a partnership agreement.

Key Features:

• No requirement for registration (but recommended)

• Governed by the Indian Partnership Act, 1932.

• Unlimited liability of partners

• Simple tax structure

• No separate legal entity

Examples: Small businesses, traditional family businesses, and traders.

Sole Proprietorship

A Sole Proprietorship is the simplest form of business where a single individual owns and manages everything.

Key Features:

• No legal distinction between the owner and the business

• Minimal compliance requirements

• Owner has unlimited liability.

• No formal registration required.

Examples: Small retailers, freelancers, and self-employed professionals.

Joint Venture Company

A Joint Venture (JV) is a business partnership between two or more companies to achieve a specific goal.

Key Features:

• Shared ownership and control

• Usually created for a specific project

• Legal structure varies based on agreement

Examples: International collaborations, infrastructure projects, and technology partnerships.

Conclusion

Choosing the right type of company in India is a crucial decision that depends on factors like business goals, investment needs, liability concerns, and regulatory compliance. Whether you are a startup founder, a corporate investor, or a freelancer, understanding these company structures helps you make strategic business decisions.

If you're looking to invest in promising Indian companies, explore investment opportunities with Motilal Oswal for expert guidance and insights.

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FAQs

1. What kind of company is ideal for Indian startups?

A Pvt Ltd Company is the most suitable for startups because of limited liability, investor attraction, and scalability.

2. How does LLP differ from Pvt Ltd Company?

An LLP is more flexible with less requirement of compliance, while a Pvt Ltd Company offers more investment prospects and limited liability.

3. Can an individual start a company in India?

Yes, an OPC enables individual entrepreneurs to incorporate with limited liability.

4. Which business structure is tax-efficient?

An LLP is tax-efficient as it avoids dividend distribution tax (DDT) and offers flexible profit-sharing options.

5. Which type of company is most easily registered in India?

A Sole Proprietorship is most easily registered with low compliance, but it does not offer protection for limited liability.

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