Hi I want to know what is the current legal status of One person company in India. There are a lot of reports that its being given the legal status in 2008 by the Government. What are the benefits of having a one person company over a proprietorship company as per Indian company law. Thanks
If Indian Law is loosely based on the UK or laws of the rest of the commonwealth countries then it would be like this. A Sole Proprietorship is one where there is no legal distinction between the owner and the business so in terms of risk, there is unlimited liability. The owner is responsible for all the actions and financial risks involved by the company. This means that if the sole proprietorship goes into debts, anyone its owes can take procession of the owners personal properties. A Company is in the legal terms considered as a separate entity from its owners and managers. Under law, it is almost treated like a legal person and the company is responsible for its own debts and actions. The responsibility of the owner/shareholders would be only limited to the amount of capital invested in the company under normal circumstances. So under normal circumstances, the creditors would not have any claims to the shareholders/owners personal properties. Of course, if the owners does something which is against the law then that protection is lifted. http://in.news.yahoo.com/241/20080830/1264/tbs-cabinet-clears-companies-bill.html Of course, with a company you have different laws you need to comply and may require more documentations. You may need to engage a Company Secretary, Accountant and Auditor at the very least.
yes recently some amendments have been made in company act. i am not an expert but here is what i know minus more taxes, FBT, more formalities , more paper work, plus depreciation, and above post is very informative