Corporate & Commercial Law

Corporate work is the legal architecture a business sits inside: how it is incorporated, how decisions are recorded, what its contracts say, and which filings keep it in good standing. Most disputes trace back to a document that was never drafted, or drafted without regard to how the business actually runs.

Choosing between the three structures

Fig. 4
Private Limited, LLP and One Person Company compared Four rows compared across three structures. Members: a Private Limited Company takes 2 to 200, an LLP takes 2 with no upper limit, a One Person Company takes 1. Outside equity: readily available to a Private Limited Company, limited for an LLP and a One Person Company. Compliance load: heaviest for a Private Limited Company, lighter for the other two. Limited liability applies in all three cases. Private Limited Companies Act, 2013 LLP LLP Act, 2008 One Person Co. Companies Act, 2013 Members permitted range 2 to 200 2, no cap 1 Outside equity more marks, more readily Compliance load more marks, heavier Limited liability in every case Yes Yes Yes
The row that usually decides the answer is outside equity. A business that intends to raise from investors is ordinarily incorporated as a Private Limited Company, because that is the structure shares can be issued into. Converting later is possible, but it costs time at exactly the point there is none. Companies Act, 2013; Limited Liability Partnership Act, 2008

Matters handled

Principal legal framework

Companies Act, 2013
Incorporation, directors, resolutions, filings and restructuring.
Indian Contract Act, 1872
Formation, validity and enforceability of commercial agreements.
LLP Act, 2008
LLP formation, partner rights and conversion.
Ministry of Corporate Affairs
Annual filings, registers and event-based compliance.

Questions that come up

What is the difference between a Private Limited Company and an LLP in India?

A Private Limited Company is incorporated under the Companies Act, 2013, has shareholders and directors, and is the structure most equity investors expect. An LLP is incorporated under the Limited Liability Partnership Act, 2008, has partners rather than shareholders, carries lighter annual compliance, and does not readily accommodate external equity investment. Both give limited liability. The choice usually turns on whether outside investment is anticipated.

Does a shareholders agreement need to be reflected in the Articles of Association?

Yes, in most cases. Indian courts have held that a term in a shareholders agreement which is not incorporated into the Articles of Association may not bind the company itself. Rights such as transfer restrictions, board nomination and affirmative-vote items are therefore ordinarily mirrored in the Articles.

What are the recurring annual compliances for a private company?

A private company ordinarily files its annual return and financial statements with the Registrar of Companies each year, holds a general meeting, holds the prescribed number of board meetings, maintains statutory registers and minutes, and makes event-based filings when directors, capital or the registered office change.

This page describes the scope of the practice in this area. It is general information and not legal advice on any particular matter.

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