Last updated: December 20th, 2024 12:27 PM

Mandatory Company Registration

There is no restriction requiring mandatory company based on sales turnover or capital contribution. Hence, a business with any amount of turnover or capital can be operated as a Proprietorship or Partnership or Limited Liability Partnership or Private Limited Company. However, the Companies Act 2013, does require mandatory company registration for certain Partnerships.

Mandatory Registration Requirement

Association or partnership firm having more than 100 persons for any business must mandatorily be registered as a company. As per Section 464(1) of the Companies Act, 2013, no association or partnership consisting of more than 100 persons shall be formed for the purpose of carrying on any business that has for its objects the acquisition of gain by the association or partnership or by the individual members thereof, unless it is registered as a company.

Limited Liability Partnership

The regulations requiring mandatory registration of a company does not apply for those businesses operating as a Limited Liability Partnership (LLP). One of the main advantages of a LLPs, is that it is allowed to have unlimited partners. Hence, this rule does not apply to a LLP. LLP can also have any amount of sales turnover or capital.

Hindu Undivided Family

A Hindu Undivided Family (HUF) is a type of business entity in India which consists of persons lineally descendant from a common ancestor, including their wives and unmarried daughters, who are staying together jointly. The persons in a Hindu Undivided Family are joint in food, estate and worship. The requirement for conversion of an entity to a company does not apply to a Hindu Undivided Family also.

Professional Partnerships

The requirement to convert to company also does not arise for association of partnership, if formed by Professionals who are governed by special Acts. Professionals governed by special Act include Chartered Accountants, Lawyers, Company Secretaries, Cost Accountants and others.