Why Is Company Registration Important?

Setting up a new business is tough and in the journey, the entrepreneur has to make important decisions. One of the main decisions is to register a company with the Ministry of Corporate Affairs, as per the authority the business will get the benefits of a company only after the registration. In the article, the key importance of company registration is shared.

Benefits of Company Registration

A company is an artificial person that has its legal personality, common seal, and perpetual succession. It is not affected by the death, or insolvency of an individual member. Registering a company has different benefits and these are as follows:

Separate Legal Entity

A company has its separate identity from the Directors, Promoters and Shareholders. It registered with the law as an artificial person and denoted as a “juristic person”. The company can buy, sell and own property or can sue and be sued in its name.

Limited Liability

A limited liability is the most important benefit of private limited companies. The partnership and proprietorship don’t have this advantage. Having a limited liability means that shareholders are not liable for the losses of the company and their assets not affect during the winding up of the company. Here is an example of limited liability, a person has 20 shares of Rs. 100 each. The maximum liability of the person to the company is Rs. 2,000 only.  

More Investors

The inventors always look for businesses where the chances of growth are high. The private limited companies are popular in the Indian market and it is why the investors trust the companies and invest. The companies get funding and they create quality services which build the trust of customers. Some examples of private limited companies are Google, Adobe, Microsoft, Paypal Payments, American Express, etc.

Perpetual Existence

In perpetual succession, the company exist continuously until it is legally dissolved. This means that the company has its own legal identity. After the company’s registration, its existence remains unaffected. 

Regardless of any changes in membership, staff, shareholders or other factors, the company’s existence. It remains operational by the provisions of the Companies Act.

Transferability of Shares

The shares are a moveable property that is transferable from one person to another easily. A shareholder can choose anyone to transfer the shares, and a signed copy of the transferred shares is sent to the buyer. So, in a public limited company, there is no restriction on transferring the shares. However, in the private limited company, there are some restrictions on transferring the shares.

Owning Property

A company can acquire any property, or land in its name and any of the shareholders cannot claim the property. Also, the shareholders do not have a right to participate in the company’s profit. According to the Memorandum of Association (MoA), individual shareholders have no right to the company’s property. The Private Limited Company is the only company that helps its promoters raise capital from Angel Investors and Private Equity Firms.

Conclusion

In conclusion, registering a company is one of the important steps to getting credibility, legal protection, tax benefits, funding, and brand protection. You must consult an expert to get the right assistance in complying with the legal requirements of company registration. Read more articles on RegistrationKraft about business and company registration.