TYPES OF ENTERPRISES

Pradeep Kumar Arora

Senior Advisor, NIESBUD
THE NATIONAL INSTITUTE FOR ENTREPRENEURSHIP &
SMALL BUSINESS DEVELOPMENT (NIESBUD)
(Ministry of Skill Development and Entrepreneurship,
Govt. of India)
 TYPES OF ENTERPRISES
1 Proprietorship
2 Partnership
3 Limited Liability Partnerships
4 Private limited company
5 Public limited company
6 One Person Company
7 Self help group
8 Hindu undivided family
• Trust: Trust is legal arrangement in which a person
holds property for the sake of some other person.
• Society: Society is an association of persons who
came together to full fill any particulars purpose,
described under the act.
• Section 8: Many companies primarily have
charitable and non-profit objectives. Such entities
are referred to as a Section 8 Company because they
get recognition under Section 8 of Companies Act,
2013. These companies dedicate all their incomes
and profits towards the furtherance of their
objectives.
HOW YOU MAKE CHOICES OF YOURS BUSINESS ENTITY
• Ability to raise capital/Requirement of capitals/Source of
Funding.
• Separation of ownership or management
• Limited labilities protection
• Transfer of ownership
• Ease of formation, formalities and its maintenance.
• Tax consideration
• FDI investment
• Size of venture
• Governance and operations
• Impact investment and social responsibility
• Risk taking capability
• Capacity and capability an individual
Proprietorship : It is a form of business
organization which is owned, controlled and
managed by only one person.
Partnership: A partnership is an association of
tow or more persons to carry on as co owners a
business and to share it profit or loss.
Company: A company is an association of
persons who contribute money in the shape of
shares and the company gets a legal entity and
enjoy a permanent existence.
 Steps Proprietors Private Limited One Person
Partnership LLP
hip Company Company
It can be
Registered with the Registered with the
registered or
Ministry of Registered with the Ministry of
No formal unregistered
Corporate Affairs Ministry of Corporate Corporate Affairs
Registration registration (Registered
under the Limited Affairs under the under the
Required under
Liability Partnership Companies Act, 2013. Companies Act,
Partnership
Act, 2008. 2013.
Act, 1932)
Name must be
Name must be
approved by the Name must be
approved by the
Registrar of approved by the
Registrar of
Company. Only Registrar of Company.
Company. Only
names that are not Only names that are
names that are not
identical / similar to not identical / similar
Choice of Choice of identical / similar to
an existing company to an existing
Name can be Name can be an existing company
Name of the or LLP name and company or LLP name
used. No used. No or LLP name and
Entity names that are not and names that are
approvals approvals names that are not
offensive or illegal not offensive or illegal
required required offensive or illegal
would be allowed . It would be allowed . It
would be allowed .
must end with end must end with end
It must end with
with the words with the words
end with the words
“Limited Liability Private Limited
“OPC” or “One
Partnership” or Company
Person Company”.
“LLP”.
 Steps Private Limited One Person
Proprietorship Partnership LLP
Company Company
Private Limited
One
Company is a
Person Compan
separate legal
y is a separate
entity
LLP is a legal entity
It is not registered
It is not separate legal registered under
recognized as a under the
recognized as a entity registered the
separate legal Companies Act,
separate legal under the LLP Companies Act,
Legal entity and the 2013. The
entity and the Act, 2008. The 2013. The
Status of promoter Directors and
promoter partners of a Director and
Entity is personally Shareholders
is personally liable LLP are not Nominee
liable for the of a Private
for the liabilities of personally liable Director of a One
liabilities of the Limited
the Partnership for the liabilities Person Compan
Proprietorship Company are
of the LLP. y are not
not personally
personally liable
liable for the
for the liabilities
liabilities of the
of the Company
Company.
Director and
Proprietor has Shareholders
Partners have li Nominee
unlimited liability Partners have have
mited liability Director
Member and is unlimited liability limited liability
and is liable only have limited liabi
(s) responsible for and is responsible and is liable
to the extent of lity and is liable
Liability all the liabilities for all the liabilities only to the
their contribution only to the extent
of the of the Partnership. extent of their
to the LLP. of his/her share
Proprietorship. share capital.
 Steps Private Limited One Person
Proprietorship Partnership LLP
Company Company
A minimum of
A minimum of one persons are
Minimum A minimum of two A minimum of two persons required to start
Have only one
Number persons are two persons are are required to a One Person
person as
of required to start a required to start start a Private Company, viz.
member.
Members Partnership. a LLP. Limited Director and
Company. Nominee
Director.
A One Person
Company can
Maximu Maximum of
Can have only Maximum number Have unlimited have only two
m Numbe 200
one person as of partners can be number of people, viz.
r of shareholders
member. only 100. Partners. Director and
Members or members.
Nominee
Director.
Foreigners are Foreigners are
allowed to allowed to
invest in a LLP invest in a
Foreigners are Foreigners are only with prior Private Limited Director and
Foreign
not allowed to not allowed to approval of RBI Company Nominee
Ownershi
start a start a and Foreign under the Director cannot
p
Proprietorship. Partnership. Investment Automatic be Foreigners.
Promotion Approval route
Board (FIPB) in most
 Steps Private Limited One Person
Proprietorship Partnership LLP
Company Company
Ownership can
Transfera Ownership can be transferred Ownership can
Not transferable Not transferable.
bility be transferred. by way of be transferred
share transfer.
Existence of a Existence of a
Existence of a Private Limited One
Existence of a
LLP is not Company is Person Compan
Partnership
dependent on not dependent y is not
Existence of business is
Existenc the Partners. on the dependent on
a Proprietorship dependent on the
e or Could be Directors or the Director or
business is Partners. Could
Survivabi dissolved only Shareholders. Nominee
dependent on be up for
lity voluntarily or by Could be Director. Could
the Proprietor dissolution due to
an Order of the dissolved only be dissolved
death of a
Company Law voluntarily or only voluntarily
Partner.
Board. by Regulatory or by Regulatory
Authorities Authorities.

Minimum
paid up
No binding No binding No binding 1 LAKH No binding
capital
required
 Steps Private Limited One Person
Proprietorship Partnership LLP
Company Company
No No Board and
Annual No
requirements No requirements requirements General
Statutor requirements to
to conduct to conduct to conduct Meetings
y conduct annual
annual annual statutory annual must be
Meeting statutory
statutory meetings. statutory conducted
s meetings.
meetings meetings. periodically.

Must file
Must file Must file
No Annual
Annual Annual
requirements Accounts and
No requirements Statement of Accounts and
to file annual Annual Return
to file annual Accounts Annual Return
report with with the
report with & Solvency with the
Registrar of Registrar of
Registrar of and Annual Registrar of
Annual Companies. Companies
Companies. Return with the Companies
Filings Income Tax each year.
Income Tax Registrar each each year.
Return must be Income Tax
Return must be year. Income Income Tax
filed based on Return must
filed for the Tax Return Return must
the income of also be filed
Partnership. must also be also be filed for
the for the Private
filed for the the One Person
Proprietorship. Limited
LLP. Company.
Company.
S. Public Ltd Company S. Private Ltd Company
No. No.
1. Public ltd Co are open to 1. Private ltd Co is owned by a group
everyone. The Company is not in of promoters. All its shares are in
the hands of few promoters but private hands.
the public own its.
2. Public ltd Co full-fledged 2. A Private ltd Co is a partnership
corporate body. firm with limited liabilities.
3. The shares can be freely 3. Public offer of share is not possible
transferred in in private ltd Co. if have to
transferred the consent of share
holders must be sought.
4. Its share can be listed in stock 4. Share can not be listed in stock
exchange exchange.
5. It’s comes with stringent rules 5. Moderate no stringent norms.
and requirements.
6. The minimum no of share holder 6. The minimum no of share holder is
is 7 and no maximum limit. 2 and maximum is 200.
7. Minimum paid up capital is 5 Lac. 7. Minimum paid up capital is 1 Lac.
COMPARISON CHART OF TRUST & SOCIETY
BASIS FOR COMPARISON TRUST SOCIETY
Meaning A legal relationship, in A society is an organized
which author assigns group of persons, who are
property to the trustee for joined together for
the benefit of the fulfilling any purpose
beneficiary. relation to literature,
science or charity.

Status Indian Trust Act 1882 Society Registration Act

1860
Fundamental Document Trust Deed Memorandum of
Association and Rules
Regulation
Minimum persons 2 7
required
Control System Centralized Democratic
Governed by Board of trustees Governing Body which
should be directors,
governors, trustees etc
 TYPES OF CREDITS
1 Term loan
2 Working capital
3 Bank guarantee
4 Letter of credit
5 Pre shipment credit
6 Post shipment credit
7 Angel financing
8 Lease financing
9 Crowd funding
Term Loan: A term loan is a loan in which
• Duration is fixed
• Amount is fixed
• Repayment schedule is fixed
• Interest rate is predetermined/fixed

Working Capital: Working capital denotes the

amount of funds needed for meeting day to day
expenses.
Bank Guarantee: A bank guarantee is a promise
from a bank or other lending institutions that if a
particular borrower defaults on a lone the bank all
cover the loss. it may be performance based or
financial.

Letter of Credit: A letter of credit represents an

obligation taken by a bank to make payment once
certain criteria are met after their terms are
completed and confirmed, the bank will transfer the
fund. The L.C. ensures the payment will be made as
long as the services are performed.
 eshipment: Credit extended to exporter prior to shipment
oods for the execution of the export order.

ost Shipment: Post Shipment finance refers to the cred

xtended to the exporter after the shipment of goods f
eeting working capital requirement.
Lease Financing: Lease financing where the
owner of an asset gives another person the right
to use the asset against periodical payment

Advantage : The Lessee can use the asset to

earn without investing money in the asset. It is
mostly for fixed assets.

Other Advantage: No risk of obsolescence, cost

saving, flexibility & liquidity
Angel Financing: An Angel investor is typically
an individual or a high worth individual investor
who provides funding or financial support for
start-up in lieu of stake in ownership in the
company.
Crowd Funding : Funds from multiple investors via
web based platform or social networking site for
definite objective. Small contribution no of person
cumulatively may full fill the fund requirement of the
investee who otherwise lacked assess to such funds.
• It is unsecured loan
• Equity crowd funding is not allowed in India
• Only a credited investor can invest
• Retail investor can invest up to 20000-60000 only
• Max no of Retail investor 200
• Start up to less than 2 year old only eligible to
participate.
Self Help Group (SHG):
Self Help Group is a small economically
homogeneous affinity group of 10-20 rural poor
people voluntarily formed to share and mutually
agreed to contribute to a common fund to be lend
to its members for meeting their productive and
emergent credit needs as per group decision.
• quantum of loan 50000 per person
• Only one person form one family can become
member SHG.
Hindu Undivided Family: Hindu Undivided Family
is not defined as income tax act but it is cover
under the Hindu law by definition HUF consist of
all individuals who are lineally descended from a
common ancestor and also comprises of
unmarried.
A HUF is a family which consists of all person
lineally descended from a common ancestor and
also the wives and daughter of the male
descendants. It consist of the Karta who is
typically the eldest person or head of the family
while other family members are coparceners.
 Revised MSME Classification
Composite Criteria : Investment And Annual Turnover
Classification Micro Small Medium
Manufacturing & Servics Investment < Rs. 1 Cr. Investment < Rs. 10 Cr. Investment < Rs. 20 Cr.
And And And
Turnover <Rs.5cr. Turnover <Rs.50cr. Turnover <Rs.100 cr.
• Credit Guarantee Scheme (CGTMSE) is an
important programme of the Government of
India aimed at facilitating the flow of collateral
free credit up to Rs. 200 lakhs per borrower
form the Banks to Micro and Small
Enterprises. Further as per the extant
guidelines of RBI, Banks are mandated not to
accept collateral security in the case of loans
upto Rs. 10 lakhs extended to units in Micro
and Small Enterprise.
• Credit facilities (Fund based and / or Non fund
based) extended to a single eligible borrower
in the Micro and Small Enterprises sector for
credit facility not exceeding Rs. 200 laks,
without any collateral security and/ or third
party guarantee.
• Credit facilities extended to MSE Retail Trade,
not exceeding Rs. 100 Lakhs, without nay
collateral security and/ or third party
guarantee.
“Hybrid Security” Product: Collateral security can be obtaine
for a part of the credit facility, whereas the remaining part
the credit facility, up to maximum of Rs.200 lakhs, can b
covered under the scheme. CGTMSE will have an notion
second charge on the collateral security provided by th
borrower.
 METHOD OF ASSESSMENT
• Working Capital Credit Limits to MSME Enterprises in
Individual cases up to Rs.5.00 Cr (Manufacturing
Sector) and up to Rs.2.00 Cr (Service Sector) will be
computed on the basis of minimum 20% of their
estimated/projected annual sales turn over (turn over
method).
• To promote and encourage cashless or digital mode of
transactions to MSME units, working capital credit limits
will be computed on the basis of 25% of their
estimated/projected annual sales turn over & 30% of
the digital portion projected turnover.
 59 Minute Loan-The initiative
“PSBloansin59minutes.com” Portal - Standard
Operating Procedures
• To ease access of credit to Individuals and
MSMEs. This is a unique platform that ensures
seamless In-principle loan approval.
• The initiative aims at automation and
digitization of various processes of Business
Loan (Term Loan and Working Capital Loan)
and Retail Loans .The borrower has been given
the flexibility to choose lender.
 59 Minute Loan-The initiative
“PSBloansin59minutes.com” Portal - Standard Operating
Procedures
• Business Loan In-principle approvals, with
/without collateral, are currently provided for
value from INR 1 Lac to INR 5 Crore. The Rate of
Interest starts from 8.5% onwards. The Platform
is integrated with CGTMSE to check eligibility of
borrowers.
• As the calculation of Bank Finance on
psbloansin59minutes is done based on the
existing / present cash flow as per GST returns,
applying the turnover method.
 WHAT IS CHAMPIONS
Recently, the Ministry of Micro, Small and Medium Enterprises (MSM
has launched CHAMPIONS portal.
The CHAMPIONS stands here for Creation and Harmonious Application
Modern Processes for Increasing the Output and National Strength.
The “CHAMPIONS” portal utilizes modern ICT tools such as telephon
internet and video conference.The portal is also empowered with Artific
Intelligence, Data Analytics and Machine Learning as well as integrated wi
GOI’s main grievances portal CPGRAMS. As part of the portal, a network
control rooms is created in a Hub & Spoke Model where hub is situated
New Delhi.
 OBJECTIVES
Support: To help the MSMEs in this difficult situation in terms of financ
raw materials, labor, permissions, etc.
Explore: To help them capture new opportunities like manufacturing
medical accessories and products like Personal Protection Equipme
(PPEs), masks, etc.
Promote: To identify the sparks, i.e., the bright MSMEs who can not on
withstand but can also become national and international champions.
 FEATURES

The entire ICT architecture is created in house with the help of the Nation
Informatics Centre.
A network of control rooms is created in the Hub & Spoke Model.
– The Hub is situated in New Delhi in the Secretary MSME’s office.
– The spokes will be in the States in various offices and institutions of t
Ministry.
 WHO CAN REGISTER

The following persons or organizations can register their grievanc

at the Champions Portal:-
Association
MSME Unit
MSME Employee
Government Officials
Would be Entrepreneur
Individual
Other
 NEW SCHEMES BY MSME
Rs. 3.00 Lakh crores loans to MSMEs: Collateral Free, Guarantee
Guarantee free and collateral free loans amounting to Rs. 3.00 Lakh c
have been approved for Businesses / MSMEs who have been hit badly d
COVID19 to meet operational liabilities built up, buy raw material and r
business
Distressed Assets Fund - Subordinate Debt Scheme for MSMEs- GO
provide guarantee coverage of up to 85% for loans upto Rs. 5 lakh and
for loans beyond Rs 5 lakh to MSMEs for them to raise funds from Fin
Institutions
Equity Infusion for MSMEs through Fund of Funds-The proposed fu
funds will encourage private sector investments in the MSME secto
leverage of Rs.50,000 crore. The actual investment may be even higher.
 NEW SCHEMES BY MSME
Pradhan Mantri Mudra Yojana-has three products as per the fund
requirements of the Beneficiary or the Entrepreneur. Shishu, kishor a
Tarun
Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT SM
75% of the loan amount to the bank is guaranteed by the Trust Fun
Collateral free loan up to a limit of ₹ 100 lakh is available for individual M
on payment of guarantee fee to bank by the MSE.
Prime Minister’s Employment Generation Programme (PMEG
implemented by Khadi and Village Industries Commission (KV
functioning as the nodal agency at the national level. At the state level, t
scheme is implemented through State KVIC Directorates, State Khadi a
Village Industries Boards (KVIBs) etc
THANK YOU
Email: [email protected]
Mob No : 9720447744