Corporate Structuring & Advisory

The most common structure for a startup seeking external investment is a private limited company. It offers limited liability, a clear share capital structure, and is the preferred vehicle for equity investment from angel investors, venture capital funds, and institutional investors. LLPs are suitable for professional services and partnerships where external equity fundraising is not planned. Sole proprietorships and partnership firms are simpler to set up but do not offer limited liability and are not suitable for institutional investment. OPCs (one-person companies) are an option for solo founders but carry restrictions on conversion and growth. We advise founders on choosing the right structure based on their business model, funding plans, and long-term objectives.

Incorporation of a private limited company requires obtaining a Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the proposed directors, reserving the company name through the RUN (Reserve Unique Name) portal, filing the incorporation application (SPICe+ form) with the Registrar of Companies along with the Memorandum and Articles of Association, and obtaining the Certificate of Incorporation. Post-incorporation steps include opening a bank account, obtaining PAN and TAN, registering for GST (if applicable), and complying with any sector-specific registrations or licences. The incorporation process typically takes 7 to 15 days if all documents are in order.

DPIIT recognition under the Startup India initiative is available to entities incorporated as a private limited company, LLP, or registered partnership firm, that are less than 10 years old from incorporation, have turnover not exceeding Rs. 100 crore in any financial year, and are working towards innovation, development, or improvement of products, processes, or services. Benefits include self-certification for labour and environmental law compliance, income tax exemption for three consecutive years under Section 80-IAC (subject to approval), an 80% rebate on patent filing fees, fast-tracked patent examination, and access to government-empanelled facilitators whose fees are borne by the government. If you qualify, there is no reason not to apply.

Under the Companies Act, 2013, every listed public company must have at least one-third of its board as independent directors. Unlisted public companies meeting prescribed thresholds (paid-up share capital of Rs. 10 crore or more, turnover of Rs. 100 crore or more, or outstanding loans, debentures, or deposits exceeding Rs. 50 crore) must have at least two independent directors. An audit committee is mandatory for listed companies and public companies meeting the same thresholds. For private limited companies, these requirements do not apply unless the company is a subsidiary of a listed company or exceeds specific thresholds under the rules. We advise on board composition, committee formation, and corporate governance compliance.

A private limited company must hold at least one board meeting every quarter, hold an annual general meeting within six months of the close of each financial year, file annual returns (Form MGT-7A) and financial statements (Form AOC-4) with the Registrar of Companies within the prescribed timelines, maintain statutory registers and minutes, comply with GST, TDS, and income tax filing obligations, and file event-based forms for changes in directors, registered office, share capital, or other key particulars. Non-compliance with filing deadlines attracts penalties, and persistent non-compliance can lead to the company being struck off the register and directors being disqualified. We advise on ongoing corporate compliance and help companies set up internal systems to meet these obligations.

Restructuring options include conversion of entity type (private limited to LLP or vice versa), mergers and amalgamations under the Companies Act (requiring NCLT approval), demergers, and slump sales. For winding down, the options are voluntary liquidation under the Insolvency and Bankruptcy Code (for solvent companies), striking off under Section 248 of the Companies Act (for defunct companies with no assets or liabilities), or compulsory liquidation through the NCLT. Each route has different procedural requirements, timelines, and tax implications. The choice depends on whether the company has outstanding liabilities, pending litigation, or regulatory obligations that need to be addressed before closure.