[Introduction to Financial Management |

]
[Dr Sharon K Jose ]

Introduction to Financial
Markets
Introduction
• Sole proprietorship
• Partnership Limited
• Liability Partnership (LLP)
• Corporation Private Limited
• Company Public Limited
• Company Government Company
• One Person Company (OPC)
• Sec 8 Company
Sole proprietorship

• A sole proprietorship (also known as individual

entrepreneurship, sole trader, or simply
proprietorship) is a type of unincorporated entity that
is owned by one individual only. It is the simplest
legal form of a business entity.
Advantages of a Sole Proprietorship

• 1. Easy and inexpensive process of formation

• 2. Few government regulations
• 3. Tax advantages
Disadvantages
1. Unlimited liability of the owner
2. Limitations on sourcing capital
Partnership Limited

• Minimum of 2 and maximum of 100

• Partnership deed
• The new Companies Act 2013 has prescribed the
maximum number of members in case of a
partnership firm should not be more than 100 in
case of partnerships. As per the previous Companies
Act 1956, the maximum limit in case of partnerships
was 10 and 20 for banking business and other
businesses respectively.
Limited Liability Partnership (LLP)

• Limited liability partnerships (LLPs) allow for a

partnership structure where each partner’s liabilities
are limited to the amount they put into the business.
• Having business partners means spreading the risk,
leveraging individual skills and expertise, and
establishing a division of labor.
• Limited liability means that if the partnership fails,
then creditors cannot go after a partner’s personal
assets or income.
• LLPs are common in professional business like law
firms, accounting firms, and wealth managers.
Corporation Private Limited
Company Public Limited
Company Government Company
One Person Company (OPC)

• The concept of the one person company (OPC)

allows a single person to run a company limited by
shares. A sole proprietorship is an entity that is run
and owned by one individual where there is no
distinction between the owner and the business.
• The OPC is best for people who want to start a
business with a corporate structure but still want to
retain effective control over all the business
operations. You can scale the company and still enjoy
limited liability. 
One Person Company (OPC)

• Advantages of OPC
• Limited liability for the business owner
• It is a separate legal entity
• A sustainable business structure even when you want
to scale
• Disadvantages of OPC
• OPC takes more money to set up and run compared to
Sole Proprietorship
• More compliances
• Must have a nominee to incorporate an OPC
• A person cannot have more than 1 OPC at a time
One Person Company (OPC)

• The company registration gives more credibility to

the business
• Easy to get loans or funding for the business as
lenders trust the registered business
• Perpetual succession
• In case the owner becomes incapable to run the
business or dies, the nominee can take over the
business
One Person Company (OPC)
Section 8 Company
• Section 8 Company when it registered as a Non-
Profit Organization (NPO) i.e. when it has motive of
promoting arts, commerce, education, charity,
protection of environment, sports, science, research,
social welfare, religion and intends to use its profits
(if any) or other income for promoting these
objectives.
Organizational Chart of a Matrix
Organization (Example of real company)