A very common term in the business universe, ‘Company’ and ‘Body Corporate‘ hold the ground by means of distinct definitions and practical use under corporate law. Since many entrepreneurs, legal professionals, and practicing professionals dealing with matters relating to Trademark, ITR Filing, GST, and Company Registration make a mistake between Company and Body Corporate, this paper intends to discuss the distinction between these two.
What is a Company?
A company is the result of some people, groups, or organizations to carry on business activities. It is registered under the Companies Act, 2013, in India. The company has a separate legal identity from its members; it can own property, sue or be sued, and enter into contracts without reference to its shareholders.
Important Characteristics of a Company:
- Separate Legal Existence: The company is regarded as having a legal existence independent of the owner and the shareholders.
- Limitations on Liability: Liabilities of the shareholders will only be restricted to their share amounting to the contribution of capital.
- Continuity Succession: In cases of change in the members or directors, the existence of a company continues unabated and can also decrease.
- Corporate Government: A company conducts its affairs with proper management by rules and regulations of conduct.
- Mandatory Registration: A company can earn legal existence only if registered under the relevant Companies Act.
Varieties of Companies:
- Private Company: Prohibits transferring shares and also no more than a limited set of shareholders.
- Public Company: Opens up itself to the public and thereby share market.
- One Person Company (OPC): The ownership by one individual.
- Section 8 Company: Such companies exist for the promotion of charities or for social causes
What is Body Corporate?
The term ‘body corporate’ refers to any entity that has been conferred with an independent identity in the eye of the law. However, a company is just a body corporate but not every body corporate is a company. Some of the bodies corporate are corporations, cooperatives, and statutory bodies created by special acts of the parliament.
Characteristics of a Body Corporate:
- Legal Entity: The body corporate enjoys its separate legal identity similar to that of a company.
- Created Under Acts: It can be created under specific enactments, like municipal corporations or cooperative societies.
- Different Ownership and Control: The ownership and control structure is different for different types of bodies corporate.
- Diverse Objects: Bodies corporate can be created for business, governance, or community service objects.
- Autonomous Operations: They operate independently, irrespective of their members or stakeholders.
Examples of Bodies Corporate:
- Municipal Corporations: Bodies provided for under municipal laws.
- Statutory Corporations: Such bodies as the Reserve Bank of India, were created under a specific act of parliament.
- Cooperative Societies: They are formed for mutual benefit, such as credit societies.
Key Differences Between Company and Body Corporate
| Dimension | Company | Body Corporate |
|---|---|---|
| Definition | A company is a legal entity registered under the Companies Act. | A body corporate is a legal entity that includes companies and other entities. |
| Scope | Applied only to the business organizations incorporated under company acts. | The wider term, includes all the legal entities that are separate entities. |
| Examples | Private limited companies, public limited companies. | The wider term includes all the legal entities that are separate entities. |
| Purpose | Primarily for profit-oriented business activities. | Can include governance, public service, or mutual benefits. |
| Formation | Registered under the Companies Act. | Formed under various statutes or acts. |
| Registration Requirement | Mandatory registration under the Companies Act. | Registration depends on the applicable statute. |
| Ownership Structure | Shareholder-based ownership. | Varies based on the type (e.g., statutory bodies, cooperatives). |
Importance of Understanding the Difference
Recognizing the differences between a company and a corporate body is important. Here’s why:
- Legal Compliance: Different laws and regulations govern companies and other corporate bodies, which impacts compliance requirements.
- Operational Scope: Understanding the purpose and limitations of each entity helps in selecting the right structure.
- Tax Implications: Taxation rules, including ITR Filing and GST Registration, may vary based on the type of entity.
- Trademark Registration: Bodies corporate may also undertake the Registration of Trademarks, which requires customized efforts.
Company Registration Procedure
The registration of the company ensures its legal existence along with its compliance. Below are the major steps one follows in the process
- Select a business structure: Decide to register a Private limited company, OPC, or any other.
- Digital Signature Certificates DSC: Required for Online Filings
- Company Name: Apply from the MCA portal.
- Preparation of Incorporation Document: Prepare Memorandum of Association and Articles of Association
- Registration Application: File incorporation application through the MCA portal
- Obtain Certificate of Incorporation After registration, the company is provided with a certificate.
Trademark Registration for Companies and Bodies Corporate
Intellectual property is very important in corporate houses as well as companies. Trademark Registration protects the brand identity and stops any unauthorized usage of a trademark. These are the procedures for registration of your trademark:
- Make Trademark Search: One needs to ensure that it is unique.
- Prepare an Application: File for that after details and documents.
- Respond and Take Care of Objections against trademark by the Trademark office itself.
- Publication and Registration: If there is no opposition, the trademark is published and registered.
GST Registration for Companies and Bodies Corporate
GST Registration is compulsorily required by entities whose turnover exceeds a specific threshold. It allows businesses to collect and pay Goods and Services Tax. The process involves:
- Determine Applicability: Check if the entity is liable for GST registration.
- Submit Application: Register through the GST portal with the required documents.
- Verification and Acceptance: Once verified, the GSTIN (GST Identification Number) is issued.
ITR Filing for Companies and Bodies Corporate
ITR Filing is a process through which a company or body corporate complies with the income tax. Companies and other bodies corporate are compelled to file returns as part of their income, deductions, and tax liability functions. The process involves:
- Collection of Financial Documents: Collection of income, expenditure, and tax-paid records.
- Selection of Relevant ITR Form: Companies and bodies corporate are required to file different forms.
- File Online: File the return through the Income Tax Department’s e-filing portal.
Conclusion
Though both the company and the body corporate seem quite similar, differences prevail when compared in scope, purpose, governance, and formation. A company is basically a limited type of body corporate mostly designed for commercial or business activities. It belongs to a comprehensive category called body corporate.
The uniqueness of each entity can be determined by businesses and professionals to navigate the complex landscape of corporate law with more confidence and efficiency.