Body Corporate, MCA issued Companies (CSR Policy) Amendment Rules, 2020, and amended Schedule VII of the Companies Act, 2013. Under the new Rules, companies that are engaged in R&D of a new vaccine, drugs, and medical devices are permitted to undertake such activity related to Covid-19 for financial years 2020-21, 2021-22, and 2022-23- subject to fulfillment of the prescribed conditions.
A company is a body corporate, an independent corporate existence that ‘distinguishes ‘ it from a partnership. In Indian Laws, a Body Corporate has been defined under Section 2 (7) of the Companies Act, 1956.
It includes all the corporations within India and outside India as well, EXCEPT: (1) A Corporation Sole, (2) A Co-operative Society registered under any co-operative societies laws, and (3) Any such other corporations that the central government might include in the Official Gazette as not being a body corporate under the Companies Act, 1956.
Unlike its owners or members, a body corporate has its own legal identity.
Body Corporate, Company, and Partnership: What’s the Difference
Starting a business requires you to decide what kind of business structure you will adopt. The following aspects of your business structure will be affected:
- Taxation of your company
- Exposure to liability
- The way your company will be run
Businesses are referred to as companies. As a result, your company represents a group of people who do business in your targeted market. According to the Companies Act of 2013, companies are separate legal entities from their owners or members. They are artificial people with perpetual succession and a common seal.
There is a tendency to confuse companies with corporations on a regular basis. Corporations can be registered inside or outside a country’s borders and jurisdictions. In the past, corporations were large companies with global presence. While a company has a somewhat limited scope, the business it represents is normally physically present in the country it is registered in.
Here are five key differences between partnerships, companies, and corporations:
- The cost of starting up
- Potential liability
- Tax scenarios
- Management structures
The structure of a corporation differs considerably from that of a partnership. A corporation’s decision-making process is usually more complex and involves more people. The ownership of a partnership, however, is typically shared by as few as two people.
Creating a corporation can be significantly more expensive than creating a partnership. Setting up a corporation requires the following minimum requirements:
- Lots of administrative fees
- Complex legal and tax requirements
- Articles of Incorporation
- Local and state licenses or permits
Partnerships, on the other hand, are much easier to form. For most businesses, forming a partnership involves registering with local state authorities and obtaining the necessary licenses and permits.
Any debts or legal obligations incurred by the partnership are generally the responsibility of the members. If a company’s debt must be repaid, a partner’s personal assets may be targeted. In this regard, a partnership agreement typically outlines what percentage each partner is responsible for. Each partner may have a different percentage. A corporation, on the other hand, does not hold its owners or members responsible for its debts.
Definition of Body Corporate
Corporations are commonly referred to as bodies corporate under the Indian Companies Act of 2013. It also states that companies may be incorporated inside or outside their jurisdiction. Body corporate excludes:
- Cooperative societies
- Sole corporations
- Corporations that notify the central government’s official gazette of the formation
This can include but is not limited to:
- Private companies
- A single personal company
- Small companies
- Limited liability partnerships
- Foreign companies
Corporations are businesses that maintain a separate legal identity from their owners. If a corporation is sued in its own name, the members of that corporation will be subject to limited liability for the legal action being pursued against them. Corporations are also subject to a corporate tax under the Income Tax Act of 1961.
Whether a company is formed in India or outside of it, a corporation is a body corporate. The following are not included in a body corporate:
- Cooperative societies registered under any laws that pertain to their specific type of business structure
- Other companies that are not defined by the Companies Act of 2013 that the central government chooses to specify
If you need legal assistance with body corporate issues, please do not hesitate to post your inquiries in our comment section or contact the team directly if you require any type of support in relation to your body corporate.