What a company is, and what owning one means

Reading for India · about 5 min

What this cluster is for

Most people learn what a company is after they have already bought one. They own shares before they can say what a share is a share of. They sign a contract with a business before they know whether there is a legal person behind it. They start something with a friend and split the money, without knowing that they have created a partnership with unlimited liability and no document.

These 11 lessons close that gap, and they do it the useful way round. Each one ends with something you do in about 5 minutes, using your own bank app, your own invoices, your own holdings or your own business idea. Not a worked example. Your data.

By the end of this cluster you will be able to:

Measure what your idle cash loses every year, in your own currency, on your own balance
Tell from a single character on an invoice whether you are dealing with a person, a firm or a company
Look up any Indian company for free and read the 3 fields that matter before extending credit
Decode a 21-character CIN and know the company's form, state, year and listing status without opening anything
Say which structure fits a business, and why, using 1 question rather than a comparison table
Find out which state's courts would hear a claim on a US company you own
Check a company name against the 2 registers that can stop it, before spending anything

Nothing here is a tip. Nothing here names a company to buy. Everything here should still be true in 2036, about a business that does not exist yet.

The reading order

The articles build on each other. Read them in order the first time.

Why any of this matters

What is money, and why do we invest? — money is a claim that shrinks on a schedule, and the shrinkage is the reason ownership exists.
What is a company, and what does it mean to own one? — a company is a legal person that owns itself. You own a claim, and you are last in the queue.

The structures, from simplest to strongest

Sole proprietorship — you with a trade name. No second person, no wall, and your house is inside the business.
Partnership — every partner can bind the firm, and every partner is liable for all of it. You may already be in one.
LLP — the invention that made modern business possible, and the 4 doors out of it.
LLC — the American form that does everything, why India has none, and how to translate the advice anyway.
Private limited company — shares you cannot buy. Paid-up capital is not the company's money.
Public limited company, and private versus public — money from strangers is paid for with information to strangers. The stock market starts here.

Making one exist

How is a company registered? — the 6 steps every country shares, and what a registrar does not check.
Registering a company in India, step by step — SPICe+, the real costs, and the step where almost everybody gets stuck.
Registering a company in the USA, step by step — choose a state, and why that choice is a live commercial decision.

The checklist

Every article ends in an action. Collected here they are one evening's work, and they are the most valuable thing in this cluster. Tick them off as you go.

Once, on your own money

Savings rate minus the latest inflation print, multiplied by your actual balance. Write the number down. (1)
Your slice of one company's last-year profit: EPS × your shares. Compare it with the dividend you actually received. (2)

On the businesses you already pay

Take 3 invoices from smaller businesses. Read the 6th character of each GSTIN: P individual, F firm or LLP, C company. (3)
List every arrangement where you share profit with somebody. Which have a signed document? Which do not? (4)
Look up one LLP you deal with on MCA master data. Read its total obligation of contribution, then ask about its insurance. (5)
Open the Terms of Service of 3 apps you used today. Write down the exact legal entity name and suffix. (6)

Before you extend credit, take a job, or sign anything long

MCA master data, 3 fields: status, date of incorporation, date of last financial statement filed. (7, 9)
Decode the CIN on the invoice: listed or not, state, year, form. (9)
Ignore paid-up capital as a strength signal. If you need to know whether they can pay, read the filed balance sheet. (7)
For a US entity: state entity search for status and registered agent, then SEC EDGAR to see whether anything financial exists at all. (6, 7)

On what you own

Count one listed company's filings in the last 30 days. That is what being public costs. (8)
Read its shareholding pattern. Public shareholding is at least 25% in India. How much do the promoters hold? (8)
For 3 US holdings: state of incorporation versus headquarters, from the 10-K cover page. Then search the proxy for "exclusive forum". (11)

If you are starting something

Search your intended name on MCA and on the trademark register at ipindia.gov.in. Both are free. (10)
Keep authorised capital under ₹15 lakh unless there is a reason not to. (10)
Diary the dates that have penalties: INC-20A within 180 days, first auditor within 30 days, DIR-3 KYC every 30 September. (10)
In the US: 83(b) election within 30 days of vesting shares. Bylaws before the second founder. (11)

India and the United States, equally

Every article covers both countries at the same depth, and then does the thing most explanations skip: it says where the 2 diverge and what that difference tells you.

Those sections are worth reading twice, because this is the cluster where imported advice does the most damage. "Form an LLC" has no Indian answer. "You need lakhs of capital to start a company" has been wrong since 2015. "Private company means you cannot see the numbers" is true in the United States and false in India, where every company's audited accounts are on a public register and almost nobody opens them.

Two of the divergences are worth carrying on their own:

India verifies people; the United States verifies almost nothing. You can usually find out who runs an Indian company. You usually cannot find out who owns an American LLC.
India files the internal rulebook; the United States does not. An Indian company's articles are public. A US company's bylaws are in a drawer, and you must ask for them before you invest.

A note on what this is not

These lessons are free, and they will stay free. They are the text version of the ideas in our video course, written for anybody who cannot spend money on learning right now.

They are also not legal or tax advice. Fees, thresholds and deadlines change, and the ones marked in each article are the ones we most want you to verify against the official source before you act. Structure changes slowly. Numbers change every year.

The goal is the same one it has always been: fewer people in the 95%.