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Legal Entity | Meaning and Definition

What is a legal entity?

A legal entity is an individual, group of persons, or organization with legal rights. In other words, a legal entity can enter into contracts, own property, and sue or be sued in court. There are several types of legal entities, each with advantages and disadvantages. The most common legal entities are sole proprietorships, partnerships, limited liability companies (LLCs), Private Limited Company, Public Limited Company, and One Person Company. 

Business law definition

Business law governs the rights, relations, and conduct of persons and organizations engaged in commerce, merchandising, and sales. It is often considered a branch of civil law and deals with issues of both private law and public law. 

Business law includes many different areas such as contracts, property, business organizations, employment, and agency relationships between businesses and their customers or employees. Many countries have separate systems of business laws governing different areas of commercial activity. This can create a complex legal environment for businesses operating in multiple jurisdictions.

Private company meaning

A private company is a company whose ownership is not publicly traded. A small number of owners can privately hold private companies or be controlled by a single owner who chooses not to sell shares to the public. 

There are advantages and disadvantages to being a private company. Private companies have more freedom to make decisions, and they don’t have to answer to shareholders. However, this also means that they may not be able to raise as much money as a public company, and they often have less access to capital markets. 

Types of Legal Entities

Those companies which are registered under Companies Act 2013 are most common types of legal entities in India:

  • Private Limited Company
  • Public Limited Company
  • Sole Proprietorship
  • Partnership
  • Limited Liability Partnership
  • One Person Company
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