How to form a company/partnership/LLP for trading and investment in stock market

General
1

How to form a company/partnership/LLP for trading and investment in stock market?

My query is me and my friend also some family members want to pool money and then trade in one account.

Which type is best ( One Person Company (OPC) or Limited Liability Partnership (LLP) or Private Limited Company (PLC) )?

2

Same like how you would form one for any other business. But having primary objective as trading is not legal for any of the ones you mentioned.

3

Why is it not legal?

4

As per RBI guidelines, you need to register as an NBFC if your primary income is through financial activities. This doesn’t apply in the case of individuals.

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5

What I meant was the registrar wont accept trading in shares and derivatives as primary object of the company unless you have NDFC license. I don’t think you will go that far to get this license.

Can u incorporate with some other objective and then trade ? Yes. You can. But going against the object clause in itself is illegal.

Also kindly search for relevant query in the search bar before posting. This has been answered many times in this forum. It has more details than I have given. It will clear all your doubts.

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6

Thanks for this information. Is it possible open a company which deals in other activities and then allowed to do investing as well? Does it involve 50-50% test then?

7

Hello, Is it possible to do the same through LLP?

8

Nah. The application gets rejected right away.

9

You can form Partnership Firm to invest in stock and derivatives.

10

Ok, you mean a partnership firm is possible but not LLP?

11

Thank you for your response. Can you please guide me to any online webpage or document to check which suits me better? As someone responded partnership is possible but not LLP. Someone also mentioned LLP is possible.

12

Can you please share the link of the discussion? I searched but many topics come up. Thanks in advance.

13

MCA will not approve LLP application if there is investment and trading clause in application.

14

Yes. That’s right.

I am telling you. If what I say isn’t reliable, any link or discussion which I share will also be equally not reliable. :joy::joy:

15

If Partnership firm buy any shares. Does it show in partner’s Annual Information Statement?

16

As you mentioned in the earlier post hence that this has been answered many times in this forum. It has more details than I have given. It will clear all your doubts. Then I want to understand it better.