Companies and its Kinds

“company” means a company incorporated under The Companies Act, 2013 or under any previous company law. The Indian Companies Act, 2013 The Indian Companies Act, 2013
“company” means a company incorporated under The Companies Act, 2013 or under any previous company law. The Indian Companies Act, 2013 The Indian Companies Act, 2013
Companies and its kinds

Company :

According to Sec. 2 (20) of The Companies Act, 2013, a “company” means a company incorporated under The Companies Act, 2013 or under any previous company law.

The Indian Companies Act, 2013 has replaced the Indian Companies Act, 1956. The Companies Act, 2013 makes the provisions to govern all listed and unlisted companies in the country. The Companies Act 2013 implemented many new sections and repealed the relevant corresponding sections of the Companies Act 1956. This is a landmark legislation with far-reaching consequences on all companies incorporated in India.

It is needless to say that we have a multitude of companies of various kinds. From corporate companies to one person company, we have so many kinds of companies. Mainly these companies can be classified on the basis of size of the company, number of members, control, liability and manner of access to capital. This article shall be talking in-depth about all such, and various other kinds of companies too.

Kinds of Company :

  1. On the basis of incorporation
  2. Royal or Chartered Companies —Formed in England and do not exist in India. This companies are incorporated under specified charter like East India company, Bank of England. Company Act is not applicable to them. This companies were created and regulated by the king or queen.
  • Statutory Companies:  Such companies are formed under special act of Parliament or the state legislature , are form to undertake business of national importance  like reserve Bank of India State Bank of India Life Insurance corporation UTI. Such companies are Owned and control by government and they have not required to have MOA and AOA. Even they need not to use the word limited with their name. These companies are Separate legal entity and its Audit is done by Comptroller and Auditor General of India.
  • Registered CompaniesRegistered Companies are Found and registered under the Indian Companies Act 2013 or any other companies Act .

Registered Companies are further classified as:-

  • One person Company —One person Company is a company in which one Person is required who can be shareholder as well as the Director. Section 2 (62) of the Companies Act 2013 defined one person as one person company that means a company which has only one person as a member. An individual cannot incorporate more than one OPC or cannot become nominee in one more than one OPC. such as YUVENDRA AGRO (OPC) PRIVATE LIMITED, Kanpur.
  • Private company——Private Company defined under Section 2 (68) as A company which has a minimum paid up capital as may prescribed and by its article
    • Restricts the right to transfer share
    •  Having minimum 2 and maximum 200 members
    • Required to add the word Private Limited at the end of its name
    • Need to have minimum 2 directors
    • Need not to issue a prospectus or file with ROC.
  • Public company—— Public Company defined under Section 2 (71) as public company which is not a private company.
    • Section 3(1) of the CA, 2013– Public company may be formed for any lawful purpose by 7 or more persons.
    • Section 149(1) of the CA, 2013 – Every public company shall have minimum 3 director in its Board.
    • Section 4(1)(a) of the CA, 2013 – A public company is required to add the words “Limited” at the end of its name. It is the essence of a public company that its shares and debentures can be transferable freely to the public unlike private company. Only the shares of a public company are capable of being dealt in on a stock exchange.
    • A private company that is a subsidiary of a public company, will be considered a public company.
    • Has a minimum paid up capital as may be prescribed
    • Shares are freely traded at secondary market
    • Prospectus are compulsory required
    • Minimum 3 Directors and maximum 15 Directors are required.
  • On the basis of liability
  • Companies limited by shares: Section 2 (22)

A company that has the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them is termed as a company limited by shares.

The liability can be enforced during existence of the company as well as during the winding up. Where the shares are fully paid up, no further liability rests on them.

For example, a shareholder who has paid 75 on a share of face value 100 can be called upon to pay the balance of 25 only. Companies limited by shares are by far the most common and may be either public or private.

  • Companies limited by guarantee: Section 2 (21)

 Company limited by guarantee is a company that has the liability of its members limited to such amount as the members may respectively undertake, by the memorandum, to contribute to the assets of the company in the event of its being wound-up. In case of such companies the liability of its members is limited to the amount of guarantee undertaken by them. The members of such company are placed in the position of guarantors of the company’s debts up to the agreed amount. Clubs, trade associations, research associations and societies for promoting various objects are various examples of guarantee companies.

  • Unlimited Liability Companies: Section 2 (92)

A company not having a limit on the liability of its members is termed as unlimited company. Here the members are liable for the company’s debts in proportion to their respective interests in the company and their liability is unlimited. Such companies may or may not have share capital. They may be either a public company or a private company.

  • On the basis of control :
  • Government Company Defined u/s 2(45) of the CA, 2013 – “Government company” means any company in which not less than 51 % of the paid-up share capital is held by
  • The Central Government, or
  • By any State Government or Governments, or
  • Partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a government company.

Explanation – “paid-up share capital” shall be construed as “total voting power”, where shares with differential voting rights have been issued. Special privileges: Government Company enjoys several privileges and exemptions under the Companies Act.

  • Holding Company: Defined u/s 2(46) of the CA, 2013 – “holding company”, is a company which controls another company.

Explanation: For the purposes of this clause, the expression “company” includes anybody corporate.

  • Subsidiary Company: Defined u/s 2(87) of the CA, 2013 – “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in which the holding company—
  • controls the composition of the Board of Directors; or
  • exercises or controls more than one-half of the total voting power either at its own or together with one or more of its subsidiary companies:

Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.

Explanation: For the purposes of this clause-

  1. A company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding company;
  2. The composition of a company’s Board of Directors shall be deemed to be controlled by another company if that other company by exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors;
  3. The expression “company” includes anybody corporate;
  4. “layer” in relation to a holding company means its subsidiary or subsidiaries.
  5. On the basis of place of registration
  6. Indian Company: A company formed and registered in India is known as an Indian Company. In other words, a company which is incorporated in India. Head offices and its businesses is conducted within India. It can be private and public.
  7. Foreign company: Defined u/s 2(42) of the CA, 2013 – “foreign company” means any company or body corporate incorporated outside India

Which has a place of business in India whether by itself or through an agent, physically or through electronic mode; and conducts any business activity in India in any other manner.

Section 379 to Section 393 of the CA, 2013 prescribes the provisions which are applicable on such companies.



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