TYPES OF COMPANIES

Presentation by:-Rehaman.M

MBA (student)

TYPES OF COMPANIES

Companies

Incorporated

CharteredCompanies

Statutory Companies

RegisteredCompanies

Liability

Limited

Unlimited

Number of Member

Private

Public

Control

Holding

Subsidiary

Ownership

Government

Non- Governmen

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CLASSIFICATION OF COMPANIES:

I. On the Basis of Incorporation:-

1. Chartered Companies:

Companies set up as a result of a royal charter granted by a king or queen of a country are known as chartered companies. Example: East India Company, the Bank of England etc.

2. Statutory Companies:

Companies set up by Special Acts of Parliament or State Legislatures are called Statutory Companies. Example: Reserve Bank of India, Life Insurance Corporation of India, Unit Trust of India etc..

3. Registered Companies:

Companies registered under the Indian Companies Act, 1956 or under any of the previous Companies Acts are called registered companies. Most of the companies in India belong to this category

4. Licensed Companies:

Companies established for the promotion of arts, science, religion, charity or any other similar objects can obtain license under Sec.25 from the Central Government and enjoy certain privileges.

5. Foreign Companies:

A company incorporated outside India under the law of the country of incorporation but having established its business in India is called a foreign company.

II. ON THE BASIS OF LIABILITY

1. Companies with Limited Liability:

It is a company where the liability of the shareholder remains limited to the nominal value of the shares held by him.

2. Unlimited Companies:

Here the liability of its members is unlimited. In other words, their liability extends to their private properties also. Unlimited companies are almost non-existent these days.

3. Companies Limited by Guarantee:

In a guarantee company the liability of a shareholder is limited to the amount he has voluntarily undertaken to contribute towards the assets of the company to meet out any deficiency at the time of it winding up. Such a company may or may not have a share capital.

III. ON THE BASIS OF NUMBER OF MEMBERS

1. PRIVATE COMPANY :-

A company which has a minimum paid-up capital of Rs 1,00,000 or such higher paid up capital as may be prescribed, and by its articles

a. Restricts the right to transfer its shares, if any

b. Limits the number of its members to 50.

c. Prohibits any invitation to the public to subscribe for any shares in, or debentures of, the company,

d. Prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives.

2. PUBLIC COMPANY :-

A public company means a company which-

a. has a minimum paid-up capital of Rs. 5 lakh or such higher paid-up capital, as may be prescribed.

b. is a private company which is a subsidiary of a company which is not a private company.

Every public company, existing on the commencement of the Companies Act, 2000, with a paid-up capital of less than Rs. 5 lakh, within a period of two years from such commencement, enhance its paid-up capital to Rs. 5 lakh

IV. ON THE BASIS OF CONTROL:-

1. Holding Companies:

A company is known as the holding company of another company if it has control over the other company. According to Sec 4(4) a company is deemed to be the holding company of another if, but only if that other is its subsidiary. A company may become a holding company of another company in either of the following three ways :-

a) by holding more than fifty per cent of the normal value of issued equity capital of the company; or

b) b) By holding more than fifty per cent of its voting rights;

c) or c) by securing to itself the right to appoint, the majority of the directors of the other company , directly or indirectly.

2. Subsidiary Company:-

A company is know as a subsidiary of another company when its control is exercised by the latter (called holding company) over theSubsidiary Company. [Sec. 4 (I)]. A company is know as a subsidiary of another company when its control is exercised by the latter (called holding company) over the

V. ON THE BASIS OF OWNERSHIP1.Government Company:

A Government Company means any company in which not less than 51 per cent of the paid-up share capital is held by

(a) the Central Government, or

(b) any State Government or Governments, or

(c) partly by the Central Government and partly by one or more State Governments.

A subsidiary of a Government company is also called a Government company

Example: Indian telephone Industries Hindustan Aeronautics Ltd.

2. One Man Company:-

A member may hold virtually the entire share capital of a company. Such a company is known as a “one-man company”. This can happen both in a private company and a public company. The other member/ members of the company may be holding just one share each. Such other members may be just dummies for the purpose of fulfilling the requirements of law as regards minimum membership

3. Deemed Public Company:

The Companies (Amendment) Act. 2000 has, by introducing a sub-section (11) to Section 43A, made that a private company will not automatically become a public company on account of shareholding or turnover

4. Non-Trading Company/Non-Profit Association:

Such a company must have the objects of promoting of commerce, arts, science, religion, charity or any other useful object and must apply its profit, if any, or other income in promoting its object and must prohibit payment of any dividend to its members.

5. Investment Companies:

An investment company is a company the principal business of which consists in acquiring, holding and dealing in shares and securities. It involves only the acquisition and holding of shares and securities and thereby earning income by way of interest, dividend, etc.

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