After the introduction to The companies Act, 2013. We shall discuss and understand each classifications of the companies. This presentation also includes the conversion of public to private company and vise versa, and the difference between the two types of companies formed.

1. CLASSIFICATION OF
COMPANIES
GROUP-3
SYBAF 2020 – 2021
BUSINESS LAW

2. INDEX
Sr. No TOPIC NAME & ROLL NO
1. INTRODUCTION ADNAN SHAIKH - 48
2. CLASSIFICATION OF COMPANIES (PRIVATE & PUBLIC COMPANY ) ADNAN SHAIKH - 48
3. FOREIGN COMPANY & GOVERNMENT COMPANY ADARSH KESHARWANI - 20
4. ASSOCIATE COMPANY & NON-TRADING COMPANY SARTHAK MORE - 28
5. ONE PERSON COMPANY & SMALL COMPANY KHUSHI SHEDGE - 51
6. HOLDING COMPANY & SUBSIDARY COMPANY VARSHA JAIN - 15
7. DORMANT COMPANY & GUARANTEE COMPANY SARA MUNSHI - 29
8. LIMITED BY SHARES COMPANY , INVESTMENT COMPANY &
PRODUCER COMPANY
PETTCHIAPPAN ESSAKIMUTTU - 57
9. UNLIMITED COMPANY NOELLA CHERIAN - 07
10. CONVERSION OF PUBLIC TO PRIVATE & PRIVATE TO PUBLIC NIKHIL GAWDE - 10
11. MERITS & DEMERITS OF PUBLIC & PRIVATE COMPANY SADAF ANSARI - 01
12. DIFFERENCE BETWEEN PUBLIC AND PRIVATE COMPANY NOELLA CHERIAN - 07
13. CONCLUSION NOELLA CHERIAN - 07
14. BIBLIOGRAPHY ------------------------------------------------------

3. INTRODUCTION
 The 2013 Act replaces the Companies Act,1956.
 regulates incorporation of a company, responsibilities of a company, directors, dissolution of a
company.
 The Indian Parliament has passed the Companies Bill, 2013 on 8th August 2013.
 The Act came into force on 12 September 2013
 Assent given by the President on 29th August 2013. Notified in official gazette on 30th August
2013.

4. CLASSIFICATION OF COMPANY

5. PRIVATE COMPANY
A private company is a firm held under private ownership.
 they issue stock to their shareholders
 shares of these businesses are less liquid
 valuations are more difficult to determine.
Example : The companies that run Flipkart, Ola, Snap deal, Carat Lane, Zoom Car
are all private entities.

6. PUBLIC COMPANY
A public company is a business whose shares can be freely traded on a stock exchange or over-the-
counter. Also known as a publicly traded company, publicly held company, or public corporation.
shareholders have a claim to part of the company's assets
 free trade of shares of stock on stock exchanges
 ownership of a public company is distributed among
general public shareholders.
Examples : Reliance Industries, Tata Motors, Bharti Airtel, Larsen & Toubro

7. FOREIGN COMPANY
It means any company or body corporate incorporated outside India but
Has a place of business in India
By itself or through agent or electronic mode
Conducts any business activity in India in any other manner
Example: Samsung, Amazon.

8. GOVERNTMENT COMPANY
More than 51%share capital held by :
 Central government
 State government
 Partly by central government and partly by other state government
Example: Bharat Petroleum Corp Ltd, Indian oil

9. ASSOCIATE COMPANY
Meaning :
 An affiliate company, in which a notable portion of shares is owned by a parent company
The portion lies between 20% - 50%.
 Any ownership higher than 50% turns into subsidiary of the parent company.
 when is it formed ?
 advantages & disadvantages :
 New insights and expertise
 It is only temporary
There is no such thing as an equal involvement
 Flexibility can be restricted
Examples : Berkshire Hathaway

10. NON-TRADING COMPANY
Meaning :
 formed for the welfare of people
 betterment of the society.
 aim on civil purpose
 source of income
 advantages & disadvantages :
 Employee Commitment
 Protection from Personal Liability
 Limited Funding.
 Social Pressure.
Examples : Orphanages, Sports clubs, Civil hospitals, Libraries, Charities.

11. ONE PERSON COMPANY
 Defined under section 2 (62) of the Companies Act ,2013
 only one person as to its member.
 members are subscribers to its memorandum of association
 created when there is only one founder/promoter for the business.
 Advantages -
 Safety Net
Succession.
Market Value.
Easy Credit Facilities.
Easier Return Filing.
Examples : Srielite Solar (opc) Private Limited, Ginsafe (opc) Private Limited

12. SMALL COMPANY
According to Companies Act 2013, Small company means the company which satisfies the
following conditions:-
 paid up share capital
 annual turnover
A Company is not a Small Company if:-
It is a Public Company
It is a Holding of another company.
The company is a subsidiary of another company.
The company is a Section 8 Company.
It is a company governed by any Special Act.
Examples : Airbnb , pet sitters.

13. HOLDING COMPANY
Holding Company is a company which has a control over another company by either of the
following:
 Controls the composition of it’s Board of Directors.
 It is the Holding Co for it’s Subsidiary’s Subsidiary Co.
 Advantages & disadvantages :
 Risk handling
 Raising capital
 Problem of Monopoly
Unequal Distribution of Wealth
Examples: Aditya Birla, Mahindra, Tata, Reliance.

14. SUBSIDIARY COMPANY
A company controlled by a holding company is know as subsidiary company.
By Following way :
 Controlled the board of directors
 Holds more than in nominal value of its equity share capital by other
company
 Advantages & disadvantages :
 Tax benefits
 Risk reduction.
 Increased efficiencies and diversification.
 possibility of multiple taxation,
 lack of business focus,
 conflicting interest between subsidiaries and the parent company.
Examples : companies bearing Tata label – Tata motors, Tata DoCoMo etc.

15. DORMANT COMPANY
Meaning :
 formed and registered under section 455
 future project
 hold an asset
 intellectual property.
 REQUIREMENTS:☆ Minimum number of directors
☆Minimum two board meetings.
☆Minimum one financial document should be filed with registrar.
 PROCEDURE FOR REGISTRATION OF DORMANT COMPANY
Examples : Bharat Digitals Ltd, Optimum Agrotech Ltd

16. GUARANTEE COMPANY
Meaning :
 member promises to pay
 event of liquidation
 payment of debts and liabilities
 who governs it ?
 advantages & disadvantages :
 Members are protected from financial risk.
 Company can enter into commercial contracts and employ staff.
 The cost of setting up is high.
 It can become a major issue if there is any sort of dispute.
Examples: Cricket Australia

17. LIMITED BY SHARES COMPANY
Meaning:
 Section 2 (22) of the Companies Act 2013
 the liability of the members
 limited by its memorandum of association
 unpaid on shares held by them.
 liability of the shareholders to the creditors
of the business
 advantages & disadvantages :
 Minimizing personal liability
 Professional status
 limited companies must be incorporated at Companies House
 you will be required to pay an incorporation fee to Companies House

18. INVESTMENT COMPANY
Meaning :
a corporation or trust
 business of investing the pooled capital of investors
 "fund company" or "fund sponsor."
 features of investment companies
1. More than one Investment
2. More than one Investor
 advantages & disadvantages :
 Closed-ended structure
 Boards of directors
 Gearing
 Discounts
Example : Morgan Stanley Wealth Management

19. PRODUCER COMPANY
Meaning :
 recognized body of farmers/agriculturists
 aim to improve
 standard of living
 can be formed by 10 individuals or 2 institution or by combination of both
 Features of Producer Company
1. Type of Work
2. Liability
3. Requirement of Individuals
 advantages & disadvantages :
 Separate legal entity
 Tax Benefits
 High input prices
 Low cash flow.
Example : Karnavati producer company limited

20. UNLIMITED COMPANY
Meaning :
 As per section 2 (92)
 type of private company.
 features similar to a limited company
 members -shareholders and directors,
 have unlimited liability.
 These companies are unpopular in the Indian subcontinent.
 advantages & disadvantages :
Confidentiality
More flexible share capital options
Unlimited liability
Missed opportunities
Examples : Land Rover formerly an unlimited company until 4 October 2013

21. CONVERSION OF COMPANY
Private company to Public company
 Convene a Meeting of Board of Directors
 Convene General Meeting
 Filing of Form INC-27 with ROC
 Filing of Form MGT-14 with ROC
 New Certificate of Incorporation
File Necessary Amendment Application under
certain Acts
 Conversion by Default.
 Conversion by Operation of law.
 Conversion by Special Resolution.
Public company to Private company
 Convene a Meeting of Board of Directors
 Convene General Meeting
 Filing of Form INC-27 with ROC
 Filing of forms with ROC
 File an Application for Conversion of Public
Company into Private Company
 Publication of an Advertisement
 New Certificate of Incorporation.
 Steps to be followed after Conversion of Public
Company into Private Company.

22. MERITS & DEMERITS
Public company :
Advantages/ merits -
 Raising capital through public issue of shares.
 Widening the shareholder base and spreading risk.
 Other finance opportunities.
 Transferability of shares.
 Exit Strategy.
Disadvantages/ demerits –
 More regulatory requirements
 Higher levels of transparency required.
 Ownership and control issues.
 Short-termism
 Initial financial commitment is higher
Private company :
Advantages/ merits –
 No Minimum Capital.
 Separate Legal Entity
 Limited Liability
 Fund Raising
 Free & Easy transfer of share
Disadvantages/ demerits –
 Restricts the transfer ability of shares by its articles.
 Number of shareholders in any case cannot exceed 50.
 cannot issue prospectus to public.
 stock exchange shares cannot be quoted

23. DIFFERENCE BETWEEN:
PRIVATE COMPANY
1) Number of members – min 2 , max 200
2) Restriction on name
3) Cannot invite the public
4) Prospectus or statement
5) Restriction on transfer of shares
6) Issue of new shares
7) Number of directors
8) Remuneration of directors
9) Privileges
10) Borrowing of loans / funds
PUBLIC COMPANY
1) Number of members – min 7 , max – not fixed
2) No restriction on name
3) Restriction on invitation to public
4) Must file prospectus
5) Restriction on transfer of shares
6) Issue of new shares
7) Number of directors
8) Remuneration of directors
9) Privileges
10) Borrowing of loans / funds

24. CONCLUSION
A company is an incorporated associate, which is an artificial person created by law, having a
separate entity, with a perpetual succession and common seal .
The conventional classification of companies is done mainly into chartered companies,
statutory companies, and registered companies.
These registered companies are further classified into
i. Constitution
ii. Liability
iii. Control
iv. Others
Every classification has it various advantages and disadvantages that can be understood under
the act .

25. BIBLIOGRAPHY
•www.mca.gov.in
• www.cleartax.in
• www.taxguru.in
•www.mcaindia.co.in
•www.learn.quicko.com
• www.investopedia.com
• www.hjsolicitor.com
• www.simpleformations.com
• www.vistra.com
• www.informdirect.co.uk
• AUTHOR –KALAIVANI
VENKATARAMAN
BOOK NAME – COMPANY LAW
PUBLISHING YEAR – 2017
PAGE NUMBER - 124, 125, 126

26. THANK YOU - GROUP 3
25TH FEB, 2021