1) A company is defined as an artificial legal entity created under the Companies Act for the purpose of earning profits or achieving charitable goals. 2) There are five main types of companies - chartered, statutory, registered, private, and public. Private companies have 2-200 members while public companies require a minimum of 7 members. 3) Key characteristics of companies include separate legal identity, limited liability, perpetual succession, ability to own property, transferability of shares, and use of a common seal.

1. Company and Its
Types
Subject : Legal Aspects Of
Business (103)
Submitted By:
Nitish Sadotra

2. Introduction
• As per Companies Act 2013, Section 2(20), “A company means
any company incorporated under this act or any other previous
law”
• According to L.H.Haney, “A Company is an artificial person-
i. Created by law
ii. Having a separate entity
iii. With a perpetual succession and a common seal.
• It is a voluntary association of Individuals for earning profits or
for some charitable purposes.

3. Characteristics of Company
• Separate Legal Entity.
• Limited Liability.
• Perpetual Succession.
• Separate Property.
• Transferability of Shares.
• Common Seal.

4. Separate Legal Entity : A company has a legal distinct entity and is independent of its
members., Case Salomon VS Salomon Co. Ltd.
Limited Liability : The act limits the lability of the members forming the company up to
the face value of the shares or the guaranteed amount as the case may be.
Perpetual Succession : Members may come and go but the company can go on for ever.
Separate Property : As a company is a legal person distinct from its members, it is
capable of owning, enjoying and disposing of property in its own name.
Transferability of shares : The right to transfer shares is a right and it cannot be taken
away by a provision in the articles.
Common Seal : The law has provided for the use of common seal, with the name of the
company engraved on it, as a substitute for its signature.
( Acc. To companies act (amendment) 2015, common seal has been omitted).

5. Company Types: 5 Types
of Companies
• Chartered company
• Statutory company
• Registered company
• Private company
• Public company

6. Chartered company:
• The crown in exercise of the royal prerogative has power to create a corporation by the grant of a
charter to persons assenting to be incorporated. Such companies or corporations are known as
chartered company.
• E.g. East India Company, Bank of England, etc.
Statutory company:
A company may be incorporated by means of a special Act of the Parliament or any state legislature.
Such companies are called statutory company.
E.g. Reserve Bank of India, Oil and Natural Gas Corporation.

7. Registered company:
Companies registered under the Companies Act 1956, or earlier Companies Acts
are called registered companies.
Such companies come into existence when they are registered under the
Companies Act and a certificate of incorporation is granted to them by the
Registrar. Types of Registered Company:
 Limited by shares.
 Limited By guarantee.
 Unlimited.

8. Private company:
• A private company is a very suitable form for carrying on the business of family
and small concerns.
• It consists of minimum two members only and maximum of 200 as per
• Companies Act, 2013.
• Minimum Paid-up Capital must be ₹ One lakh ( Acc. To companies act
(amendment) 2015.
• E.g. Ambika Industries Pvt. Ltd. , Paras Pharmaceutical Pvt. Ltd. Etc.

9. Public Company:
 A public company means a company which is not a private
company.
 There must be at least seven persons to form a public company.
 Minimum Paid-up Capital must be ₹ Five lakh ( Acc. To
companies act (amendment) 2015.
 E.g. Reliance Industries Ltd. , Tata Iron and Steel Co. Ltd. Etc.

10. Major difference between Private
and Public company
Private company
 Minimum 2 Directors.
 Prohibits invitation to general public to
subscribe for shares.
 Name must end with Private limited.
 Restricted by article to Transfer Shares.
Public company
 Minimum 3 Directors
 Invitation the general public to subscribe for
shares.
 Name ends with limited.
 Freely Transferability of Shares.

11. Some other types of companies
• Government Company
Companies that are owned by Govt. and paid up capital of the Govt. is minimum 51%.
E.g. Airports Authority of India, Bharat Sanchar Nigam Limited, etc.
• Non-Government Company
Foreign Companies are known as non-govt. company And the company that is registered
outside India and run there business in India.
• E.g. Alpha Graphic India Ltd. ,Alstom India Ltd. , Maruti Suzuki India Ltd , etc.

12. • Holding Company
Holding company is the company which holds and controls the other company.
E.g. Flipkart Online Services Pvt. Ltd., etc.
• Subsidiary Company
Subsidiary company is the company which is in the hold of other company.
E.g. Myntra Designs Pvt. Ltd., etc.
• One-man Company
Are the companies in which one man virtually holds whole of the share capital of
the company. There are other share holders who holds the few shares of the
company, these persons generally are his relatives or friends.
E.g. Pahalwan Food Mall Pvt. Ltd.