This document discusses the nature and types of companies under Indian law. It defines a company as an artificial legal person formed by an association of people to achieve a common objective. The key types of companies discussed are: 1. Limited by shares, limited by guarantee, unlimited liability companies based on member liability. 2. Private and public companies based on restrictions on share transfers. 3. Holding, subsidiary and government companies based on control and shareholding. 4. Other types like One Person Companies, small companies, investment companies, producer companies, and charitable companies based on their objectives, capitalization, and activities.

1. COMPANY LAW : Nature of
Company . Types

2. Sec 2 (20)Companies Act 2013

3. ■ 1.
1. Incorporated Association 2, Artificial Person 3 Separate legal Entity 4. Limited
Liability 5. Separate Property 6. Transferability of Shares 7. Perpetual existence 8
Common Seal 9. May sue or be sued in its own name

6. Corporate Veil can be lifted if it is used
for tax evasion to circumvent tax
obligation

7. MEANING OF COMPANY
A company is a natural legal entity formed by the
association and group of people to work together
towards achieving a common objective. It can be a
commercial or an industrial enterprise.
According to the definition of a company by the
Indian Act 2013;
‘‘A registered association which is an artificial
legal person, having an independent legal, entity
with perpetual succession, a common seal for its
signatures, a common capital comprised of
transferable shares and carrying limited liability.’’

8. KINDS OF COMPANIES
INCORPORATION
PLACE OF
REGISTRATION
LIABILITY OF
MEMBERS
MEMBERSHIP
PATTERN
AUTHORITY
ON THE BASIS OF
• Limited By Share
• Limited By
Guarantee
• Unlimited Liability
• Private
Company
• Public Company
• Holding
• Subsidiary
• Govt.
• Statutory
• Charted
• Registered
• Indian
• Foreign

9. ON THE BASIS OF INCORPORATION
a) Chartered companies
Companies set up as result of royal charter granted by a king or queen of a
country are known as charted companies.
b) Statutory companies
Companies set up by the special act of parliament or state legislatures are called
statutory companies.
c) Registered companies [Section 2(20)]
Companies registered under the companies act 2013 or under any previous
companies act are called registered companies

10. ON THE BASIS OF PLACE OF
REGISTRATION
a) Foreign Companies[Section 2(42)]
Foreign companies are incorporated outside
India. They also conduct business in India
using a place of business either by themselves
or with some other company.
b) Indian companies[Section 2(20)]
It is a company formed and registered under
the Companies Act, 1956. The registered or
principal office of the Indian company,
corporation, institution, association or body,
in all cases, should be in India, though it may
carry on some business activities on foreign
shores also.

11. ON THE BASIS OF LIABILITIES
a) Companies Limited by Shares[Section 2(22)]
Sometimes, shareholders of some companies might not pay the entire value of their
shares in one go. In these companies, the liabilities of members is limited to the
extent of the amount not paid by them on their shares.
This means that in case of winding up, members will be liable only until they pay the
remaining amount of their shares.

12. b) Companies Limited by Guarantee [Section 2(21)]
In some companies, the memorandum of association mentions amounts of money that
some members guarantee to pay.
In case of winding up, they will be liable only to pay only the amount so guaranteed.
The company or its creditors cannot compel them to pay any more money.
c) Unlimited Companies[Section 2(92)]
Unlimited companies have no limits on their members’ liabilities. Hence, the company
can use all personal assets of shareholders to meet its debts while winding up. Their
liabilities will extend to the company’s entire debt.

13. ON THE BASIS OF MEMBERSHIP
PATTERN
a)One Person Companies (OPC) [Section 2(62)]
These kinds of companies have only one member as their sole shareholder. They are
separate from sole proprietorships because OPCs are legal entities distinct from their
sole members. Unlike other companies, OPCs don’t need to have any minimum share
capital.
b) Private Companies[Section 2(68)]
Private companies are those whose articles of association restrict free transferability
of shares. In terms of members, private companies need to have a minimum of 2 and
a maximum of 200. These members include present and former employees who also
hold shares.
c) Public Companies[Section 2(71)]
In contrast to private companies, public companies allow their members to freely
transfer their shares to others. Secondly, they need to have a minimum of 7 members,
but the maximum number of members they can have is unlimited.

14. ON THE BASIS OF AUTHORITY OF
COMPANY
a)Holding Companies[Section 2(46)]
This type of company directly or indirectly,
via another company, either holds more than
half of the equity share capital of another
company, or controls the composition of
Board of Directors of another company.
b) Subsidiary Company
A company, which operates its business under
the control of another (holding) company, is
known as a subsidiary company.

15. c) Government Companies[Section
2(45)]
Government companies are those in which
more than 50% of share capital is held by
either the central government, or by one
or more state government, or jointly by
the central government and one or more
state government.

16. OTHER TYPES OF COMPANIES
a) Charitable Companies (Section 8)
Certain companies have charitable purposes as their objectives. These companies
are called Section 8 companies because they are registered under Section 8 of
Companies Act, 2013.
Charitable companies have the promotion of arts, science, culture, religion,
education, sports, trade, commerce, etc. as their objectives. Since they do not
earn profits, they also do not pay any dividend to their members.
b) Dormant Companies[Section 455]
These companies are generally formed for future projects. They do not have
significant accounting transactions and do not have to carry out all compliances of
regular companies.

17. c) Producer Companies [Section 581B]
“Producer Company” means a body corporate having objects or activities
specified in section 581B and registered as Producer Company under the
Companies Act, 1956.
A producer company can be defined as a legally recognized body of farmers/
agriculturists with the aim to improve the standard of their living, and ensure a
good status of their available support, incomes and profitability.
d) Small Company [Section 2(85)]
Small company” means a company, other than a public company,—
1. paid-up share capital of which does not exceed 50 lakh rupees or such higher
amount as may be prescribed which shall not be more than 10 crore rupees;
and
2. turnover of which as per profit and loss account for the immediately
preceding financial year does not exceed 2 crore rupees or such higher
amount as may be prescribed which shall not be more than 100 crore rupees

18. e) Investment Companies [Section 186]
The Investment Companies are the companies
which have a fundamental business or
transaction relating to the securities of other
companies.
Securities may be of a nature of shares or
debenture or other securities offered by such
entity.
The investment is aimed not only at the
acquisition and holding but perhaps to even the
sale of the securities whenever they reach a
better price.

19. ONE PERSON
COMPANY {OPC}

21. Provisions regarding OPC

22. 6. MEMBER OF OPC may inform ROC change within
prescribed Time Manner
PENALTY : where OPC or any of Its OFFICER
CONTRAVENES THE PROVISIONS :
Fine shall be imposed upto Rs 10,000 and Extendable to
Rs 1000 Per Day till defaut Continues