The document discusses companies under Indian law. It defines a company as an incorporated entity distinct from its members. It describes key characteristics of companies like separate legal personality, limited liability, transferable shares, and perpetual existence. It outlines different types of companies based on incorporation, liability, members, control, and listing status. Finally, it compares public and private companies on aspects like minimum members, directors, share transfer rules, financial disclosure requirements, and more.

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Presented By
Dr. Niraj C. Chaudahri
Assistant Professor,
BE(E &Tc), MBA (Operation & Supply Chain
Management , Material Management & Marketing
Management ) PhD ( Operation Management )
1
Sanjivani College of Engineering, Kopargaon
Department of MBA
www.sanjivanimba.org.in
111 ( Legal & Business Environment )
Company Act

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The Company Act- 1956
• Definition of company
• “In terms of the Companies Act, ‘company’
means a company incorporated under the
Act, or under the previous company law”
[Sec. 2(20)].

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The Company Act- 1956

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The Company
• A company may be an incorporated company or a
Corporation, or an unincorporated company. An
incorporated company is a single and legal (artificial)
person distinct from the individuals constituting it,
whereas an unincorporated company, such as a
partnership, is a mere collection or aggregation of
individuals. Therefore, unlike a partnership, a
company is a corporate body and a legal person
having status and personality distinct and separate
from that of the members constituting it.

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Characteristics of company
• Independent corporate existence
• Limited Liability
• Perpetual succession
• Separate property
• Transferable Shares
• Common seal

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Types of Companies

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Types of Companies
• On the Basis of Incorporation:
1. Statutory companies
2. Registered companies

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Types of Companies
• On the basis of liability
1. Company limited by shares Section 2 (22)
encompassed to meet the company’s debt.
2. Company limited by guarantee Section 2
(21).
3. Unlimited company Section 2 (92)

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Types of Companies
• On the basis of members
1. One person company ,Section 2 (62)
2. Private Company [Section 2 (68)]
3. Public company [Section 2 (71)]
4. Small Company [Section 2 (85)]

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Types of Companies
• On the basis of control
1. 'holding company :According to Section 2
(46)
2. 'subsidiary company According to Section 2
(87)

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Types of Companies
• On the basis of Listing in the recognized
Stock Exchange
1. Listed company ,According to Section 2 (52)
2. Unlisted company ,According to Section 2
(52)

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Public vs. Private Company

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Public vs. Private Company
Basis for Comparison Public Company Private Company
Meaning
A Public Company is
owned and traded
publicly on the stock
exchange.
A Private Company is
owned and traded
privately.
Use of Suffix
Limited can use after the
public company name
(Example- ABC Limited).
Private Limited can be
used after the private
company name. (Example-
ABC Private Limited).
Min. Members
Minimum 7 members
must be required to form
a public company.
Minimum 2 members
must be required to form
a private company.
Max Members
There is no maximum
limit of the member in a
public company
The maximum limit of the
member in a private
company is 200.
Min Directors
At least 3 directors are
required in a public
company.
At least 2 directors are
required in a Private
company.

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Public vs. Private Company
Basis for Comparison Public Company Private Company
Start of Business
Certificate of
incorporation and
commencement of
business is required to
start the business.
The only certification of
incorporation is required
to start the business.
Public Subscription of
Shares
Public subscription of
share is allowed in public
companies.
Public subscription of
share is not allowed in
private companies.
Quorum at AGM
5 members should be
present personally at
AGM.
2 members should be
present personally at’
AGM.
Statutory Meeting
The statutory meeting is
compulsory.
The statutory meeting is
Optional.
Issue of Prospectus
It is their mandate to issue
the prospectus.
It is not required in a
private company.

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Public vs. Private Company
Basis for Comparison Public Company Private Company
Shares Transferability
Share can be transferred
freely in public companies.
Transfer of share is
restricted in private
companies.
Managerial Remuneration
There is no restriction is
managerial remuneration.
Managerial remuneration
can exceed 11% of the Net
Profit.
Disclosure of Financial
Report
A public company needs to
disclose its financial
reports quarterly and
annually.
There is no such
obligation for a private
company to disclose its
financial results to the
normal public.
Size
Generally, the size of the
public company is very
huge.
Normally the size of a
private company is small
in comparison to a public
company. But a private
company also be a big
company.