Types of Companies in 13 Words

2021
Types of
Companies
Classroom Deliberations
CA (Dr) Prithvi Ranjan Parhi
1
CA (Dr) Prithvi R Parhi

Types of Company : Defined in Companies Act,2013
1. Company Limited by Shares
2. Company Limited by Guarantee
3. Small Company
4. One Person Company
5. Government Company
6. Private Company
7. Public Company
8. Foreign Company
9. Holding Company
10. Subsidiary Company
11. Associate Company
12. Unlimited Company
13. Banking Company
14. Listed Company
CA (Dr) Prithvi R Parhi 2

Types of Company
Incorporation Liability Control
Chartered Co
Statutory Co
Registered Co
Unlimited
Co
Limited
Co
By
Guarantee
By
Shares
Private Public
Govt. Co
Holding Co
Subsidiary Co
Associate Co
One Person
Co
Small Co
Listed Co
Nature
Banking
Insurance
Electricity
Foreign Co
Indian Co
Not for
Profit Co.
(Sec 8 Co.)
Restricts Share transfer
Members < 200
Prohibits Public to
subscribe securities
Other Types of
Companies

1.Chartered Company
• An Incorporated Company founded
by the royal Charter granted by the
Crown is called a Chartered
Company.
• The best example of a chartered
company is the East India Company.
• The members of a chartered
company have no liability for the
debts contracted by the company.

2. Statutory Company
• Formed under special statutory Act of the
Parliament or State legislature.
• Eg., SBI,LIC, OSFC, OFDC
• Usually to carry on the work of public
importance.
• Usually do not use the word “limited”.

3. Registered Company – Sec 2(20)
• Registered under Companies Act, 2013 or under
any previous Companies Act. –Sec 2 (20)
• Have MoA & AoA
• Can be limited by shares or guarantee or
unlimited company.
• A company limited by shares can be public or
private limited.

4. Banking Company – Sec 2(9)
• “Banking company” means a banking company
as defined in clause (c) of section 5 of the
Banking Regulation Act, 1949;
Clause (c) of section 5 of the Banking Regulation Act, 1949
• (c) "banking company" means any company which transacts the
business of banking [in India];
• Explanation.--Any company which is engaged in the manufacture
of goods or carries on any trade and which accepts deposits of
money from the public merely for the purpose of financing its
business as such manufacturer or trader shall not be deemed to
transact the business of banking within the meaning of this
clause;

5. Insurance Company
• As defined under Insurance Regulatory and
Development Authority Act, 1999 (41 of
1999);

6. Electricity Company
• Companies engaged in the generation or
supply of electricity as defined under
Electricity Act, 2003 (36 of 2003);

7. Foreign Company- Sec 2 (42)
• Means any company or body corporate
incorporated outside India which—
• (a) has a place of business in India whether by
itself or through an agent, physically or through
electronic mode; and
• (b) conducts any business activity in India in any
other manner.

Body Corporate
• Body corporate broadly means a corporate entity which has a legal existence.
• This includes a private company, public company, one personal company, small
company, Limited Liability Partnerships, foreign company etc.
• The term "body corporate" is defined in Section 2(11) of the Companies Act,
2013.
• Body corporate or ―corporation includes a company incorporated outside India,
but does not include—
– (i) a co-operative society registered under any law relating to co-operative
societies; and
– (ii) any other body corporate (not being a company as defined in this Act),
which the Central Government may, by notification, specify in this behalf;

8. Indian Company
• A company incorporated in India.

9. Non Profit Making Company :Sec 8 Company
• For promotion of arts, science, religion, charity or any other
useful object.
• Intends to apply its profits other income in promoting its
object.
• Prohibits payment of dividend to its members.
• CG may direct that the association may be registered as a
company with limited liability without addition of the
words “ Limited” or “ Private limited”.
• A company registered under section 8 shall not be required
to have minimum paid-up capital specified in this section.

10. Unlimited Company- Sec 2(92)
• Means a company not having any limit on the
liability of its members;

11. Limited Company
• A company where liabilities of the members
are limited either by ;
– the amount guaranteed by them;
– or by the unpaid value of shares, if any.

12. Company Limited by Guarantee
-Sec 2(21)
• Means a company having the liability of its
members limited by the memorandum to such
amount as the members may respectively
undertake to contribute to the assets of the
company in the event of its being wound up;

13. Company Limited by Shares
-Sec 2 (22)”
• Means a company having the liability of its
members limited by the memorandum to the
amount, if any, unpaid on the shares
respectively held by them;

14. Private Company -Sec 2(68)
• “private company” means a company having a minimum paid-up share
capital as may be prescribed, and which by its articles,—
• (i) restricts the right to transfer its shares;
• (ii) except in case of One Person Company, limits the number of its
members to two hundred:
– Provided that where two or more persons hold one or more shares in a
company jointly, they shall, for the purposes of this clause, be treated as a
single member:
– Provided further that—
– (A) persons who are in the employment of the company; and
– (B) persons who, having been formerly in the employment of the company,
were members of the company while in that employment and have
continued to be members after the employment ceased, shall not be
included in the number of members; and
• (iii) prohibits any invitation to the public to subscribe for any securities
of the company;

15. Public company –Sec 2 (71)
• “public company” means a company which—
• (a) is not a private company;
• (b) has a minimum paid-up share capital, as may be
prescribed:
• Provided that a company which is a subsidiary of a
company, not being a private company, shall be
deemed to be public company for the purposes of
this Act even where such subsidiary company
continues to be a private company in its articles ;

Distinction : Public – Private Company
Basis Private Public
Min No. of Members 2 (1 in case of OPC), 7
Max No. of Members Max 200 Max unlimited
Suffix Private Limited Limited
Share Transferability Not transferable & restricted Freely transferable
Invitation to public Can not invite to subscribe
shares
Can invite to subscribe shares
No. of Directors Min 2 Min 3
Restriction on
Director’s appointment
No restriction Consent to act as director need
to be filed with RoC.
Legal controls Relatively less strict Relatively more strict
Privileges Enjoy certain privilege No privilege.

Privilege of Private Company
1. Min number of members.
2. Minimum subscription before allotment of shares do not
apply to private company.
3. Need not file a prospectus/ statement in lieu of
prospectus.
4. Various kinds of share capital ~ with or without voting
rights.
5. Commence business immediately after incorporation.
6. Need not keep an index of members.
7. Min no of directors.
8. Directors consent to act need not be filed.
9. Provisions about maximum managerial remuneration do
not apply.
10. Proportion of directors liable to retire by rotation do not
apply to private company.

16. Government Company – Sec 2 (45)
• Means any company in which not less than fifty
one per cent. of the paid-up share capital is held
by
– the Central Government, or
– by any State Government or Governments, or
– partly by the Central Government and partly by one
or more State Governments,
• and includes a company which is a subsidiary
company of such a Government company;

17. Holding company – Sec 2 (46)
• Holding company, in relation to one or more
other companies, means a company of which
such companies are subsidiary companies;

18. Subsidiary Company –Sec 2 (87)
• “subsidiary company” or “subsidiary”, in relation to any other company (that is
to say the holding company), means a company in which the holding
company—
• (i) controls the composition of the Board of Directors; or
• (ii) exercises or controls more than one-half of the total share capital either at
its own or together with one or more of its subsidiary companies:
• Provided that such class or classes of holding companies as may be prescribed
shall not have layers of subsidiaries beyond such numbers as may be
prescribed.
• Explanation.—For the purposes of this clause,—
• (a) a company shall be deemed to be a subsidiary company of the holding
company even if the control referred to in sub-clause (i) or sub-clause (ii) is of
another subsidiary company of the holding company;
• (b) the composition of a company’s Board of Directors shall be deemed to be
controlled by another company if that other company by exercise of some
power exercisable by it at its discretion can appoint or remove all or a majority
of the directors;
• (c) the expression “company” includes any body corporate;
• (d) “layer” in relation to a holding company means its subsidiary or subsidiaries;

19. Associate Company –Sec 2(6)
• Associate company, in relation to another company,
means a company in which that other company has a
significant influence, but which is not a subsidiary
company of the company having such influence and
includes a joint venture company.
• Explanation.—For the purposes of this clause,
“significant influence” means control of at least
twenty per cent. of total share capital, or of business
decisions under an agreement;

20. One Person Company
-Sec 2(62)
• Means a company which has only one person
as a member;

21. Small Company – Sec 2(85)
• (85) ‘‘small company’’ means a company, other than a public
company,—
• (i) paid-up share capital of which does not exceed fifty lakh rupees
or such higher amount as may be prescribed which shall not be
more than Ten crore rupees; or
• (ii) turnover of which as per its last profit and loss account does
not exceed two crore rupees or such higher amount as may be
prescribed which shall not be more than One Hundred Crore
rupees:
• Provided that nothing in this clause shall apply to—
– (A) a holding company or a subsidiary company;
– (B) a company registered under section 8; or
– (C) a company or body corporate governed by any special Act;

22. Listed Company – Sec 2(52)
• Means a company which has any of its
securities listed on any recognised stock
exchange;

23.Defunct Company
• A defunct company means a company
– which never commenced business or
– which is not carrying on business and has either
no assets or has such assets as shall not be
sufficient to meet the cost of liquidation.
• A company is, however, not
considered defunct if the cessation of
business is due to the conduct of winding up.

24. Closely held Company
• A closely held company is that which has only
a limited number of shareholders; its stock is
exchanged only infrequently .

25. Widely held company
• A widely held company or a publicly
listed/ traded company is basically
a company that has issued securities/ shares
through an initial public offering (IPO) in the
primary market, has a mandated statutory
basic paid up capital, and is traded on at least
one stock exchange or in the over the counter
(OTC) market.

26. Blue chip companies
• Blue chips generally sell high-quality, widely accepted
products and services.
• Blue chip companies are known to weather downturns and
operate profitably in the face of adverse economic conditions,
which helps to contribute to their long record of stable and
reliable growth.
• A blue chip company stock typically has a market
capitalization in the billions, is generally the market leader or
among the top three companies in its sector, and is more
often than not a household name .

27.Multinational Company
• Headquarters in one country and business
operations in other countries.

28. Dormant Company
• A dormant company is one that has been
registered under Companies Act,2013 or
earlier Acts,
• but is not carrying on any kind
of business activity or receiving any form of
income.

29. Strike off Company /
Struck off Company
• The RoC is in the process of removing the name
of the company from its registered.
• Can be revived.

39
Thank you
CA (Dr) Prithvi Ranjan Parhi
prithvi.baps@gmail.com
7008246670 / 8763434 746
CA (Dr) Prithvi R Parhi

Types of Companies in 13 Words

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