[Economy] Different Types of Companies: Pvt.Ltd, Public Ltd.

, Public Corporation, Departmental Undertaking, PSUs

1. Paid up Capital 2. Private company 3. Public company 4. Holding company and subsidiary company 5. Departmental undertakings 6. Government Company 7. Public corporation 8. PSU (Public Sector undertakings)

Paid up Capital

This word is going to keep reappearing in next few articles, so better understand it in advance. You already saw that there are two ways to finance a company: Debt + Equity. Paid up Capital means the amount of money contributed via Equity (shareholders)

Private company

It has a minimum paid-up capital of Rs.1 lakh It needs minimum two members and maximum 50 members (i.e. The persons who hold its equity) This company is to use the word Private Limited at the end of its name. It cannot have more than 50 members It cannot borrow for general public. For example Balaji Telefilms private ltd= Ektaa Kapoors company, involved in making those boring Saas Bahu serials. Another example: Neela telefilms private ltd. = Asit Modis company, they produce the comedy serial Tarak Mehta Kaa oolta Chashmaa. Flipkart.com : the online shopping website is also a private company, started by Sachin and Binni Bansal.

Public company

It has minimum paid-up capital of Rs.5 lakh. Requires minimum seven members to start a public company.

It has to hold annual general meeting of shareholders. It can borrow from general public via IPOs and Bonds. For example, Infosys started as a private ltd company in 1981, but in 1992, it re-registered itself as a Public Ltd company and launched the IPO in 1993.

Holding company and subsidiary company

If company A holds more than 50% Shares of company B then, Company A is a holding company Company B is a subsidiary company Example: Coal India is a holding company. Bharat Coking ltd, Mahanadi CoalFields ltd are its subsidiary companies. Similarly, Konkan Railway is a subsidiary company of Indian Railways. Although Indian Railways is not a Holding Company, it is a Departmental undertaking.

Departmental undertakings Government Company

It is a company in which government holds not less than 51% of paid-up share capital. For example, ONGC, SAIL Here, The Government means the union government or the State government(s) on both. For example, in Company A, 30% shares are held by union government, 10% by Gujarat government, 11% by Madhya Pradesh government, still Company A is a Government company (30+10+11=51%) The government company is managed by the board of directors. Board of Directors are appointed by the shareholders. But since government owns majority of the shares, majority of directors are chosen by the government. They can borrow extra money from public via IPOs and bonds. This company does not need Parliaments approval on how to use the profit, But it will need approval of Board of directors on how to spend the profit. Theyre not directly audited by CAG, but CAG appoints the private firms (Chartered accountants) as auditors. RTI applies to Government companies.

Public corporation PSU (Public Sector undertakings)

When we use the word PSU: it means Public corporations + Government companies. Departmental undertakings (Railway/Postal) are not PSUs. CAG has two wings: 1. The Civil wing looks after the auditing of Ministries + Departmental undertakings. 2. The Commercial wing looks after the auditing of Government companies +Public Corporations.