Kinds of Companies
Size
Rationale
Transparency at a low cost through
simplified requirements
Small companies should NOT suffer the
consequences of regulation that may be
designed to ensure balancing of interests
of stakeholders of large, widely held
corporates.
Enable simplified decision making
procedures by relieving such companies
from select statutory internal
administrative procedures.
Reduced financial reporting and audit
requirements and simplified capital
maintenance regimes
Criterion for classifying a non-public company as a small company
(i) paid-up share capital < 50 lakh rupees
or such higher amount as may
be prescribed which shall not be more
than 10 crore rupees; or
No. of Members
Small Co. Other Co. Private Co.
Meaning
meaning
S.2(85) of C-13 restricts the right to transfer its shares
limits the number of its members to two
Small co. is a company, other than a public hundred (except OPC)
company in which
prohibits any invitation to the public to
subscribe for any securities of the company
Proviso/exception
Proviso/exception
(ii) turnover of which as per its last profit These cannot be small company
and loss account < 2 crore rupees or
that where two or more persons hold one
such higher amount as may be prescribed
or more shares in a company jointly, they
which shall not be more than 100 crore
shall, for the purposes of this clause, be
rupees: (A) a holding company or a subsidiary
treated as a single member.
company;
A: persons who are in the employment of
(B) a company registered under section 8;
the company; and
or
(B) persons who, having been formerly in
the employment of the company, were
(C) a company or body corporate governed
members of the company while in that
by any special Act;
employment and have continued to be
members after the employment ceased
shall not be included in the number of
members; and
Rationale
Since private companies, do not access
capital markets, they require less rigorous
protection for their shareholders.
One Person Co.
only one person as a member
Rationale
For individuals to operate in the economic
domain
simpler regime through exemptions so
that the single entrepreneur is not
compelled to fritter away his time, energy
and resources on procedural matters.
Control
Public Co.
is not a private company
proviso
a company which is a subsidiary of a
public 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
Holding Co,
a company of which such companies are
subsidiary companies;
Liability
Subsidiary Co.
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 19[total voting power] either at
its own or together with one or more of its
subsidiary companies:
Associate Co.
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.
"significant influence" means control of at
least twenty per cent. of total voting
power, or control of or participation in
business decisions under an agreement
the expression "joint venture" means a
joint arrangement whereby the parties
that have joint control of the arrangement
have rights to the net assets of the
arrangement
Access to Capital
Limited by Shares Limited by Guarantee Unlimited Listed Un-Listed
a company which has any of its securities
listed on any recognised stock exchange
securities" means the securities as defined
in clause (h) of section 2 of the Securities
Contracts (Regulation) Act, 1956
shares
scrips
stocks
bonds
debentures
debenture stock
or other marketable securities of a like
nature in or of any incorporated company
or other body corporate
a security derived from a debt instrument,
share, loan, whether secured or unsecured,
risk instrument or contract for differences
derivative
or any other form of security; (B) a contract
which derives its value from the prices, or
index of prices, of underlying securities units or any other instrument issued by
any collective investment scheme to the
investors in such schemes
security receipt
units or any other such instrument issued
to the investors under any mutual fund
scheme
Government securities
such other instruments as may be
declared by the Central Government to be
securities
rights or interest in securities