kinds of companies

The Companies Act, 2013 provides for three basic types of companies which may be registered
under the Act. They are :

(1) One Person Company (OPC)

(2) Private Company, and

(3) Public Company

These Companies may be :

(1) Company limited by shares;

(2) Company limited by guarantee; and

(3) Unlimited Company.

Companies limited by shares

The main attribute of limited companies which attracts the investors is limited liability of the
share-holders.

Companies limited by Guarantee

A company limited by guarantee may also be called a Guarantee Company.

The companies under the first two categories, namely, companies limited by shares and
companies limited by guarantee, may be either private or public companies.

PRIVATE AND PUBLIC COMPANIES

Private Companies :

Broadly speaking, a private company means a company which :-

(i) Restricts the right to transfer its shares;

(ii) Limits the number of members to fifty :

(iii) prohibits any invitation to the public to subscribe for any securities : 

(iv) includes One Person Company (OPC), small companies.

(v) Private companies are not taken into consideration while calculating the maximum limit of 20
companies for audit.
A pertinent question raised in the case of Ram Parshotam Mittal and another v. M/s. Hillcrest
Realty . and others etc.

Public Companies :

According to Section 2(71) of the Companies Act, 2013 a 'Public Company means :

(a) a company which is not a private company:

(b) has a minimum paid up capital '[of five lakh rupees or such higher paid up capital] as may be
prescribed :

In Shyam Nandan Prasad v State of Bihar   the Supreme Court held that a cooperative housing
society registered under the Bihar & Orissa Cooperative Societies Act, the paid up capital of
which is not subscribed to by Government and the membership of which exceeds fifty is

Government Companies (Section 2 (45)]

A Government company is one 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 subsidiary of a Government Company.

Foreign Companies [Section 2 (42)

Foreign Company means any company or body corporate incorporated in 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.

Multinational Companies (MNCs)

The companies, enterprises or corporations that manage production or deliver services in more
than one country are called a multinational companies, enterprises or corporations, as the case
may be. They can also be referred as international companies or corporations.

Finance Companies (Financial Institutions)

A Finance Company' means a non-banking company, which is a financial institution, within the
meaning of Section 45(1)(c) of the Reserve Bank of India Act 1934. According to this section, a
financial institution is a non-banking institution which carries on any of the following activities as
its business or part of its business :

The Companies Act, 2013

Company Limited by Shares

Memorandum of Association

Of

XYZ Private Limited 

1. The name of the company is XYZ Private Limited. (Name Clause)

2. The registered office of the company will be situated in the state of
Punjab. (Registered Office Clause)

3. The object for which the company is established are (Object Clause):

(a) The objects to be pursued by the company on its incorporation are:

I. To carry on business of manufacturing, converting, altering, designing,

producing security systems. 
II. To trade, buy, sell or act as agents to import or export all security related
devices.
III. To carry on the business and act as buyers, sellers, traders, agents and
dealers for obtaining the above objects. 

(b) Matters which are necessary for the furtherance of the objects specified in
clause 3A are:

1.  To manufacture and deal in packaging materials, boxes, grading, branding,

weighting, and marketing for all kinds of security devices and other
electronic components associated with it. 
2. To draw, make, accept, endorse, discount, execute, issue, negotiate, assign
and otherwise deal with cheques, drafts, bills of exchange, promissory notes,
hundies, debentures, bonds, bills of lading, railway receipts, warrants and all
other negotiable or transferable instruments. 
3.  To amalgamate with any other company or companies.
4. To acquire or merge with any other company.
5. To start a joint venture with any other company.
6. To distribute any of the property of the Company amongst the members in
specie or kind subject to the provisions of the Companies Act in the event of
winding up. 
7.  To apply for, tender, purchase, or otherwise acquire any contracts,
subcontracts licences and concessions for or in relation to the objects or
business herein mentioned or any of them, and to undertake, execute, carry
out, dispose of or otherwise turn to account the same.

 The liability of the member(s) is limited and this liability is limited to the
amount unpaid, if any, on the shares held by them. (Liability Clause)

 The share capital of the company is 70,00,000 rupees, divided into 2000
shares of 3500 rupees each. (Capital Clause)
 We, the several persons, whose names and addresses are subscribed, are
desirous of being formed into a company in pursuance of this memorandum
of association, and we respectively agree to take the number of shares in the
capital of the company set against our respective names
Corporate Personality is the creation of law. 

A corporation is an artificial person enjoying in law capacity to have rights and duties and holding
property.A corporation is distinguished by reference to different kinds of things which the law
selects for personification. The individuals forming the corpus of corporation are called its
members. The juristic personality of corporations pre-supposes the existence of three conditions
:

(1) There must be a group or body of human beings associated for a certain purpose.

(2) There must be organs through which the corporation functions, and

(3) The corporation is attributed will by legal fiction. A corporation is distinct from its individual
members.

Corporations are of two kinds :

1. Corporation Aggregate : Is an association of human beings united for the purpose of
forwarding their certain interest. A limited Company is one of the best example. Such a company
is formed by a number of persons who as shareholders of the company contribute or promise to
contribute to the capital of the company for the furtherance of a common object. Their liability is
limited to the extent of their share-holding in the company. A limited liability company is thus
formed by the personification of the shareholders. The property is not that of the shareholders
but its own property and its assets and liabilities are different from that of its members. The
shareholders have a right to receive dividends from the profits of the company but not the
property of the company. The principle of corporate personality of a company was recognized in
the case of Saloman v. Saloman & Co

2. Corporation Sole : Is an incorporated series of successive persons. It consists of a single

person who is personified and regarded by law as a legal person. In other words, a single person,
who is in exercise of some office or function, deals in legal capacity and has legal rights and
duties. A corporation sole is perpetual. Post – Master- General, Public Trustee, Comptroller and
auditor general of India, the Crown in England etc are some examples of a corporation sole.
Generally, corporation sole are the holders of a public office which are recognized by law as a
corporation.. The chief characteristic of a corporation sole is its “continuous entity endowed with
a capacity for endless duration”. A corporation sole is an illustration of double capacity. The
object of a corporation sole is similar to that of a corporation aggregate. In it a single person
holding a public office holds the office in a series of succession, meaning thereby that with his
death , his property , right and liabilities etc., do not extinguish but they are vested in the person
who succeeds him. Thus on the death of a corporation sole, his natural personality is destroyed,
but legal personality continues to be represented by the successive person. In consequence , the
death of a corporation sole does not adversely affect the interests of the public in general.

In the leading case of Salomon v Salomon & Co Ltd, 

Salomon incorporated his boot and shoe repair business, transferring it to a
company. He took all the shares of the company except six, which were held
by his wife, daughter and four sons. Part of the payment for the transfer of the
business was made in the form of debentures (a secured loan) issued by the
company to Salomon. Salomon transferred the debentures to Broderip in
exchange for a loan. Salomon defaulted on payment of interest on the loan
and Broderip sought to enforce the security against the company. Unsecured
creditors tried to put the company into liquidation. It was argued for the
unsecured creditors that Salomon’s security was void (not legally binding) as
the company was a sham and in reality the agent of Salomon. However, the
House of Lords held that the company had been properly incorporated and
therefore the security was valid and could be enforced. Lord McNaughten
stated that, “The company is at law a different person altogether from the
subscribers to the memorandum: and although it may be that after
incorporation the business is precisely the same as it was before, and
the same persons are managers, and the same hands receive the profits,
the company is not in law the agent of the subscribers or trustee for
them.”[3] The spirit of the decision has not been universally followed due to
varying views of the judge’s interpretation and there are exceptions to
the Salomon principle where the corporate veil is lifted. cal1966, please do not
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