MODULE II

COMPANIES ACT

TYPES OF COMPANIES

Companies can be classified on the basis of Incorporation:-

a) Chartered Company:- A company which is registered under the Royal chart of

England is called a Chartered Company. This formation of the company could be
formed by the crown. Eg:- British East India Company.
b) Statutory Company:- A company formed under the Special statute or Act Passed
by Parliament or State Legislature is called a statutory Company
Ex:- (Railway,RBI,LIC)
c) Registered Company:-These are the companies is formed under the Companies
Act 2013 or some earlier Companies Act.

Companies on the basis of Liability

a) Company limited By shares:-Under this type of Companies the liability of

members up to the nominal value of shares.
b) Companies limited by Guarantee:- A company limited by Guarantee means a
company having liability of its members limited by the memorandum to such
amount as the members may respectively undertake by the memorandum to
contribute to the assets of the Company to the event of its winding up.
c) Unlimited Companies:-A company not having any limit on the liability of its
members. These are companies in which the liabilities of members are unlimited.
Every member of such companies is liable for all the debts of the company.

Companies on the basis of number of Members

a) Private company:- A company which is formed with a minimum number of

two persons and a maximum number of two hundred is known as a private
company.
 A private company can be formed with a minimum of two members and its
maximum is limited to two hundred and no minimum paid up capital
requirements will now apply for incorporating a private company.

b) Public Company:- A company which is not a private company and formed with a
minimum of 7 members is called Public company.
c) C) One person company(OPS):- A OPS is a kind of Private company and having
only one person as a member.

DIFFERENCE BETWEEN PRIVATE COMPANY AND PUBLIC COMPANY

BASIS PRIVATE COMPANY PUBLIC COMPANY

No Of Members Minimum 2 members Minimum 7 members

Maximum 200 members Maximum unlimited

Public Invitation No public invitation Public Invitation allowed

Transferability of shares Transfer of shares restricted
Number of Directors Minimum 2 directors
Prospectus Not required to issue a
prospectus
Minimum subscription Need not wait for minimum
subscription
Shares are freely
transferable
Minimum 3 directors
Prospectus is required
Minimum subscription is
required

Quorum of meeting Two members personally 5 members personally

present shall be the quorum
for a meeting of a private
company.
Managerial remuneration No restriction as to payment
of managerial remuneration
to the directors
present (number of
members 1000) or fifteen
members (number of
members more than 1000
but up to 5000) or thirty
members (members exceed
five thousand) shall be the
quorum for a meeting.
Remuneration shall not
exceed 11% of net profits
Special privileges
Use of ‘Limited’ word
Special privileges are No privileges
enjoyed by a private
company
Use Private Limited Use only the word Limited
(Pvt.Ltd) (Ltd.)

Companies on the basis of Ownership

a) Government Company:-A government company is one in which not less

than51% of the paid up share capital is held by the Central Government or by
any state government or jointly by central and state government.
b) Non-Government Companies:-The Company which is not a Govt. Company
is called non Government Company. The list of non-government companies
includes all those companies which are registered under the Companies Act
but not as Government company.

Companies on the basis of Control

a) Holding company:-A holding company is one which holds not less that
51% of the paid up of another company.
b) Subsidiary Company:-A holding company hold the paid up capital of
another company, that another company is known as subsidiary company.

Companies on the basis of Nationality

a) National Companies:-A company formed under a specific company act of

nation is known as national company. Eg:- A company formed and
registered under the Indian Companies Act 2013 is known as an Indian
Company.
b) Foreign Company:-A company is one incorporated outside India. A
foreign company is one that is incorporated outside India but has business
operations in India.
Other forms of Company

a) Small company:-The concept of Small Company has been introduced for

the first time by the Companies Act,2013. The act identifies some
companies as Small Companies based on their capital and turnover for the
purpose of providing certain exemptions to these companies.
b) Dormant Company:-The Companies Act 2013 introduce a new
concept i.e dormant company which means a company which is not
active. A company which is formed and registered under the
companies act for a future project or to hold an asset or intellectual
property and has no significant accounting transaction, such a company can
make an application to the Registrar for obtaining the status of a dormant
company.
c) Producer company:-The company which is formed for primary producers.
The membership of producer companies is open to primary producers they
are engaged in activity connected with or related to primary produce.
Primary produce means produce of farmers arising from agriculture
including animal husbandry, horticulture, floriculture, pisciculture,
forestry, handicrafts.
d) Listed company:-Listed company means a company which is listed its
shares on any recognized stock exchange.
e) NIDHI:- Nidhi means a company which has been incorporated with the
object cultivating the habit of thrift and savings amongst its members. It
receiving deposits from and lending to its members only, for their mutual
benefit, and and follows Central Govt.rules.