Types of Companies,

Types of Debentures,
Types of Shares,
etc.
Debobrata Majumdar
dev963@gmail.com
 Types of companies
On the basis of formation-

• Statutory company- these companies are

created by the special act of legislature.
Example- SBI, LIC, STC, etc.
• Registered Companies- The companies
formed and registered under the Companies
Act 1956 or earlier companies acts.
 Types of companies
On the basis Liability of members

• Company Limited by Shares- The members are the

shareholders. The liability of the shareholders does not
exceed the unpaid amount, if any, on the shares held by them.
• Company Limited by Guarantee- The liability of the members
is limited to the amount which the members undertake to
contribute in the event of winding up of the company.
Example- companies formed for the promotion of arts,
science, culture, charity & sports, etc.
• Unlimited Companies- the liability of the members are not
limited, the members have to contribute certain amount to
pay off the creditors of the company fully.
 Private company & Public Company
• Minimum Number- Private 2, Public 7

• Maximum Number- Private 50, Public unlimited

• Minimum paid up capital- Private 1lac, Public 5lac

• Transferability of shares- Private No, Public Yes

 Types of Shares-
Preference Shares & Equity Shares

• Types of Preference Shares -

• Cumulative- Arrears (Dividends) are accumulated and paid before the equity share
holders
• Non Cumulative- Arrears (Dividends) are not accumulated and paid for only current
year before the equity share holders
• Redeemable
• Irredeemable
• Participating- Entitled to share surplus profit after the preference and equity
dividend is paid.
• Non Participating- Entitled to a fixed dividend only
• Convertible- Can convert the preference shares to equity shares
• Non Convertible- Can not Convert
 Sweat Equity Shares
• Equity shares issued at a discount for
consideration other than cash for providing
know how or making available rights or for
value additions to the company.
• It can be issued from a class of shares already
issued.
 Employees’ Stock Option
• The option given to the whole time directors,
officers or employees the benefit or right to
purchase or subscribe at a future date, the
securities offered by the company at a pre
determined price. Shares are not
transferrable.
 Rights Issue
• When a company wants to issue a further
issue of shares, it is under legal obligation to
first offer the shares to the existing
shareholders, unless resolved otherwise by a
special resolution.
• The right of the existing shareholders to buy
the rights is transferrable.
 Debentures-
An acknowledgement of a debt (under the seal of the company)

• Redeemable & Irredeemable

• Mortgage- Debentures secured by a mortgage
• Naked/ Simple- Debentures not secured
• Registered Debentures
• Bearer Debentures
• First Debentures- Interest to be paid first, in preference to other debentures
• Second Debentures- Interest paid after the first debentures
• Convertible & Non Convertible
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