Classification of Companies

Dr. Jaya Mathew

K J Somaiya Institute of Management, India 1

 Company - Definition

The term company means a company

incorporated under the Companies Act, 2013 or
under any previous company law.

K J Somaiya Institute of Management, India 2

 Classification

On the Basis of Incorporation

On the basis of control

On the basis of liability

New Breed

Others

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 On the Basis of Incorporation

Chartered

Statutory

Registered

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 Private Company
A Company having a minimum paid-up share capital of Rs. 1, 00,000 and
which by its articles,—
restricts the right to transfer its shares
limits the number of its members to two hundred
---A private company is prohibited to make invitation to the public to
subscribe for any securities of the company.
---A private company may by alteration of Memorandum and Articles and
compliance with other procedures convert it into a public company.
--- Companies Amendment Act (2015)

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 Public Company
A Company which—
is not a private company;
has a minimum paid-up share capital of Rs. 5,00,000.
---However, a subsidiary of a company, not being a private company, shall be deemed to be public
company for the purposes of this Act.
---A public company may by alteration of Memorandum and Articles and compliance with other
procedures convert it into a private company.
----Companies Amendment Act (2015)

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On the basis of Liability

Unlimited
Limited

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 Unlimited company

A company not having any limit on the

liability of its members.

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Company limited by shares

A company having the liability of its

members limited by the memorandum
to the amount, if any, unpaid on the
shares respectively held by them.

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 Company limited by guarantee

A company having the liability of its

members limited by the memorandum to such
amount as the members may respectively
undertake to contribute to the assets of the
company in the event of its being wound up.

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 On the basis of Control

Government

Holding & Subsidiary

Dormant

Associate

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 Government Company
A company 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 a subsidiary company of such a
Government company.

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 Subsidiary Company

A company in which the holding company

controls the composition of the Board of Directors
or
exercises or controls more than one-half of the total
share capital either at its own or together with one or
more of its subsidiary companies.
It means either of the condition stated above shall be
satisfied to be classified as a subsidiary company.

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 Associate Company
If a company (Acquirer company)has
20% or more but not more than 50% of
the total share capital of another
company, then another company shall
be treated as associate Company for the
acquirer company.

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 Dormant Company
 Dormant Company on Application
Where a company 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 may make an application and
obtain the status of a dormant company
 Dormant Company on default
If a company which has not filed financial statements or
annual returns for 2 financial years consecutively, then ROC
shall issue a notice to that company and enter the name of
such company in the register maintained for dormant
companies
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 New Breed Companies

One Person Small

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 One Person Company

A company which has only one

person as member.
The Companies (Incorporation)
Rules, 2014 specifies that only a
natural person who is citizen and
resident in India is entitled to form
OPC.
A person is allowed to form only
one OPC.
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 Small Company
A company, other than a public company,
paid-up share capital of which does not exceed
Rs. 50 lakhs
Or
turnover of which as per its last profit and loss
account does not exceed Rs. 2 cr.
---Simplified financial reporting norms and
audit exemptions are prescribed for Small
companies.
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 Others

Section -8
Foreign

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 Section 8 Companies

Section 8 Companies are formed not

with a purpose of promoting trade and
business.

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 Foreign company

A company or body corporate incorporated

outside India which—
has a place of business in India and
conducts any business activity in India.

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 Unlawful Association

Any unregistered association shall be treated as

illegal association provided such association has
more than 50 members. ( As per rule 10 of
companies Rules, 2014)

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Thank You
simsr.somaiya.edu

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