Presentation on

types of companies
COMPANY LAW PRESENTATION
 Introduction

A company is a body corporate or an incorporated business organisation registered

under the companies act .The companies Act 2013 provides types of companies that
can be promoted and registered under the Act .We know about public and private
company as these companies types are common but there are so many company such
as Statutory company ,registered company , companies limited by shares, Companies
limited by shares, unlimited .Companies, Government company ,foreign company etc.

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 According to the modes of incorporation, companies
may be classified into three categories :-

REGISTERED
COMPANIES
STATUTORY
COMPANIES
CHARTERED
COMPANIES

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 REGISTERED
COMPANIES
Company registered under the Indian companies act is known as Registered companies .It is officially
set up and registered with Registrar of Companies and get Certificate of incorporation issued by Roc.
EX- Google India private ltd.

Registered Companies further divided into 3 parts :-

a. Companies limited by shares.

b. b. Companies limited by guarantee.

c. c. Unlimited Companies.

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 STATUTORY
COMPANIES
There are the Companies which are created by a special Act of the central and state legislature is called Statutory
Company .Statutory companies governed by the provisions of their special Acts .some examples of these type of companies are-
the Reserve Bank of India , the State Bank of India , the Life Insurance Corporation ,etc. These are mostly concerned with public
utilities and objective is not to earn profit but to serve people .e.g., railways, tramways , gas and electricity companies and
enterprise of national importance .The provision of the Companies Act ,2013 apply to them ,if they are not inconsistent with the
provisions of the Special Acts under which they formed. The liability of the members of such companies is limited .But in the
most of the cases, they may not be required to use the word ”Limited” as part of their names. Annual Report on the working of
each such company is required to be placed on the table of the Legislature (Parliament or State Legislative Assembly as the case
may be).The audit of such Companies is conducted under the supervision, control and guidance of the Comptroller and Auditor
General of India

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 CHARTERED
COMPANIES

A Company which is formed by the grant of the Charter by the crown and
which is regulated by that charter is called as chartered company. These are
the companies which are created under a special charter issued by the king or
queen of country of Monarchy. Example – East India of India, Bank of
England.

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 According to basis of the number of
member ,Companies may be classified into Four
categories:-

PUBLIC COMPANY

PRIVATE COMPANY

SMALL COMPANY
ONE – PERSON
COMPANY
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 PUBLIC COMPANY
According to Section 2(71) of the Companies Act ,2013, public company is a company which

A) is not a private company.

B) has minimum paid- up share capital Rs 5,00,000 or such higher paid-up capital as may prescribed,

C) has seven or more members.

The Company can invite public for Subscription of shares and debentures .The term public limited is added to its
name at the time of incorporation. There is no restriction on the maximum number of members. As per the provision
of Companies Act,2013 ,a company which is a subsidiary of a company (not being a private company ) shall be
deemed to be a public company even where such subsidiary company continues to be a private company in Article of
Association(AOA).
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 PRIVATE
COMPANY
According to Section 2(68) of the companies Act ,2013 , private company means a company having a minimum paid-up share capital
as may be defined and which by its Article.

a) Restricts the right to transfer its shares .This restriction is basically to preserve the private character of the company.

b) Maximum number of member 200 (except in case one person company).

c) Prohibits any invitation to the public to subscribe for any securities of the Company.
Minimum number of members are two (2) and Where two more persons hold one or more shares in a company jointly, they shall ,for
purposes of this clause ,be treated as a single member .In counting this number the following persons are excluded
1. Employee of the company and
2. Persons who were former employee of the company , while in that employment and have continued to be members after the
employment ceased. The requirement of Rs.1,00,000 or more as minimum paid up share capital for private companies has been
omitted by the Companies (Amendment) Act ,2015. Difference between Public and private company according to Indian Companies,
201

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 Difference between
Public and
private company
according to Indian
Companies, 2013
are:-

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 SMALL COMPANY
Section 2(85) of the Companies Act 2013 defines a small company as- “Small Company” means a company , other
than a public Company,-
1. Paid –up share capital of which does not exceed fifty lakh rupee or such higher amount may be prescribed which
shall not be more than Rs. Ten crore.
2. 2. Turnover of which as per profit and loss account for the immediately preceding financial year does not exceed
two crore rupees or such higher amount as may be prescribed which shall not be more than one hundred crore
rupees. Provided that nothing in this section shall be apply to :-
3. 1. Public Company.
4. 2. A holding company or a subsidiary company;
5. 3. A company registered under section 8 ; or 4. A company or body corporate governed by any special act .
6. “Turnover “ here means the aggregate value of the realisation of amount from the sale, supply and distribution of
goods or an account of services rendered , or both , by the company during a financial year.[section 2(91)].

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 ONE- PERSON COMPANY
Section 2(62) of the Companies Act, 2013 defines One-person company as a company which has only one person as a member.
Members of a company are subscribers to its memorandum of association , or its shareholders, so an OPC is effectively a
company that has only one shareholder as its member. In OPC legal and financial Liability is limited to the company only not to
that person.(Liability is limited). These Companies are generally created when there is only one founder or promoter for
business .Entrepreneurs whose business lie in early stage prefer to create OPCs instead of sole proprietorship business because so
many advantages OPCs offers. The basic difference between OPCs and Sole Proprietorships:-

41 Nature of Liability –In case of OPC is a separate legal entity distinguished from its promoter, it has its own assets and liabilities
.The promoter is not personally liable to repay the debts of the company. On other hand, sole proprietorships and their proprietors
are the same persons. So, the law allows attachment promoter’s own assets in case of non fulfilment of the business ‘liabilities.

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 According to the modes of incorporation,
companies may be classified into three categories
:-

HOLDING COMPANIES

SUBSIDIARY
COMPANIES

ASSOCIATE
COMPANIES
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 HOLDING
COMPANIES
A holding company is a company that has a specific function of controlling subsidiary companies. It won’t usually provide
services or products like a normal business. Instead, its only purpose is to control and manage other companies of which it holds
the majority shares. This way, it provides the structure to create a corporate group. Holding companies will either own the
majority of shares in a subsidiary or, in some circumstances, fully owns all shares in a company. Either way, they will hold control
over a subsidiary company. Consequently, they can influence and control the subsidiary company’s strategic decisions, policies
and governance. Holding companies and subsidiaries are legally recognized as independent companies. This limits the shared
liability between the companies. They can, therefore, be protected from financial or legal issues faced by the subsidiary. This is
the reason why many corporate groups will be structured using a holding company. Their assets also have a degree of protection if
a subsidiary declares bankruptcy or becomes insolvent. Holding companies are an integral part of corporate groups across the
business world. This guide will explain the holding company definition, the advantages and disadvantages, and how to set one up.

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 SUBSIDAIRY
COMPANIES
A subsidiary company is a business entity that is fully or partly owned by
another entity. If an X company buys Y company, Y becomes the subsidiary
company of X. The company that buys another company becomes a holding
company. Hence, it holds significant ownership & control over the subsidiary
company. The holding company is also called the parent company & the
subsidiary company is also called the daughter company. It shows the
relationship that the subsidiaries belong to the holding company.

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 ASSOCIATE COMPANIES
According to Indian Companies act 2013 “Associate company “, in relation to another company ,means a company in which
that other company has a significant influences ,but which is not a subsidiary company of the company of having such influence
and includes a joint venture company.

a. The expression “Significant influence “ means control of at least twenty percent (20%) of total voting power or control of
or participation in business decisions under an arrangement ; 48

b. b. 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 .

c. Thus, a company will be treated or taken as associate company and not a subsidiary company if it holds 20% or more but
less than 50%of the share capital of another company .

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 GOVERNMENT
COMPANIES

According to Section 2(45) of Indian Companies Act 2013 “Any company in

which not less than 51% 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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 FOREIGN COMPANIES
According to Section 2(42) of Indian companies Act 2013, foreign company
means any company or body corporate incorporated outside India which has a
place of business in India whether by itself or through an agent , physically or
through electronic media ; and, conducts any business activity in India in any
such manner .The expression “electronic media “ means that cover all those
companies which are operating online on a virtual platform such as Amazon ,
flipkart.
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 DORMANT COMPANIES
Dormant means “inactive or inoperative”, its good to start a company for future
perspective ,holding project and hold an asset /intellectual property without significant
accounting transaction . It is new initiative taken by Ministry of Corporate Affairs to
introduce Dormant company

Where a company is formed and registered under this Act for a future project or to hold an
asset or intellectual property and has no significant accounting transaction, such a company
or an inactive company may make an application to the Registrar in such manner as may be
prescribed for obtaining the status of a dormant company .
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 Public Financial Institutions

A public financial institution takes funds from customers and places it in financial assets. The most
common financial assets include deposits, loans and bonds issued by or made by the public financial
institution. The purpose of this process is to earn a return on the customers' funds and provide these
returns to the customers. Financial institutions are public when the government owns the organization .
Government-owned public financial institutions typically are heavily regulated institutions. National,
regional or local governments might create rules that allow these organizations to exist. A common form
for these institutions is a credit union for state or local employees. Not only do these institutions handle
payroll checks and other banking services, they also handle loans and investments into funds for invested
capital. The government operates these institutions as a benefit for government employees and to provide
loans for improving the surrounding economy.

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Thank you