Introduction
Companies are famously known to be two which include one as private and another one as a public company. All around the globe these two are the types of companies known by everybody. However, who are in the field of company registration or are professionals like Chartered Accountants, or Company Secretary have complete knowledge of the companies and the different types of companies.
Well, here you will learn not only about private and public companies, but also about the different types of companies that are not much known yet are in existence.
All the companies are registered under the Registrar of Companies (ROC) being it a legal compliance. Due to the growth of the economy as well as increase in the complexity of business operations, the companies that were just limited to two (private and public company) have now increased in number. Let us now discuss about the classification of companies.
Classification of Companies
Companies as per the Companies Act are classified into:-
- On the basis of Size
a) Small Companies
As per Section 2(85) of the Companies Act, a small company is a company that is not a public company and has paid up capital equal to or below Rs. 2 Crores or such higher amount specified note exceeding more than Rs. 10 Crores. And, turnover equal to or below Rs 20 Crore or such a higher amount specified not exceeding more than Rs. 100 Crore.
The clauses mentioned under the definition of small company does not apply to the following companies:-
- A Holding or subsidiary company
- A Company registered under Section 8
- A body corporate or company governed by any special act.
In order to provide comfort to small businesses having less annual revenue compared to other companies. Associations, charitable companies licensed under section 25 of the existing companies should not be treated as small companies irrespective of their gross assets.
b). Other Companies
- On the basis of Number of Members
a. One Person Company
As per Section 2 (62) of the Companies Act, one person company is a company that consists of only one member responsible for managing and running the company. Under this type of company, the law mandates to appoint a nominee in advance who can take place of the sole owner in case any mishap arises. This kind of entity shall allow the benefit of a separate legal entity as well as privilege of limited liability.
b. Private Company
As per the Companies Act, private company means a company having a minimum paid-up share capital as may be prescribed and which by its articles-
- Restricts the right to transfer its shares
- Except in case of One Person Company, limits the number of its members to two hundred
Provided where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member. Provided further that-
- Persons who are in the employment of the company; and
- Persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be included in the number of members; and
- prohibits any invitation to the public to subscribe for any securities of the company;
c. Public Company
As per Section 2(71), Public Company means a company which-
- Is not a private company
- Has a minimum paid up share capital as may be prescribed
Provided that the company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purpose of this Act even where such subsidiary company continues to be a private company.
III. On the basis of control
a. Holding Company
Holding Company is also known as Parent Company. It is a type of financial organization that owns a controlling interest in other companies which are names as subsidiaries. The clear purpose of holding company’s existence is to keep full control on the activities of its subsidiary companies. The holding companies are beneficial as it reduces the risk of the shareholders.
b. Subsidiary Company
A “Subsidiary Company” or “subsidiary” in relation to any other company means a company in which the holding company-
- controls the composition of the Board of Directors; or
- (ii) 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:
Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.
c. Associate Company
An “associate company” in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company.
On the basis of liability
1. Limited
(i) By Shares
A Company “limited by shares” means 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
(ii) By Guarantee
A Company “limited by guarantee” means 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;
2. Unlimited
An “Unlimited Company” means a company not having any limit on the liability of its members
V. On the basis of manner of access to capital
a. Listed Company
A “Listed Company” means a company which has any of its securities listed on any recognized stock exchange;
b. Un-listed Company
A public company whose shares are not listed on stock exchange and however are privately owned. This simply means that unlisted companies are owned by private investors.
Other Types of Companies
1. Government Company
“Government Company” means 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;
2. Foreign Company
As per Section 2(42), “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 mode; and
- conducts any business activity in India in any other manner.
3. Section 8 Company
Section 8 Company are the companies that are registered with an objective of promoting the fine arts, science, literature, or knowledge sharing for a purposeful matter or for charity. These are the limited companies established under the Companies Act. The Government grants these companies an exclusive license under Section 8 Companies Act. There are three main conditions for granting the license is.
- The company should form for the charitable purpose.
- Income and profits should be used towards these objects.
- The company should not pay any dividend to its members.
4. Dormant Company
A dormant Company is a type of company that 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 a manner prescribed for obtaining the status of dormant company.
5. Nidhi Company
As per Section 406 of the Companies Act, “Nidhi” means a company which has been incorporated as Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, or lending to, its members only for their mutual benefit and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies.
6. Public Financial Institutions
Public Financial Institution means a company which –
- the Life Insurance Corporation of India, established under section 3 of the Life Insurance Corporation Act, 1956 (31 of 1956);
- the Infrastructure Development Finance Company Limited, referred to in clause (vi) of subsection (1) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act;
- specified company referred to in the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002);
- institutions notified by the Central Government under sub-section (2) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act;
- such other institution as may be notified by the Central Government in consultation with the Reserve Bank of India:
Provided that no institution shall be so notified unless—
(A) it has been established or constituted by or under any Central or State Act; or
(B) not less than fifty-one per cent. of the paid-up share capital is held or controlled 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;
Registration of Companies
Registration of the Company is easy with the help of EAdvisors Infotech LLP. We, at EAdvisors deliver services of every company registration at a minimal cost. We offer utmost satisfaction to our clients by giving the best of services they expect from us. We make each and everything clear at the initial stage itself and try our best to resolve all the queries of our client.
Registration of Companies is possible with EAdvisors with the best of experts by your side. Nothing much is required. All you are expected to do is to visit the services you are looking for and fill the form given. After the form is received by our experts, we will get in contact with you within 24 hours.
Depending on the type of company you wish to register, you will be required to submit documents as asked. And then, after the documents are received, the further process shall be started. For those, who cannot visit and show their presence has the chance to send the documents either through whatsapp or via email. We are committed to provide our clients with what they need.
Company Registration, MCD Licenses and many other services also are included in the services provided by our EAdvisors Infotech LLP. So, if you are ready to start with you company, then contact us and get the best of advice from our experts. We shall guide you as per your requirement.
