Types of Companies under companies act 2013 | Types of companies | Indian companies
In India, there are so many types of companies as per the Companies Act 2013.
Companies on the Basis of Liabilities
When we look at the liabilities of members, companies can be limited by shares, limited by guarantee, or simply unlimited.
1) Limited by Shares company
Shareholders of some companies do not pay the entire value of their shares. In these companies, the liabilities of members is limited to the extent of the amount not paid by them on their shares. This means, in case of winding up, members will be liable only until they pay the remaining amount of their shares.
2) Limited by Guarantee company
In companies, the memorandum of association prescribes amounts of money that some members guarantee to pay. In case of winding up, they will be liable only to pay only the amount that the member gives a guarantee to pay. The company or its creditors cannot compel them to pay any more money.
3) Unlimited Company
Unlimited companies have no limits on their members’ liabilities. Hence, the company can use all the personal assets of shareholders to meet its debts while winding up. Their liabilities will extend to the company’s entire debt.
The company on the basis of members
1) One Person Companies (OPC)
This type of company has only one member as its sole shareholder. They are different from sole proprietorships because OPC is a legal entity distinct from its sole members. Unlike other companies, OPC doesn’t need to have any minimum share capital.
2) Private Company
Private company means whose articles of association restrict free transferability of shares. In the context of members, the private companies need to have a minimum of 2 and a maximum of 200 members. These members include present and former employees who also hold shares.
3) Public Company
Public companies allow their members to freely transfer their shares to others. and they need to have a minimum of 7 members, but the maximum number of members they can have is unlimited. a public company listed on the stock exchange.
Companies on the basis of Control
In terms of control, there are two types of companies.
1) Holding and Subsidiary Company
Shares of the company might be held fully or partly by another company. Here, the company owning these shares becomes the holding or parent company. the same with, the company whose shares the parent company owns becomes its subsidiary company. Holding company's control over their subsidiaries by exercising control by owning more than 50% of their subsidiary company's shares.
2) Associate Company
Associate companies in which other companies have significant influence. This significant influence amounts to ownership of at least 20% shares of the associate company.
Companies in terms of Access to Capital
When we think about the access of a company, It has to capital, a company may be either listed or unlisted.
Listed company's shares listed on stock exchanges. This means people can freely buy their shares. Hence, only public companies can be listed, and not private companies.
The unlisted company, on the other side, does not list their share on stock exchanges. Both, public, as well as private companies, can come under this category.
Other Types of Company
1) Government Company
Government company means a company in which more than 50% of share capital is held by either the central government, or by one or more state government, or jointly by the central government and one or more state government.
2) Foreign Company
A foreign company is incorporated outside India. They also conduct business in India.
3) Charitable Company (Section 8 company)
Some companies have charitable purposes. These companies are called Section 8 companies because they are registered under Section 8 of the Companies Act, 2013.
Charitable companies have the promotion of arts, science, culture, religion, education, sports, trade, commerce, etc. as their objectives. Since they do not earn profits, they also do not pay any dividends to their members.
4) Nidhi Company
A Nidhi company functions to promote the habits of thrift and saving among its members. It receives deposits from members and uses them for their own benefits.
5) Public Financial Institutions
Life Insurance Corporation, Unit Trust of India, and other such companies are treated as public financial institutions. They are essentially government companies that conduct functions of public financing.