What Are Kinds Of Companies?

The companies may be classified as follows:-
I. On the Basis of Incorporation:-

1Chartered Companies:- Chartered companies are those companies which are formed under a special charter approved by the Royal Head of the State are called Chartered Companies. The charter defines the scope and goals of such companies and confers the rights and privileges on such companies. E.g. Bank of England, the East Indian Company, the Dutch East Indian company.
2Statutory Companies:- A company which is incorporated by a special Act of Legislature is known as Statutory Company. The goals, powers, liabilities and other functional areas are defined under the special act. Statutory Companies undertake the public utility services.
Examples of Statutory Companies in India are Reserve Bank of India, Life insurance Corporation etc.
3Registered Companies:- Registered Companies are those companies which are formed and registered with the Registrar of companies under the Companies Act.

II. On the Basis of Liability:-

1Limited by Shares:- This is the most common form of company. It may be private or public. The Company in which liability of the shareholders is limited to the extent of amount unpaid on shares held by them is known as company limited by shares. It is necessary for these companies to use the word limited after their name. e.g. AB Co. Ltd.
2. Limited by Guarantee:- The companies where the liability of the shareholders is limited to the extent of amount undertaken by them to contribute to the assets of the firm in the event of winding up are known as companies limited by guarantee. These companies may or may not have the share capital.
3Unlimited Companies:- A company where there is no limit on the liability of its shareholders is known as Unlimited Company. The liability of each member extends to whole amount of the company’s debts and liabilities.

III. On the basis of Number of Members:-

1Private Companies:- A private company is a company which
(i) has minimum paid capital of one lakh rupees or more;
(ii) can have a minimum of two and maximum of fifty members;
(iii) has restricted the right to transfer its shares to any other person;
(iv) prohibits any invitation to general public for the subscription of its shares or debentures.
Generally, relatives and friends are given the membership of the private companies.
2Public Companies:- A public company is that company which
(i) has a minimum paid-up capital of rupees five lakhs or more;
(ii) is not a private company;
(iii) is a private company which is a subsidiary of public company;
(iv) does not limits the maximum number of members.

IV. On the Basis of Ownership:-

1Government Companies:- Government Companies are the companies in which not less than 51 % of the paid up share capital is held either by central or state government or both of them jointly. All the subsidiary companies of government companies are included in the list of government companies.
2. Non-Government Companies:- The list of Non-government companies includes all those companies which are registered under the Companies Act but not as Government Company.

V. On the Basis of Control:-

1Holding Companies:- The Company which holds more than half of the nominal value of share capital of another company or controls the composition of board of directors of another company is known as Holding company.
2. Subsidiary Companies:- A company whose more than half of the nominal value of share capital is held by another company or another company controls the composition of board of directors of such company is known as Subsidiary Company.

VI. On the Basis of Nationality:-

1National Companies:- A company formed under a specific company act of nation is known as National Company. E.g. a company formed and registered under the Indian Companies Act, 1956 is known as Indian Company.
2Foreign companies:- A company incorporated outside the region of a nation but has a place of business in the nation is known as Foreign Company.

Written by Lucas Beaumont

Generalist. Wikipedia contributor. Elementary school teacher from Saskatchewan, Canada.

Leave a Reply

What Is Fringe Benefit?

What Is The Meaning Of Partnership?