Meaning of company
A group of people who want to cooperate and work toward a similar goal can create a company, a legal organization. The Companies Act allows for the legal registration of new corporations.
Types Of Companies
On the basis of
2. Place of registration
3. Liability of members
4. Membership Pattern
5. Other types of companies
1. On the basis of Incorporation –
- Statutory companies – Statutory companies are those established by a specific act of parliament or state legislatures. Government funding is used by these companies. The legislature’s rules also determine its authority and scope of control. Example: Life Insurance Company and Reserve Bank of India ( LIC ).
- Registered companies – Registered companies are any businesses that have been registered under the 2013 Companies Act or an earlier version of the Companies Act. For instance, Reliance, Wipro, etc.
- Chartered companies – Chartered companies are those established as a consequence of a royal charter (Document) given by a king or queen of a nation. These businesses are extremely rare and old. East India Company is an example.
2. On the basis of Place of Registration –
- Foreign Companies – Outside of India, foreign corporations are incorporated. Additionally, they use a location to conduct business in India, either alone or in collaboration with another company.
- Indian companies – It was incorporated and registered under the Companies Act of 1956. Even if it may conduct certain business operations abroad, the registered or major office of an Indian company, corporation, institution, association, or body must always be in India.
3.On the basis of Liability of members –
- Companies Limited by Guarantee – In some companies, the memorandum of association contains financial commitments made by certain members.
In the event of a winding up, they would only be responsible for paying the promised sum. They cannot be made to pay more money by the corporation or its creditors.
- Unlimited Companies – There are no restrictions on the liability of members in unlimited companies. As a result, the corporation may use all of the personal assets of the shareholders to pay off its obligations as it is winding up. They will be liable for the full amount of the business’ debt.
- Companies Limited by Shares – Shareholders of some corporations occasionally may not pay the full value of their shares all at once. In these corporations, a member’s liability is only as great as the amount of unpaid share capital. This indicates that in the event of a winding up, members will only be accountable for the remaining balance of their shares.
4. On the basis of Membership Pattern –
- Private Companies – Private companies are those whose articles of association place restrictions on the free transfer of shares. Private companies must have a minimum of 2 members and a maximum of 200. These shareholders also include current and past employees.
- One Person Companies (OPC) – These companies only have one shareholder, who is also their lone member. OPCs are legal entities separate from their sole members, making them unique from sole proprietorships. OPCs are exempt from the requirement for minimum share capital, unlike other corporations.
- Public Companies – Public companies, as opposed to private ones, permit their shareholders to freely transfer their shares to third parties. Second, they must have a minimum of 7 members, but they are allowed an unlimited number of members.
5. OTHER TYPES OF COMPANIES –
- Investment Companies – The companies that conduct a core operation or transaction involving the securities of other companies are known as investment companies.
Securities offered by this organization may take the form of shares, debentures, or other securities.
The investment is intended to be used not only for the purchase and keeping of the assets but also for possible future sales of those securities at higher prices.
- Producer Companies – A body corporate that is registered as a producer company under the Companies Act of 1956 and has the aims or activities listed in section 581B is referred to as a “producer company.”
A producer company is a group of farmers or agriculturalists that has obtained legal recognition and whose goals include raising members’ living standards and ensuring that their support systems, earnings, and profitability are in good standing.
- Small Company – A “small company” is defined as a business that is not a public company and has a paid-up share capital of no more than 50 lakh rupees or any higher amount that may be prescribed but cannot exceed 10 crore rupees, as well as a turnover that, according to the profit and loss account for the most recent fiscal year, did not exceed 2 crore rupees or any higher amount that may be prescribed but cannot exceed 100 crore rupees.
6. On the basis of AUTHORITY OF COMPANY –
- Subsidiary Company – A company is referred to as a subsidiary company if it manages its operations under the direction of another (holding) company.
- Government Companies – Government companies are those in which the central government, one or more states, or both the central government and one or more states jointly own more than 50% of the share capital.
- Holding Companies – This sort of business is run either directly or indirectly, through another company, possesses more than half of another company’s equity share capital, or has control over the make-up of another company’s board of directors.