TYPES OF COMPANIES

[Mr. M. GOVINDARAJAN]

The following are the various types of companies as per Companies Act, 2013:

• Associate Company – Section 2(6) – Association 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 have such influence and includes a joint venture company.
• Banking Company – Section 2(9) – Banking Company means a banking company as defined in clause (C) of the Section 5 of Banking Regulation Act, 1949;
• Body Corporate – Section 2(11) – It is otherwise called as Corporation. It includes a company incorporated outside India, but does not include-
  • A co-operative society registered under any law relating to co-operative societies; and
  • Any other body corporate (not being a company as defined in this Act) which the Central Government may, by notification, specially in this behalf;
• Company Limited By guarantee – Section 2(21) – 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;
• Company Limited By Shares – Section 2(22) – 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;
• Foreign company – Section 2(42) –Foreign company means any company or body corporate incorporated outside India which-
  • Has a place of business in India whether by themselves or through an agent physically or through electronic mode; and
  • Conducts any business activity in India in any manner;
• Government Company – Section 2(45) – Government Company means 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;
• Holding Company – Section 2(46) – Holding Company in relation to one or more other companies, means a company of which such companies are subsidiary companies;
• Listed Company – Section 2 (52) - Listed company means a company which has any of its securities listed on any recognized stock exchange;
• One Person Company – Section 2(62) – One Person Company means a company which has only one person as a member;
• Private Company – Section 2(68) – Private Company means a company having a minimum paid up share capital of one lakh rupees of such higher 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 members to 200;
  • Where two or more persons hold one or more shares in a company jointly, they shall, for the purpose of this Act, be treated as a single member;
  • 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 the employment and have continued to the 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.
• Public Company – Section 2(71) – Public Company means a company which-
  • Is not a private company;
  • Has a minimum paid up share capital of five lakh rupees or such higher paid up capital as may be prescribed;
  • A company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles;
• Small Company – Section 2(85) – Small Company means a company, other than a public company-
  • Paid up share capital of which does not exceed Rs.50 lakhs or such higher amount as may be prescribed which shall not be more than Rs.5 crores; or
  • Turnover of which as per its last Profit and Loss Account does not exceed Rs.2 crores or such higher amount as may be prescribed which shall not be more than Rs.20 crores;
  • Nothing in this clause not apply to-
    • A holding company or a subsidiary company;
    • A company registered under Section 8; or
    • A company or body corporate governed by any special act;
• Subsidiary company – Section 2(87) – Subsidiary Company in relation to any other company (that is to say the holding company), means a company to which the holding company-
  • Controls the composition of the Board of Directors; or
  • 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;
  • Such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.
  • For the purposes of this clause-
    • A company shall be deemed to be a subsidiary company of the holding company even if the control is of another subsidiary company of the holding company;
    • The composition of a company’s Board of directors shall be deemed to be controlled by another company if that other company by exercise of some power exerciable by it at the discretion can appoint or remove all or a majority of the directors;
    • The expression ‘company’ includes any body corporate;
    • ‘layer’ in relation to a holding company means the subsidiary or subsidiaries.
• Unlimited Company – Section 2(92) – Unlimited Company means a company not having any limit on the liability of its members;
• Companies with charitable objects etc, - Section 8 – Where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a limited company-
  • Has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;
  • Intends to apply its profits, if any, or other income in promotion its objects; and
  • Intends to prohibit the payment of any dividend to its members

The Central Government may, by licence issued in such manner as may be prescribed, and on such conditions as it deems fit, allow that person or association of persons to be registered as a limited company under this Section without the addition to its name of the word ‘Limited” or as the case may be, the words ‘Private Limited’ and thereupon the Registrar shall, on application, in the prescribed form register such person or association of persons as a company under this section.

• Nidhi companies – Section 406 – ‘Nidhi company’ means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit and which complies with such rules as are prescribed by Central Government for regulation of such class of companies.