Different Types of Companies in India

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I. Definition of Company and its various categories:

1.    ‘Company’ means a company incorporated under the Companies Act or under any previous company law

2.    Types of companies:

Basically, a company incorporated in India is either public company or private company. However Companies can be divided into several categories depending upon following criteria:

(i)       Based on formation:

(A) Private company; or

(It’s a company having a minimum paid-up share capital of Rs. 1 lakh and which by its articles,

(a)       restricts the right to transfer its shares;

(b)     except in case of One Person Company, limits the number of its members to 200; and

(c)   prohibits any invitation to the public to subscribe for any securities of the company.)

(B) Public company

(It’s a company other than private company and has a minimum paid-up capital, of Rs. 5 lakh. A company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purpose of Companies Act, 2013)

(ii)     Based on limitation of shareholder’s liability

(A) Company limited by shares; or

(It’s a company where liability of its members is limited to the amount unpaid on the shares held by them)

(B) Company limited by guarantee; or

(it’s a company where liability of its members is limited to such amount as its members have undertaken to contribute to the assets of the company in the event of its being wound up)

(C) Unlimited company

(It’s a company where liability of its members is unlimited.)

(iii)   Based on Ownership

(A) Government company; or

(It’s a company where at least 51 % of the paid-up 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 subsidiary company of such a Government company.)

(B) Non-Government company

(A company other than Government company)

(iv)    Based on listing of shares

(A) Listed company; or

(It’s a company which has any of its securities listed on any recognized stock exchange)

(B) Un-listed company

(A company other than listed company)

(v)      Based on place of incorporation

(A) Foreign company

(It’s a company or body corporate incorporated outside India which –

(a)       has a place of business in India whether by itself or through an agent, physically or through electronic mode; and

(b)       conducts any business activity in India in any other manner

(B) Indian company; or

(A company registered under Companies Act of India)

(vi)    Besides above, companies can be divided into following categories:

(A) Section 8 Companies (NGOs):

(Section 8 Companies are the companies where a person or an association of persons proposed to be registered under the Companies Act as a limited company-

(a)   with an object for promotion of commerce, art, science, sports, education research, social welfare, religion, charity, protection of environment or any such other object;

(b)   intends to apply its profits, if any, or other income in promoting its objects; and

(c)    intends to prohibit the payment of any dividend to its members.)

(B) Nidhi:

“Nidhi” 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 the Central Government for regulation of such class of companies.

(C) Producer Company:

“Producer Company” means a body corporate having following objects or activities and registered as Producer Company under the Companies Act, 1956;

a.   production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit:

Provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution;

b.   processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its Members;

c.    manufacture, sale or supply of machinery, equipment or consumables mainly to its Members;

d.   providing education on the mutual assistance principles to its Members and others;

e.   rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members;

f.     generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communications relatable to primary produce;

g.    insurance of producers or their primary produce;

h.   promoting techniques of mutuality and mutual assistance;

i.     welfare measures or facilities for the benefit of Members as may be decided by the Board;

j.    any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner.

k.    financing of procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending of credit facilities or any other financial services to its Members.

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