Types of Company

Companies on the Basis of Liabilities

• Companies Limited by Shares: In companies limited by shares, sometimes, shareholders of some firms may not always pay the full value of their shares at once. The responsibilities of members in these firms are limited to the number of unpaid dividends on their shares.

• Companies Limited by Guarantee: In certain businesses, the memorandum of association specifies monetary amounts that some members agree to pay. They will only be obliged to pay the guaranteed sum if the company is liquidated. They cannot be forced to pay additional money by the company or its creditors.

• Unlimited Companies: The liabilities of members of unlimited companies have zero limits. As a result, the corporation can use all of the shareholders’ personal assets to pay off its debts while it is winding up. Their responsibilities will include the entire company’s debt.

Companies on the Basis of Members

• One-Person Companies (OPCs): As the name suggests, the shareholder in these businesses is only one person. Since OPCs are legal entities apart from their sole members, they are distinct from sole proprietorships. Unlike other companies, a one-person company does not need a minimum share capital.

• Private Companies: The articles of association of private corporations limit the transferability of shares for free. Private corporations must consist of a minimum of 2 to a maximum of 200 members. These members consist of both current and previous employees who even own shares.

• Public Companies: Unlike private organisations, public companies allow their members to transfer shares to others for free. Secondly, they must consist of a minimum of 7 members, with no limit on the max number of members they can have.

Companies on the Basis of Control

• Holding and Subsidiary Companies: There are cases where a company’s shares may be held entirely or partially by another company. The company that owns these shares is now known as the holding or parent company. Similarly, a subsidiary is a company whose shares are owned by the parent company.

• Associate Companies: Associate companies are those types of companies where other companies have a significant influence. This ” significant influence ” entails owning at least 20% of the associate company’s shares.

Other Types of Companies

• Government Companies: Government companies can be referred to as companies with more than 50% of share capital held by the central government, by state governments, or jointly owned by both kinds of governments.

• Foreign Companies: Foreign companies can be referred to as companies present outside India. These companies also conduct business in India, either on their own or by collaborating with other companies.

• Charitable Companies (Section 8): Companies with charitable goals, often referred to as NPOs, are termed charitable companies. These companies are also known as Section 8 companies as they are registered under Section 8 of the Companies Act, 2013. The primary goal of charitable companies is to promote religion, arts, culture, science, education, commerce, and many more. They do not pay money to their members because they don’t make any.

• Dormant Companies: These companies are usually set up to work on future projects. They do not have large accounting transactions and are not required to comply with all the regulations that apply to regular companies.