What are the different types of companies?

What are the different types of companies?

Introduction: companies may be classified on the basis of their incorporation, number of members, size, basis of control and motive.

On the basis of incorporation, the companies may be classified into the basis of liability, it may be companies limited by shares/guarantee and unlimited liability companies. Further on the basis of no. Of members they may be divided into “one person company, private company and public company.

Classification/kinds of companies:

1) On the basis of incorporation:

  • Statutory companies: These are constituted by a special act of the parliament or State legislature. Eg RBI , LIC
  • Registered companies :the companies which are incorporated under the companies act 2013 or under nay other previous company law under ROC fall under this category.

2) On the basis of liability:

  • Unlimited liability company: In this type the members are liable for the company’s debts in proportion to their respective interests in the company and their liability is unlimited.
  • Companies limited by guarantee: A company which has the liability of its members limited to such amount as the members may respectively undertake by memorandum to contribute to the assets of the company in the event winding up is known as company limited by guarantee.
  • Company limited by shares: A company that has the liability of its members limited by memorandum to the amount if any unpaid on the shares respectively held by them is called the company limited by shares.

3) On the basis of Registration and no. Of members:

  • Private company : A private company is what American’s call s close corporation. sec 2(68) of the company s act 2013 states “A private company is a company having a minimum paid up capital of ( 1lakh or such higher paid up share capital)
  • Public company means a company which –
    • Is not a private company
    • Has a minimum paid up capital of (5 lakh rupees or such higher paid up capital) In Western Maharashtra Dev corp Ltd v/s Bajaj auto, it was held that the company’s act makes a clear distinction in regard to the transferability of shares relating to private and public companies.
  • One person company (OPC): The 2013 act introduces a new type of entity to the existing list i.e apart from forming a public or private company , the 2013 act provides the formation of a new entity a “one person company”. An OPC means a company with only one as it’s members (sec 3(1)).

4) Small company:

Small company is a new form of private company under the companies Act 2013.A classification of a private company into small company is based on size paid up capital and turnover.In other words , such companies are “small sized private companies”. It is not a public company.

5) Limited Company

( guarantee company): The term “limited company ”means a company limited by shares or by guarantee.

6) Unlimited company:

One of the main purposes of the companies act is to confer upon the business community the privilege of trading with limited liability. However, a company may be incorporated with unlimited liability.

7) Holding company :

On the basis of control companies can be divided into holding, subsidiary and associate companies. sec 2(46) states Holding company in relation to one or more other companies, is a company of which such companies are subsidiary companies.

Section 2(87) states that subsidiary company or subsidiary in relation to any other company means a company in which the holding company 1) regulates the composition of the board of directors or 2) exercises or controls more than one-half of the total share capital either at their own or together with or more of its subsidiary company. section 2(6) states“ Associate company” in relation to another company means a company in which that other company has significant influence but which is not a subsidiary company of the company having influence and includes a joint venture company.

8) producer companies:

“producer companies” was added to the act by the companies act ,2002. It indicates that only certain categories of persons can participate in the ownership of such companies.

9) Foreign companies :

A ‘foreign company’ means any company incorporated outside India which has solace of business in india .as per sec 2(42) of the act 2013 “foreign company” is a company or body corporate incorporated outside India which has a

  • a) place of business in India whether by itself or through an agent, physically or through electronic mode;
  • b) conducts any business activity in India in any other manner.

In South India shipping corpn. Ltd v/s EXIM bank of Korea : the court said that there should be a fixed and definite place where the business like operations are carried on for a reasonably long period of time.

10) Government company :

A government company, according to sec 2(45), is any company in which at 51 percent of the paid up share  capital is held by the Central Government and partly by one or more state Governments. For eg. State trading corporation of India, etc.


Thus, these were the various types of companies .Some other companies under the companies act 2013 includes “Dormant companies”

Author: Harshita Swami,
Guwahati University BALLB9th sem

Leave a Comment