2. KINDS OF COMPANIES
(Under Companies Act – 2013)
1) One Person Company [section 2(62) of 2013 Act].
2) Private Company [section 2(68) of 2013 Act]
3) Public Company [Section 2(71) of 2013 Act]
4) Dormant Company [Section 455 of 2013 Act]
5) Small Company [Section 2(85) of 2013 Act]
6) Banking Company [Section 2(9) of 2013 Act]
7) Unlimited Company [Section 2(92) of 2013 Act]
8) Charitable Company (Formation of companies
with charitable objects, etc.) [Section 8 of 2013 Act]
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4. • One-person company: The 2013 Act introduces a new type of
entity to the existing list i.e. apart from forming a public or private
limited company, the 2013 Act enables the formation of a new entity a
‘one-person company’ (OPC). An OPC means a company with only one
person as its member [section 2(62) of 2013 Act].
• Private company: The 2013 Act introduces a change in the
definition for a private company, inter-alia, the new requirement
increases the limit of the number of members from 50 to 200. [section
2(68) of 2013 Act].
Private Company limited by shares
Private Company limited by guarantee and having share capital
Private Company limited by guarantee and having no share
capital
Private Company Unlimited and having share capital
Private Company Unlimited and having no share capital
Public Company Unlimited and having share capital
Public Company Unlimited and having no share capital
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5. • Public Company: [Section 2(71) of 2013 Act]
“public company” means a company which—
(a) is not a private company;
(b) has a minimum paid-up share capital of five lakh rupees or such
higher paid-up capital, as may be prescribed:
*Provided that 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.
Public Company limited by shares
Public company limited by guarantee and having share capital
Public Company limited by guarantee and having no share capital
• Dormant company: The 2013 Act states that a company can be
classified as dormant when it is formed and registered under this 2013
Act for a future project or to hold an asset or intellectual property and
has no significant accounting transaction. Such a company or an
inactive one may apply to the ROC in such manner as may be
prescribed for obtaining the status of a dormant company.[Section 455
of 2013 Act]
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6. • Small company: A small company has been
defined as a company, other than a public company.
(i) Paid-up share capital of which does not exceed 50
lakh INR or such higher amount as may be
prescribed which shall not be more than five crore
INR
(ii) Turnover of which as per its last profit-and-loss
account does not exceed two crore INR or such
higher amount as may be prescribed which shall not
be more than 20 crore INR:
As set out in the 2013 Act, this section will not be
applicable to the following:
• A holding company or a subsidiary company
• A company registered under section 8
• A company or body corporate governed by any
special Act [section 2(85) of 2013 Act]
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7. • Banking Company [Section 2(9) of 2013 Act] - “banking
company” means a banking company as defined in clause (c) of section 5
of the Banking Regulation Act, 1949.
• Unlimited Company [Section 2(92) of 2013 Act] - “unlimited
company” means a company not having any limit on the liability of its
members.
• Charitable Company [Section 8 of 2013 Act] - (1) 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—
(a) 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;
(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,
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8. • Listed company- if shares listed on any Indian stock exchange
e.g. Infosys, TCS etc.
• Unlisted company: self-explanatory. e.g. Nokia India, Sahara’s
those two Housing finance companies*.
*which were selling OFCDs (Optionally Fully Convertible
Debenture - Optionally convertible debentures are debt
securities which allow an issuer to raise capital and in return the
issuer pays interest to the investor.) & got Subrato Rai in Jail,
for he did not get SEBI permission before selling OFCDs and did
not repay investors’ money when SEBI ordered him to.
• overall, 9 lakh companies in India
• >90% of Indian companies are private limited.
• Holding, Subsidiary and Associate companies
• Holding company = itself owns 20% or more shares of another
company.
• that “Another company” is further classified into:
Subsidiary company Associate company
If 50% shares owned by holding
company.
If 20% or more shares owned by holding
company.
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9. Other Kinds of Companies:
1) Statutory Companies
2) Registered Companies
3) Government Companies
4) Foreign Companies
5) Holding and subsidiary companies
6) Investment companies
7) Public Financial Institutions
8) Producer Companies
9) Illegal Companies
10) Unregistered Companies
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10. • Statutory Companies -
When a Company is incorporated/formed by passing a Special
Act at the Legislature, it is called as a Statutory Company.
Though primarily they are governed under that Special Act, still
the Companies Act, 2013 will be applicable to them.
These companies are formed mainly with an intention to
provide the public services like gas, water, electricity, etc.
These companies are also known as the Statutory corporations
or public corporations.
The examples of such companies in India would be : Reserve
Bank of India, Food Corporation of India, Life Insurance
Company etc.
• Registered Companies – A Company which is formed and
registered under the Companies Act, 2013, including the
companies which are earlier registered under any of the previous
company, are called as the Incorporated or Registered Company.
* All those companies which don't fall under the above categories
are called 'Unregistered Company'
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11. • Government Company [section 2(45) of 2013 Act] -
“Government company” means any company in which
not less than fifty one per cent. 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;
• Foreign Company [section 2(42) of 2013 Act] - “foreign
company” means any 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.
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12. • Holding or Subsidiary Company [section 2(46) of 2013 Act] - “holding
company”, in relation to one or more other companies, means a company of
which such companies are subsidiary companies;
• Investment Company - An investment company is a company whose main
business is holding securities of other companies purely
for investment purposes. The investment company invests money on behalf of
its shareholders who in turn share in the profits and losses.
• In United States securities law, there are at least three types of investment
companies:
▫ Open-End Management Investment Companies (mutual funds)
▫ Closed-End Management Investment Companies (closed-end funds)
▫ UITs (unit investment trusts)
• The Reserve Bank of India is entrusted with the responsibility of regulating
and supervising the Non-Banking Financial Companies by virtue of powers
vested in Chapter III B of the Reserve Bank of India Act, 1934. The regulatory
and supervisory objective, is to:
• a) ensure healthy growth of the financial companies;
• b) ensure that these companies function as a part of the financial system
within the policy framework, in such a manner that their existence and
functioning do not lead to systemic aberrations; and that
• c) the quality of surveillance and supervision exercised by the Bank over the
NBFCs is sustained by keeping pace with the developments that take place in
this sector of the financial system.
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13. • Public financial institution [section 2(72) of 2013 Act] “public
financial institution” means—
(i) the Life Insurance Corporation of India, established under section 3
of the Life Insurance Corporation Act, 1956;
(ii) the Infrastructure Development Finance Company Limited,
referred to in clause (vi) of sub-section (1) of section 4A of the
Companies Act, 1956 so repealed under section 465 of this Act;
(iii) specified company referred to in the Unit Trust of India (Transfer
of Undertaking and Repeal) Act, 2002;
(iv) institutions notified by the Central Government under sub-section
(2) of section 4A of the Companies Act, 1956 so repealed under section
465 of this Act;
(v) such other institution as may be notified by the Central
Government in consultation with the Reserve Bank of India:
*Provided that no institution shall be so notified unless—
(A) it has been established or constituted by or under any Central or
• State Act; or
(B) not less than fifty-one per cent. of the paid-up share capital is held
or controlled 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;
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14. • Producer Companies [section 465(1) of 2013 Act] - The
concept of Producer Company in India was introduced to allow
cooperatives to function as a corporate entity under the Ministry of
Corporate Affairs. In this article, we look at the procedure for
registering a Producer Company in India, under the Companies Act,
2013.
• The Companies Act defines Producer as any person engaged in any
activity connected with or relatable to any primary produce (Produce:
“things that have been produced or grown, especially by farming”). A
Producer Company is thus a body corporate having an object that is
one or all of the following:
• production, harvesting, procurement, grading, pooling, handling,
marketing, selling, export of primary produce of the Members or
import of goods or services for their benefit.
• Further, the Producer Company must deal primarily with the produce
of its active Members and is allowed to carry on any of the following
activities by itself or through other entities – on behalf of the members.
• processing including preserving, drying, distilling, brewing, vinting,
canning and packaging of produce of its Members;
• manufacture, sale or supply of machinery, equipment or consumables
mainly to its Members;
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15. • providing education on the mutual assistance principles to its Members
and others;
• rendering technical services, consultancy services, training, research and
development and all other activities for the promotion of the interests of
its Members;
• generation, transmission and distribution of power, revitalisation of land
and water resources, their use, conservation and communication
relatable to primary produce;
• insurance of producers or their primary produce;
• promoting techniques of mutuality and mutual assistance;
• welfare measures or facilities for the benefit of Members as may be
decided by the Board;
• financing of procurement, processing, marketing or other activities
which include extending of credit facilities or any other financial services
to its Members.
• Producer Company Registration
• To register a Producer Company in India, the following members in any
of the combination is necessary:
• Ten or more individuals, each of them being a producer; or
• Two or more producer institutions; or
• A combination of ten or more individuals and producer institutions
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16. • Illegal Companies [section 464 of 2013 Act]
(1) No association or partnership consisting of more than such
number of persons as may be prescribed shall be formed for the
purpose of carrying on any business that has for its object the
acquisition of gain by the association or partnership or by the
individual members thereof, unless it is registered as a company
under this Act or is formed under any other law for the time
being in force:
Provided that the number of persons which may be
prescribed under this sub-section shall not exceed one hundred.
(2) Nothing in sub-section (1) shall apply to—
(a) a Hindu undivided family carrying on any business; or
(b) an association or partnership, if it is formed by professionals
who are governed by special Acts.
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17. • (3) Every member of an association or partnership
carrying on business in contravention of sub-section (1)
shall be punishable with fine which may extend to one
lakh rupees and shall also be personally liable for all
liabilities incurred in such business.
• 2) Exemptions: Sec will not apply to the following
entities
a. Associations which are formed without any profit like
NGO’s and charitable institutions.
b. Stock Exchanges: These are formed without profit
motive. Case: Ruia vs. dalmia
c. One single Hindu Undivided family carrying on
business.
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18. • Effects of an illegal Association:
a. Every member of an illegal association shall be personally liable
for all debts and liabilities incurred by an association in an
unlimited manner.
b. Every member shall be liable to pay fine upto rs.10, 000 each.
c. An illegal association cannot enter into any contract with any
persons.
d. It cannot sue either its own member’s or any outsiders. It can be
sued either by its own members or outsiders (However outsiders
sue the members personally).
e. It cannot be wound up or dissolved because it does not exist in the
eyes of law.
f. It cannot become a legal association subsequently by reduction in
the no. of members.
g. Profits made by an illegal association liable to Income tax.
• Unregistered Company
Any partnership or association consists of more than 7 persons and
not more than 10 persons and carrying an banking business or not
more than 20 persons carrying another business which is not
registered in companies act, or any other business.
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