Classification of Company – Liability


LIMITED BY SHARE [Sec. 2(22)]:

A company that has the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them is termed as a company limited by shares. The liability are often enforced during existence of the corporate also as during the completing . Where the shares are fully paid up, no further liability rests on them.

For example, a shareholder who has paid 75 on a share of face value 100 are often called upon to pay the balance of 25 only. Companies limited by shares are far and away the foremost common and should be either public or private.


Company limited by guarantee is a company that has the liability of its members limited to such amount as the members may respectively undertake, by the memorandum, to contribute to the assets of the corporate within the event of its being wound-up. In case of such companies the liability of its members is restricted to the quantity of guarantee undertaken by them. The members of such company are placed in the position of guarantors of the company’s debts up to the agreed amount.
Clubs, trade associations, research associations and societies for promoting various objects are various samples of guarantee companies.


It is the one in which the members are personally liable to discharge the liability of the company even through their personal assets. This liability arises only at the time of winding up of the company. However, the members cannot be sued in their personal capacity for such claims. Such kind of companies may or may not have a share capital.

An unlimited company may at any time later, convert to a limited company, where the liability of its members is either limited by shares or guarantee. Here the only condition for such conversion/re-registration being that all the contracts, debts and liabilities incurred/entered into of the unlimited company shall remain unchanged.



Companies share a relationship of holding and subsidiary, when one of them possesses and exercises control over the other. The company which possesses and exercises control is called the holding company and upon which the control is exercised is the subsidiary of the said holding company. The said control may be exercised through the composition of board of directors or by possessing more than half of the total share capital.

Associate Company is another new concept introduced by the Companies Act, 2013, whereby more transparency is sought to be brought amongst companies which shared associate relationship and were not covered in terms of holding-subsidiary. Moreover, as per provisions of the Act, an associate company is also a ‘related party’ for a company in question [section 2 (76) Companies Act, 2013].A company is an associate of another when it possesses significant influence over that company.


As per the definition given within the section 2(52) of the businesses Act, 2013, it’s a corporation which has any of its securities listed on any recognised stock market.


Unlisted company: means company other than listed company.


As per section 2(42), “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 commercial activity in India in the other manner
Section 380 of the Act lays down that each foreign company which establishes an area of business in India must, within 30 days of the establishment of such place of business, file with the Registrar of Companies for registration.


Section 2(45) defines a “Government Company” as any company during which not but fifty one per cent. Of the paid-up share capital is held by the Central Government, or by any government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a corporation which may be a subsidiary of such a Government company. The Government Company is neither a department nor a Government establishment.

COMPANIES WITH CHARITABLE OBJECTS etc. (Non-profit companies) [Sec. 8]

Section 8 of the businesses Act, 2013 deals with the formation of companies which are formed to market the charitable objects of commerce, art, science, sports, education, research, welfare , religion, charity, protection of environment etc. Such company intends to use its profit in promoting its objects and prohibiting the payment of any dividend to its members.

Conditions for formation of a non-profit company A company may be formed if:
a) The objects of the company are to promote commerce, art, science, sports, education research, social welfare, religion, charity, and protection of environment or such other object.
b) The company shall intend to apply its profits in promoting its objects; and
c) the corporate intends to ban the payment of dividend to its members

The Companies Act, 2013, has introduced another kind of company known as a dormant company. The concept of dormant company was introduced in the regulatory regime, keeping in mind that there were large numbers of companies which actually not carrying out any significant business activity, and were merely holding an asset or an intellectual property or were incorporated for a project to be carried out in future. Hence, the compliances as against these companies were relaxed.4
Such inactive companies have to apply to the Registrar of Companies to get the ‘dormant company’ status. The Registrar once satisfied may grant such status and enter the name of such company in the Register of Dormant Companies.

Aishwarya Says

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at

We also have a Facebook Group Restarter Moms for Mothers or Women who would like to rejoin their careers post a career break or women who are enterpreneurs.

You may also like to read:

Suicide and Social Media 1

Advertisement 3

Independence of Judiciary


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.