Types of Company

There are three types of company:-
Incorporation
Liability
Control

INCORPORATION
1. Chartered Company
Chartered companies are being formed by the kings and queens. These company do not exist today. We do not study about these companies in company law.
Example:- East India Company, Bank of Japan.

2. Statutory Company
Statutory company are being formed by the parliament. A separate act has to be passed to form a statutory company.
Example:- Life Insurance Corporation of India. (LIC Act, 1956)

3. Registered Company
Registered company are those company’s which is registered in either Companies Act, 1956 or Companies Act, 2013.

LIABILITY
1. Unlimited Company
Unlimited company e which is defined under section 2 clause 92 of the Companies Act.
Liability of members are unlimited. Unlimited company may have share capital or may not have share capital.

2. Limited Company
In limited company liabilities of members are limited. Limited company has two categories limited by guarantee and limited by share capital.
• Limited by guarantee
In this company, members only give fixed amount of guarantee.
• Company limited by share capital.
It is divided into two categories that is private company and public company.
Private Company
Private company is being defined under section 2 clause 68. It has three restrictions. These are:-
 Member of a private company cannot transfer his shares to the outsider.
 Private company has a limitation of minimum 2 members and maximum 200 members.
 Private company cannot raise a public issue.
Public Company
Public company is being defined under section 2 clause 71 of the Companies Act.
 Public company has no restrictions of members.
 It can raise public issues.
 Minimum 7 members are required to form a public company.
 Public company is larger than private company and it has more minimum number of directors than in private company.

CONTROL
1. Government Company
Government company is being defined under section 2 clause 45 of the Companies Act.
Government company is that company in which Central Government and State Government, Central Government or State government or only combined State Government. Their share holding must be at least 51%.
Subsidiary of the government company is also considered as government company.

2. Holding Company.
Holding company is being defined under section 2 clause 46 of the Companies Act. Holding company is that company which has control over the subsidiary company. Holding company has more than half of the share capital of the subsidiary company. Holding company can appoint a majority of the board of directors of the subsidiary company. Holding company take major decisions of the subsidiary company.
Example:- Subsidiary of Dabur India limited would be dabur lanka limited.

Subsidiary company has been defined under section 2 clause 87 of the Companies Act.

3. Associate Company
Associate company is being defined under section 2 clause 6.
Associate company is that company which has significant influence over the other company. “Significant Influence” Means ” accompany having at least 20% to 50% of the shares of another company”.
Example:- X company has a significant influence over Y company. Then Y Company is an Associate Company of the X Company.

Aishwarya Says:

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