India has about eighteen kinds of business organisations. Types of company in company law can be sole proprietorships, private corporations, limited liability partnerships, etc. However with the country’s economic development, many types of companies in company law are becoming even more popular every day and other choices also are getting much more appealing. This blog will explain the sorts of Companies under the Companies Act 2013.
Understanding Concept of Company under Companies Act 2013
Prior to discussing the kinds of company in company law which are offered under the Companies Act 2013 let us see what a company is defined in the Act. A company is a legal entity produced by individuals with a legal identity and constant presence under Section 2 (twenty) of the Act. The company’s capital is divided into shares.
Different Types of Companies under Companies Act 2013
Mentioned below is a list of kinds of companies in company law under Companies Act 2013:
- Statutory Corporation
- Registered Enterprises
- Companies limited by shares
- Companies limited by guarantee
- Companies with unrestricted liability
- Public Corporations
- Private Enterprises
- One Person Businesses (OPC)
- Overseas Enterprises
- Domestic Businesses
- Section 8 Organisations
- State-Owned Enterprises
- Small-Scale Businesses
- Subordinate Entities
- Parent Companies
- Affiliated Enterprises
- Manufacturing Corporations
- Dormant Enterprises
Types of Companies Based on Liability
The types of companies in company law under the companies Act 2013 according to liability are as follows:
| Type | Characteristics |
| Companies Limited by Shares | – Partners’ liability restricted to total amount set in partnership agreement |
| – Unpaid share amounts may be called upon to fulfil liability | |
| – Liability against partners enforceable even during liquidation | |
| – No claims by members until shares fully repaid | |
| Companies Limited by Guarantee | – Partners liable to extent they contribute to company’s property if disbanded |
| – Quantity of guarantees in partnership contract restricts shareholders’ liability | |
| – Members are guarantors of company’s debts upon dissolution | |
| Companies with Unlimited Liability | – Members’ liability not determined |
| – Members have unlimited liability, assets may be used to service company debt | |
| – May or may not have share capital |
Types of Companies Based On Company Incorporation
The types of companies in company law according to company incorporation are the following :
| Statutory Companies | Registered Companies |
| Created under a special Act of Parliament or State Legislature | Formed under the Corporations Act, 2013 (or any earlier Companies Act) |
| Exist primarily as a public service | Receive a certificate of incorporation |
| Governed by separate laws; Companies Act of 2013 restricts their scope | Governed by the Corporations Act, 2013 (or any earlier Companies Act) |
Types of Companies Based on the Number of Members
The types of companies in company law as per the no. of members are as follows:
| Type | Definition | Key Points |
| Public Companies | – Defined in Section 2(71) of the Companies Act of 2013- Require more than 7 partners to form – Permit unrestricted buying and selling of shares – Shares are transferable – Non-compliance leads to losing public company status | – Require more than 7 partners – Allow unrestricted buying and selling of shares – Shares can be transferred – Non-compliance results in losing public company status |
| Private Companies | – Registration under Section 2(68) of the Companies Act – Limited to 200 members – Cannot solicit the general public for debentures or shares – Shares are not transferable – Restrictions must be stated in Articles of Association | – Limited to 200 members – Cannot solicit the general public for debentures or shares – Shares are not transferable – All restrictions must be in the Articles of Association |
| One Person Company | – Defined in Section 2(62) of the Companies Act – Has only one partner or shareholder – Requires at least 1 director – Business ceases upon the death of the sole member – Incorporates the concept of a “nominee” | – Has only one partner or shareholder – Requires at least 1 director – Business ceases upon death of the sole member – Incorporates the concept of a “nominee” |
Types of Companies in India by Residence
The types of companies in company law in accordance with residence are as follows:
| Foreign Companies | Indian Companies |
| Based on Section 2 (42) of the Companies Act, 2013 | Indian companies are all those incorporated and registered in India |
| Place of business or conducts business in India through an agent | Generic term covering other kinds of businesses |
| Provisions in Sections 379-393 of the Act apply |
Other Types of Companies in India
Other types of companies in company law under the companies Act 2013 include:
| Company Type | Description |
| Section 8 Company | – Registered under Section 8 of Companies Act 2013- Non-profit, promoting socially advantageous goals- Profits used for stated goals- No dividend distribution to members- Exempt from using Ltd or Pvt Ltd in name |
| Government Companies | – Central or State Government holds ≥ 51% share capital |
| Small Companies | – Share capital ≤ 50 lakh rupees- Turnover ≤ 2 crore rupees for previous year |
| Subsidiary Company | – Holding company manages board composition- Holding company controls > 50% voting rights |
| Holding Companies | – Companies of which others are subsidiaries |
| Associated Companies | – Company holds substantial influence, not a subsidiary- “Substantial influence” = control of ≥ 20% voting rights |
| Producer Companies | – Associations of farmers/producers- Name ends with “Producer Company Limited”- Directors: min. 5, max. 15 |
| Sleeping or Dormant Companies | – No business or significant transactions for 2 years |
Final Thoughts
India has many types of companies in company law under Companies Act 2013 to suit different business demands. From partnerships to companies, they reflect the changing corporate system. The concept of a company with separate legal identity and perpetual succession is important. Specialised entities like Section 8 Companies, Associated Companies, Holdings, Subsidiaries, Small Companies, Government Companies, Producer Companies & Dormant Companies complete the corporate structures of India.
These various kinds of Companies under companies Act 2013 play vital roles in innovation, entrepreneurship and social welfare of the nation’s economy. Entrepreneurs and investors should understand these distinctions for successful participation in India’s business sector.
FAQs
What are the types of companies in company law under Indian Companies Amendment Act 2013?
Along with private and public limited companies, the Act establishes an OPC, Section 8 companies and producer companies. One Person companies (OPC) are single member Companies. Only individual Indians may be shareholders in an OPC.
What are the types of companies in India?
Sorts of companies recognised under Indian Law are Private Limited Company, Public Company, Sole Proprietorship, One Person Company, Partnership along with Limited Liability Partnership.
What kind of registered company is most common?
A Private Limited Company is among India’s most common legal forms of legal entities. A Private Limited Company is subject to the Companies Act 2013 and has more than 2 Directors & 2 Shareholders, one being an Indian Resident along with Indian Citizen.
What is MoA and AoA?
The MoA and AoA are very different documents. The MoA defines the key details of the company and also the AoA defines its internal rules and regulations. The AoA is subordinate to the MoA.
