Introduction

In this article you will learn about" Meaning And Characteristics(Features) Of A Company: Types Of Companies " in simple language so that you will be able to understand it. A company ( or a joint stock company) is an association of persons formed and registered under the Companies  Act . It is a legal person not having physical existence and has a seperate legal entity, means an artificial person seperate from its members ( shareholders) . It normally has a share capital divided into small units called shares, the owners of which are known as members or shareholders. Insolvency or death of a member does not affect continuity of the company. The company continues even if a member (s) becomes insolvent or dies.  

" Company means a company incorporated under companies Act, 2013 or any previous company law ". Defined by section 2 (20) of the companies Act, 2013.




Characteristics (Features) Of A Company

1. Incorporation: 

A company is an artificial person created by the process of law, i.e., the companies Act. 

2. Separate legal entity:

A company is an artificial person having a legal seperate from its shareholders. 

3. Artificial person:

In the eyes of law it is an artificial person. It can own property, enter into contract, conduct business, sue or be sued for its debts and actions. 

4. Perpetual existence:

A company has a perpetual succession, means its existence is not affected by the death, lunacy or bankruptcy of its members or shareholders. The life of a company comes to an end, only by winding up through the process of law. 

5. Limited liability:

Liability of its members is limited to the value of shares subscribed by them or amount guaranteed to be paid at the time of winding up in the case of companies limited by guarantee. However, in case of companies incorporated with unlimited liabilities, liability of members is unlimited. 

6. Transferability of shares:

Shares of a company are freely transferable in the case of companies listed on a Stock Exchange. In the case of unlisted companies and private companies, it is regulated by Articles of Association of the company 

7. Management and ownership:

A company is not managed by all the members but by their elected representatives called Directors . Thus, management and ownership are seperate. 

8. Common seal: 

A company may or may not have a common seal. If it has a common seal, it is affixed to all the important documents of the company. The common seal is used as the signature of the company. Documents are approved after using common seal of the company. 
 
Read more: The New Economic policy 1991The New Economic policy 1991

Types Of Companies

Companies are of following three types:-
1. One person company
2. Private company
3. Public company

One person company (OPC) 

One person company is a company which has only one natural person as a member or shareholder. 
Section 2(62) of the Companies Act 2013 defines One Person Company as 'one person company means a company which has only one person as member'. 
Rule 3 of the Companies (Incorporation) Rules, 2014 relating to One Person Company prescribes that : 
(a) Only a natural person being an Indian citizen and resident in India can form One Person company or can be a nominee for the sole member of One person company. 
(b) It cannot be formed for charitable purposes. 
(c) It cannot carry out Non- Banking Financial Investment activities including investments in securities of any body corporate. 
(d) It's paid up share capital is not more than ₹ 50 lakh. 
(e) Its average annual turnover of three years should not exceed ₹ 2 crore. 
(f) A One person company should have at least 1 director but not more than 15 directors. 

Private company

A private company is one who has a minimum paid - up share capital as may be prescribed and which by its articles of association. 
  • Articles Of Association of the company restricts the transfer of shares. 
  •   Shares cannot be offered to public for subscription. 
  • Minimum number of members are 2 and maximum are 200 excluding its  past or present employee members. 
  • A private company should have at least 2 directors but not more than 15 directors. 

Public company

A public company is a company which is not a private company, has a minimum paid -up capital as may be prescribed ,and a private company which is a subsidiary of public company is also public company. 
  • A public company have at least 7 members. There is no restriction on the the maximum number of members. 
  • It should have at least 3 directors but not more than 15 directors. 
  • A public company can raise its capital by issue of shares to public for subscription. 
  • Transfer of shares of listed companies are without restrictions. However, shares of unlisted companies are restricted by the Articles of the company.