Introduction

In this article you will learn about "Classification Of Companies In Company Law" and will be able to understand it. But before this we should know the definition of company so that we can understand the topics clearly. 

Meaning Of A Company

The term company is taken from the Latin word where- "Com" means together, "panis"  means bread which refers to an association of people taking their bread together. It means the association of people who contribute capital and employee common purpose (profit). 
According to Section 2(20) of the Companies Act 2013, company refers as, " A company incorporated under companies act 2013 or under any previous company law". It is a legal entity established by a group of people who come together for a common purpose and to conduct business activities and earn a profit. There are so many types of companies under companies act 2013 , which are classified on the different basis. We know about private and public company as these companies types are common but there are so many company such as statutory company, registered company, companies limited by share, unlimited companies etc. We study types of companies in detail. 




Classification Of Companies

Companies may be classified on the following basis:-
  • Classification of companies on the basis of mode of incorporation
  • Classification of companies on the basis of number of members
  • Classification of companies on the basis of control
  • Classification of companies on the basis of domicile/ nationality

Read more :- Difference Between Delegation And Decentralisation https://theeducationtheory.blogspot.com/2023/10/difference-between-delegation-and.html?m=1

On The Basis Of Mode Of Incorporation

1. Registered Companies

Companies registered under the Indian company's Act are known as the Registered companies. It is officially set up and registered with the Registrar of Companies and get Certificate of incorporation issued by ROC. Ex- Google India Private Limited. 
Registered companies further divided into 3 parts:-
  • Companies limited by shares
  • Companies limited by guarantee
  • Unlimited companies

2. Statutory Companies

There are the companies which are created by a special act of the central and state legislature called Statutory Company. Statutory companies governed by the provisions of their special Acts. Some example of these types of companies are - Reserve Bank of India, the State Bank of India, the Life Insurance Corporation, etc. There companies are mostly concerned with public utilities and the objective is not to earn profit but to serve people. The provisions of the Companies Act, 2013 apply to them, if they are not inconsistent with the provisions of the special acts under which they formed. 

3. Chartered Companies

A company which is formed by the grant of the Charter by the crown, and which is regulated by that charter is called a chartered company. These are the companies which are created under a special charter issued by the king or queen of the country of Monarchy. Example- East India of India, Bank of England. 

On The Basis Of Number Of Members

1. Public Company

According to section 2(71) of the Companies Act, 2013,public company is a company which (a) is not a private company (b) has minimum paid up share capital ₹ 5,00,000 or such higher paid- up capital as may prescribed. 
The company can invite the public for subscription of shares and debentures. The term public limited is added to its name at the time of incorporation. There is no restriction on the maximum number of members. 

2. Private Company

According to section 2(68) of the Companies Act, 2013 , private company means a company having a minimum paid-up share capital as may be defined. By its article there are restrictions on the right to transfer its shares. This restriction is basically to preserve the private character of the company. It prohibits any invitation to the public to subscribe for any securities of the Company. Minimum number of members are 2 and maximum are 200 ( except in case of one person company). 

3. Small Company

Section 2(85) of the Companies Act 2013 defines a small company as-"Small Company " means a company, other than a Public Company, -
  • Paid -up share capital of which does not exceed fifty lakh rupees, or such higher amount may be prescribed which shall not be more than ₹ Ten crores. 
  • Turnover of which as per profit and loss amount for the immediately preceding financial year does not exceed two crores rupees or such higher amount as may be prescribed which shall not be more than one hundred crore rupees. 

4. One Person Company

Section 2(62) of the Companies Act, 2013 defines One- Person Company as a company which has only one person as a member. 
Members of a company are subscribers to its memorandum of association, or its shareholders, so an OPC is effectively a company that has only one shareholder as its member. In OPC legal and financial liability is limited to the company only not to that person. These companies are generally created when there is only one founder or promoter for business. 

On The Basis Of Control

1. Holding Company

According to section 2(46) of Indian companies act "holding company", in relation to one or more other companies, means a company of which such companies are subsidiary companies. A company which holds, or controls another company is called a holding company. According to section 4(4), a company is " deemed to be the holding company of another if, but only if, that other is its subsidiary. "
The company is called a holding company if that particular company holds/owns at least 50% of the other companies and has the authority to make management decisions, influence and control the company's board of directors. 

2. Subsidiary Companies

According to section 2(87) of Indian companies act, 2013,Subsidiary company, in relation to any other company (that is to say the holding company) controls the composition of the Board Of Directors ; or exercise or controls more than half of the total voting power [amendment by the companies amendment Act, 2017] . A private company which is a subsidiary of a public company is regarded  as the public company. A subsidiary company cannot be a member of its holding company and all allotment Or transfers of shares in the holding company to its subsidiary will be void. 

3. Association Company

According to section 2(6) of Indian companies act, 2013," Association company ", in relation to another company, means a company in which that other company has a significant influence but which is not a subsidiary company of the company having such influence and includes a joint venture company. The expression " Significant influence " means control of at least twenty percent (20%) of total voting power or control of participation in business decisions under an arrangement. 

4. Government Companies

According to section 2(45) of Indian companies act, 2013 , " Any company in which not less than 51% 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. "

On The Basis Of Domicile / Nationality

1. Foreign Company

According to section 2(42) of Indian companies act, 2013, foreign company means any company or body corporate incorporated outside India which has a place of business in India whether by itself or through an agent, physically or through electronic media; and, conducts any business activity in India in any such manner. The expression "electronic media" means that cover all those companies which are opening online on a virtual platform such as Amazon, flipkart. 

2. Indian company

A company which is formed and registered in India and which pay taxes in India is known as an Indian company. These type of companies have registered office or place of business in India. 


Frequently Asked Questions

Question 1. What is the meaning of company as per companies act, 2013? 

According to section 2(20) of the companies act, 2013" Company means a company incorporated under this act or any previous company law". 

Question 2. What are the important features of company? 

The most important features of a company are "seperate legal entity" from its members. It means company are different from its owner in the eye of law . 

Question 3. What are the main types of company? 

The main and important types of company are :-
  • Public company
  • Private company
  • One person company
  • Not-profit organisation (section 8) company
Question 4. What is section 8 company? 

Section 8 company is a not -profit organisation that aims is to promote social welfare activities and promote education, science, art, and other social activities. These organisation are not work for profit.