39252356 Kinds of Companies

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The Companies Act of 1956

KINDS OF COMPANIES



Classification of companies:On the basis of incorporationCompanies

Incorporated

Unincorporated

Chartered Companies

Statutory Companies

Registered Companies



Classification of companies:

y

Incorporated companies:Which is formed for the purpose of carrying a business Which is incorporated under companies

act of 1956



Classification of companies:y

Unincorporated companies: These are to all intents and purposes large Partnerships Transferable shares Liability of the members is unlimited These companies continue even after the death or insolvency of the members Maximum number of members 10 in case of banking business & 20 in case of any other business



Classification of companies:On the basis of incorporation y Chartered companies:Incorporated under a special charter granted by king or queen

y

Statutory companies:

Created by special act of legislature

y

Registered companies:Formed and registered under companies act 1956 or were registered under any of the earlier companies acts



Classification of companies:On the basis of liability & membersPrivate Limited Company Limited Company by Share

Companies Before & after Company Act 1956

Limited Company By Guarantee

Public Limited Company

Unlimited Company



Classification of companies: On the basis of liabilityy

Companies limited by shares:Liability of members of a company is limited by memorandum to the amount ,if any, unpaid on the shares.

y

Companies limited by guarantee:Liability of members of a company is limited by memorandum to a fixed amounts which the members contribute at the time of wound up

y

Unlimited companies:A company without limited liability



Classification of companies:On the basis of Memberya) b) c)

Private limited company:Restricts the right to transfer its shares Limits the number of its members to f

ifty Prohibits any invitation to the public to subscribe for any shares in , debentures of , the company

ya) b) c)

Public company:Does not restrict the right to transfer its shares, if any; Does not limit the number of its members Invites public to subscribe for any shares in , debenturesof , the company



Distinction between a public and private companyBasis Minimum number Maximum number Number of directors Appointment of directorsInvitation to subscribe for shares Transferability of shares Public company 7 Unlimited At least 3 Must file consent with registrar Invites public Free transfer Private company 2 50 At least 2 N/A Restricted Restricted



Foreign companyIt means any company incorporated outside India Which: a) after 1st April, 1956,established a place of business within India, or b) before 1st April,1956 established a place of business in India and continued to have an established place ofbusiness within India on the 1st Aprily



Classification of companies:On the basis of Control

y

Holding companies: A company is deemed to be holding company if but only if, that other company is its subsidiary



Classification of companies:On the basis of Control

Subsidiary companies: Company is deemed to be subsidiary of another company in the following: 1. If the composition of board of directors of the company is controlled by another company 2. Holding of majority of shares 3. Subsidiary of another subsidiary

y



Classification of companies:On the basis of Ownership y Government company: A company in which 51 % of the paid up share capital is held by central government and/or by any state government or governments ,or partly by central government and partly by one or more state governments y Non government company: controlled and operated by private capital



Public financial institutiony

According to sec 4-A of companies ( Amendment ) act 1974, each of the financialinstitutions shall be regarded as a public financial institution, namely:The industrial credit and investment corporation of India The industrial financial corporation of India The industrial development bank of India The life insura

nce corporation of India The unit trust of India

i. ii. iii. iv. v.



Public financial institutiony

Sec 4-A(2) authorize the central government to specify by notification in official gazette , any other institution to be public financial institution , but no institution shall be so specified unless:It has been established or constituted by or under any central act or Not less t

han 51% of paid up share capital of such a institution is held or controlled bythe central government

i. ii.



Associations not for profits(sec25)y

The name of the limited company must end with the word Â´limitedÂµ , in the case of public company and with the word Â´private limitedÂµ in the case of private company Sec 25,however, permits the registration , under a license granted by the central government , of an association not for profits with limited liability without using t

he word Â´limitedÂµ or the words Private limited to its name.



Associations not for profits(sec25)y

The central government may grant such license to an association where it is proved to the satisfaction of the government that is :Is about to be formed as limited company for promoting commerce , science, religion, charity, or any other useful object; and Intends to apply its profits , if

any, or other income in promoting its objects and to prohibit the payment of anydividend to its members

a)

b)



Section 43-A company 43Private company which has become public company by virtueof sec 43-A but not treated as public company in all respects it is a special type of public company Features of such a company: a) it can retain the featuresof a private company , viz., restriction on the transfer of shares ,limitation on the number of members to fifty etc b) Number of members may be below seven c)The minimum number of directors does not apply d) Profit and loss account of thecompany is not open for the public

y



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39252356 Kinds of Companies