ELEMENTS OF

COMPANY LAW

TYPES OF COMPANY

PREPARED BY : PROF. ATUL A. KULKARNI.

(M.Com. MBA(Finance), PGDBM (HRM), B. Ed. SET, NET.
TYPES/ KINDS OF COMPANIES
1. Classification of Companies on the
Basis of Incorporation
 
a. Chartered Companies
Chartered companies are established by  the King or Queen
of a country. Powers and privileges of chartered company
are specified in the charter. Power to  cancel the charter is
vested with King/Queen. Examples: East  Indian  Company, 
Bank  of England, Hudson’s Bay Company. The Companies
Act does not apply to them. Such companies cannot be
started in India.
1. Classification of Companies on the
Basis of Incorporation
 b. Statutory Companies
Companies are established by a  Special Act made in
Parliament/State Assembly. Constitution of company is
specified  in  the Memorandum of Association (MOA). Rules
relating to day-to-day management of statutory companies
are  specified  in  the Articles of Association (AOA). Audit  of
statutory company is conducted by Comptroller and Auditor
General of India (CAGI). The report of CAGI is placed in
Parliament/State Assemblies concerned. Examples: Food
Corporation of India, LIC, GIC, RBI, SBI, IDBI, Railways,
Electricity, ONGC. Statutory companies enjoy autonomous
status. It need not use the word ‘Limited’ next to its name.
1. Classification of Companies on the
Basis of Incorporation
 c. Registered Or Incorporated Companies
Companies that are registered under the Companies Act of
the country, are Registered Or Incorporated Companies.
However, there is a difference between registered Or
incorporated companies.
Forming a new business structure that becomes a recognized
person or entity under the law, is incorporating a company.
The next step of incorporating is company formation. It
means to set up documents, and legal requirements
required to establish the company legally.
Once it is done; the company is submitted for registration
under the Companies Act of the country.
1. Classification of Companies on the
Basis Liability
  Companies Limited By Shares
A company limited by shares is a registered company having
the liability of its member limited by its memorandum of
association to the amount, if any, unpaid on the shares
respectively held by them.
A shareholder cannot be called upon to pay more than the
amount remaining unpaid on his shares.
Shareholder’s assets cannot be called upon for the payment
of the liabilities of the company if nothing remains to be paid
on the shares purchased by him.
Such a company is also known as a “Share Company.”
1. Classification of Companies on the
Basis of Liability
Companies Limited By Guarantee
A company limited by guarantee is one having the liability of
its members limited by the memorandum to such amount as
the members may respectively undertake by the
memorandum to contribute to the assets of the company in
the event of its being wound up.
Such a company is also known as a “Guarantee Company”. A
pure “guarantee company” does not have a share capital.
1. Classification of Companies on the
Basis of Liability
 Unlimited Company
An unlimited company is where the liability of the members
or shareholders is not limited.
An unlimited company;
incorporated with or without a share capital (and similar to
its limited company counterpart),
but where the legal liability of the members or shareholders
is not limited:
that is, its members or shareholders have a joint, several and
non-limited obligations to meet any insufficiency in the
assets of the company to enable settlement of any
outstanding financial liability in the event of the company’s
formal liquidation.
1. Classification of Companies on the
Basis of Control
 Holding Company
Where a company has control over another company, it is
known as the Holding Company and the company over
which control is exercised is called the Subsidiary Company.
A Company is deemed to be under the control of another if;
1 That other controls the composition of its Board of
Directors; or
2 The other company holds more than half in nominal value
of its equity share capital
3 It is a subsidiary of a third company which itself is a
subsidiary of the controlling company.
1. Classification of Companies on the
Basis of Control
 Subsidiary Company
A subsidiary company is a company owned and controlled by
another company; known as a holding company or a parent
company. If a parent company has control over the operations of
the subsidiary company is called holding company.
A subsidiary company;
1. owned and controlled by another company.
2. If a Holding company or parent company owns 50% of the
voting stock of the subsidiary company, it’s operations are
controlled by the holding company.
3. If the parent company holds 100% of the voting stock, the
subsidiary company structure is referred to as a wholly-owned
subsidiary.
1. Classification of Companies on the Basis of
Transferability of Share/no. of shares
Private limited company:
A private limited company is a business entity that is held by
private owners. This type of entity limits the owner’s liability to
their ownership stake, and restricts shareholders from publicly
trading shares.
1. Classification of Companies on the Basis of
Transferability of Share/no. of shares
Public limited company:
A public company is a company that has permission to issue
registered securities to the general public through an initial
public offering (IPO) and it is traded on at least one stock
exchange market. A public company is not authorised to begin
its business operations just upon the grant of the certificate of
incorporation. In order to be eligible to run as a public company,
it should obtain another document called a trading certificate.
1. Classification of Companies on the Basis of
Transferability of Share/no. of shares
1. Classification of Companies on the Basis of
Transferability of Share/no. of shares
One Person Company
One Person Company (OPC) is similar to sole-proprietorship but
unlike a sole proprietorship, where the owner has limited
liability and so his/her personal assets would not be at risk of
losses that need to be recovered or if the company is
(closed)liquidated.
Other types

Domestic Companies
A company which cannot be termed as foreign company under
the  provision  of the Companies Act should be regarded as a
domestic company.
 Other types
b. Foreign Companies
A foreign company means a company which is incorporated in a
country outside India under the law of that country. After the
establishment of business in India, the following documents must be
filed with the Registrar of Companies within 30 days from the date of
establishment.
(i) A certified copy of the charter or statutes under which the
company is incorporated, or the Memorandum and articles of the
company translated into English.
(ii) The full address of the registered office of the company.
(iii) A list of directors and secretary of the company.
(iv) The name and address of any person resident of India who is
authorised to accept, on behalf of the company, service of legal
process and any notice served on the company.
(v) The full address of the company’s principal place of business in
India.
 Other types
c. Multi National Companies
A Multi National Company (MNC) is a huge industrial organisation
which,
i. Operates in more than one country
ii. Carries out production, marketing and research activities on
international Scale in those countries.
iii. Seeks to maximise profits world over.
A domestic company or a foreign company can be a MNC.
Examples: Microsoft Corporation, Nokia Corporation, Nestle, Coca-
Cola, International Business Machine, Pepsico, Sony Corporation.
 Other types
Not for profit Company Section 8 Company (earlier known as Section
25 Company) is a legal form of Non Profit Organizations or Non
Governmental Organizations registered under Section 8 of the
Companies Act, 2013 and has its objective of promotion of arts,
science, commerce, education, sports, research, religion, social
welfare, charity or any other similar object. 
Income earned by the Company is applied only for promoting the
objects of the Company and it cannot be distributed to promoters. It
shall enjoy all the privileges of limited Company subject to the
obligations.
• There should be minimum two Shareholders;
• There should be minimum two Directors;
• At least one of the Director should be resident in India;
• No requirement of Minimum capital is there, it can be formed with
or without share capital