TYPES OF COMPANIES
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INTRODUCTION?
When we hear about a company's form of business, the only question that comes into our mind is which type of company it is. We must be clear about which type of company we want to form before incorporating our own company.
CLASSIFICATIONS OF COMPANIES?
DEFINITIONS AND EXAMPLES OF COMPANIES UNDER THE CLASSIFICATIONS
In any company, shareholders might not pay the entire value of their share in one go. In the case of winding up, members are liable to pay until they pay the remaining amount of their shares.
The memorandum of association of some companies says about the number of money members guarantee to pay. In case of winding up, members will only pay the amount they are guaranteed.
Here, companies do not have any limit on their members' liability. While winding up, a company can use all personal assets of shareholders to meet its debts.
One-person company has only one member as a sole shareholder. This company does not need to have any minimum share capital.
A private company needs to have members a minimum of 2 and a maximum of 200. Present as well as future members of the company can hold shares.
Members of a public company can freely transfer their shares, and a company needs to have a minimum of 7 members, and a maximum number of members is unlimited.
When shares of any company are held wholly or partly by another company or company-owned, these shares are known as holding or parent company. The company, whose shares are held by the parent company, becomes the subsidiary company.
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A company that possesses a significant influence on other companies is known as an associate company. The term ‘a significant influence” means the ownership of 20% shares in an associate company.
A company that has its securities listed on the stock exchange means people can freely buy its securities known as a listed company.
E.g., Public Company.
A company that does not list its shares on a stock exchange is an unlisted Company.
E.g., public and private companies both can come under this category.
Companies with more than 50% share capital held by the central government or by one or more state governments or jointly by the central government or one or more state governments are known as government companies.
Companies incorporated outside India conduct their business in India using a place of business by themselves or with other companies known as Foreign companies.
Certain companies have charitable purposes as their objectives. These companies are called Section 8 companies because they are registered under Section 8 of the Companies Act, 2013. Charitable companies have the promotion of arts, science, culture, religion, education, sports, trade, commerce, etc., as their objectives.
This company promotes savings amongst its members. Members of this company provide deposits, and the company uses those deposits for its benefit.
Dormant company forms for future projects. This company does not carry out all the compliances of a regular company.
CONCLUSION?
These are the different types of companies, and if you want to incorporate your own company, you must be fully aware of the types and incorporation procedures of those companies.