When starting a business, it’s very important to fix the business structures. The business structure you choose will determine the compliance measures you need to follow, the taxes you have to pay, and the steps you need to follow from time to time to meet the eligibility criteria to incorporate with. It is very essential for entrepreneurs to think about it before starting a business.
Discussing Company Formation In India?
What are the different types of Companies categorized on different measures?
There are different types of companies based on size, members, Liabilities, control & special companies. They also get categorized into different companies as explained below:
| Basis | Companies | |
| 1. | On the basis of Incorporation | Statutory Companies Registered Companies |
| 2. | On the basis of members categorization are | OPC (One Person Company) Private Limited Company Public Company |
| 3. | Based on the Liability | Company limited by shares Company limited by guarantee Unlimited companies |
| 4. | On the basis of Control | Holding company Subsidiary company Associate Company |
| 5 | Special Companies | Sec-8 company Government Company Foreign Company Producer companies, |
What is A Company?
A company is a legal entity governed by the laws of Companies Act,2013. It is a separate entity from the individuals who manage and support its operations.
Which Companies Are Categorized On The Basis Of Different Measures?
1. On the basis of Incorporation, companies are categorized into 2 different types. Explained Below:
Registered Companies
Registered Companies are those companies which are governed by the appropriate government authority of the country as a corporation in accordance with the laws of the country.
Statutory Companies
Statutory Companies are those companies that are incorporated under the act of parliament or state legislature. These are those companies that are not governed outside the purview of the Companies Act,2013.
2. Now discussing the various types of Companies based on the members are:
Private Limited Company
On the basis of members, a Private Limited company is a type of company which has a minimum of 2 members & maximum of 200 limits. It is one of the modest forms of organization & most reliable business entity. Private limited companies restrict the transferability of shares. Minimum 2 directors & maximum 15 directors in a private limited company are required.
Public Limited Company
A public limited company must have a minimum of 7 members & maximum there is no limit in terms of members. Shares can be freely transferable. In terms of directors, there are minimum 3 directors & maximum of 15 directors.
One Person Company
One person Company is a solely owned company that has only 1 shareholder& maximum of 15 directors. In terms of members, there is 1 member. It is the newly introduced concept in the Companies Act,2013
3. On the basis of liability companies are categorized into 3 different categories:
Limited By Shares
Company limited by shares means the liability of its shareholders to the creditors of the company is limited to the capital invested originally by them.
Company Limited By Guarantee
A Company limited by guarantee means a company which is guaranteed by the members who agree to pay a certain amount of money when wound up. This is generally for non-profit organizations.
Unlimited Companies
Unlimited companies are those companies which have no limits on their liabilities to members. It means companies can use their personal assets to meet the company’s debt while there is winding up.
4. On the basis of control, companies are categorized are:
Associate Company
As per section 2(6) Associate company is a company in which the other company has a significant influence in that company but it is not a subsidiary company.
Holding Company
As per Section 2(46), a Holding company is a company that has a majority of shares in other companies & other companies are the subsidiary of the parent company. That parent company is called the Holding company.
Subsidiary Company
As per Section 2(86) Subsidiary company is a company which is managed by the holding company i.e. Parent company.
5. Other types of companies in India. These are called special companies:
Non-Profit Organizations (Sec-8 Companies)
Sec-8 companies enjoy special status & these are nonprofitable companies. These companies are incorporated for charitable purposes.
Foreign Companies
Foreign companies are those companies that are registered outside India, have a place of business in India through an agent or through itself, physically or in electronic mode & conduct any business in India.
Government Companies
Government Companies are those companies in which at least 51% of the paid-up capital is held by the central or state government or partly by both central and state governments.
Producer Companies
Producer companies are those companies legally recognized by the farmers for producing, harvesting, procuring, grading, pooling, handling, marketing, selling, importing, export & other services which aim to improve the standard of living.
Conclusion
The Companies Act,2013 provides us with the different types of Company formation in India based on different measures like incorporation, members, liabilities, control, access, & special companies. There is a brief about everything in this blog so before going forward with your company formation, you must be aware of all these things. For better understanding, we at JustStart will assist you from the start to end procedure. You will also be getting full support & hassle-free registration with us to incorporate your dream business.
