Definition of company & Types of Companies in India
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Meaning of a Company
A company is a voluntary association of many persons.It is an artificial person recognized by law with distinctive name, a common seal, a common capital and having a perpetual succession.
Definition of Company Under Companies Act 1956 & 2013
Companies Act 1956 Defines a company as ” Company formed and registered under this Act or an existing company”
Companies Act 2013 Defines a company as “a company incorporated under this Act or under any previous company law;
“company limited by guarantee” means a company having the liability of its members limited by the memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up;
“company limited by shares” means a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them;
Following are the main features of Company
- It is a voluntary association of many persons.
- It has separate legal entity or existence apart from its members.
- It has perpetual succession or continuous existence.
- It is an artificial person created by law .
- The liability of the share holders is limited to the extent of the value of shares held by them.
- It has common seal which is considered to be the signature of the company.
- There is separation of ownership and management.
- The shares of company are freely transferable.
Types of Companies
Joint stock companies may be classified on the basis of
- Liability of Members
- Public Interest
Types of company based on Incorporation
- Chartered Company: It is a company incorporated under a special charter granted by the head of the state,eg .East India Company.
- Statutory Company: It is a company created by special Act in Parliament SBI,IFCI,RBI,LIC are examples of this type.
- Registered Company: It is a Company which is formed and registered in India with the Registrar of Companies under the provisions of the Companies Act.
Companies Based on Liability of Members.
- Company Limited by shares: It is a company which has a share capital and the liability of members is limited to the extend of value of shares held by them.
- Company Limited by Guarantee: In this type of company the liability of the member is limited to the amount of guarantee stated in the memorandum.The members are liable to pay the agreed amount at the time of winding up.
- Unlimited company: It is a company in which the liability of members is unlimited as in the case of sole proprietorship or partnership.
Companies on the Basis of Public Interest
- Private Company: A Private company is one which by its articles,(a) limits the number of members to 50 (b) prohibits the invitation to the public to subscribe its shares or debetures and (c) restricts the translatability of its shares.
- Public Company: A public company is one which is not a private company.