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Types of Companies in India

Types of Companies in India

A company is a form of business organization that has been created legally. Company forms of businesses have become immensely popular over the years. Companies can be classified on the basis of liabilities, members and on the basis of control.

On the Basis of Members

  • One Person Company
    An OPC is a hybrid structure which combines most of the benefits of a sole proprietorship and a business one person company . OPC or encourages startups and young entrepreneurs where a single person can subsume the entity. As the name suggests, there can be only one member which is the biggest advantage unlike a Private Limited Company or a Limited Liability Partnership.

  • Private Company
    A private company is a firm that is privately owned. Under this type of company, the business assets are different from personal assets. The minimum and maximum number of members in a private company is 2 and 200 respectively. More than two persons who own shares jointly are treated as a single member. All private companies are required to include the words “Private Limited” Pvt. Ltd.” in their names.

  • Public Company
    A public company refers to one whose ownership is divided amongst general public shareholders via the free trade of shares of stock on exchanges or over-the-counter markets. The minimum number of members required to start a public company is 7 but there is no limit on the maximum members. It can also be said that a company which is not a Private Limited Company is a Public Limited Company .

On the Basis of Liability

  • Company Limited by Shares
    A company that is limited by shares is referred to a company that has the liability of the members limited by such an amount that is unpaid on their respectively held shares. Hence, the shareholders are accountable only for the amount that is not paid on their holdings.

  • Company Limited by Guarantee
    Company limited by guarantee can also be called as a Guarantee Company. A company limited by guarantee is a distinct legal entity from its owners, and is responsible for its own debts.

  • Unlimited Company
    In this case, there is no limit to the losses that the owners or investors have to bear. The liability of the member ends when he/she is no longer a member of that company.

Special Companies

  • Government Company
    A government company is a company in which 51% or more of the paid-up capital is held by the Government or State Government. It also includes the company whose holding company is a government company.

  • Foreign Company
    A foreign company is any company or body corporate incorporated outside India and conducts any business activity in India in any other manner, by way of an agent traditionally or electronically.

  • Section 8 Company
    A Section 8 company is one whose objectives is to promote fields of arts, commerce, science, research, education, sports, charity, social welfare etc. These companies are provided with a special license by the Central Government.

  • Public Financial Institution
    A financial institution is responsible for the supply of money to the market from investors to the companies in the form of loans, deposits, and investments. It includes LIC, ICICI, IDFC, IDBI, UTI etc.

On the Basis of the Control

  • Holding Company
    A holding company is a company that doesn’t organise any operations, ventures or activities for itself. Instead, the holding company owns assets. The holding company can own 100% of the subsidiary, or it can own just enough stock or membership interests to control the subsidiary.

  • Subsidiary Company
    A subsidiary is a company that belongs to another company, which is usually referred to as the parent company or the holding company. Ownership is determined by the shares that the parent company holds. The ownership stake must be at least 51%.

  • Associate Company
    An associate company is a corporation in which a parent company possesses an ownership stake. The parent needs to have a minimum of 20% and a maximum of 50% of total voting rights in the associate.

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