Types of Companies under Companies Act

types of companies

 Before discussing Types of Companies first come to know what is Company. A company is a separate legal entity, which comes into existence by fulfilling the legal requirement of the corporate law of the country. As corporate law varies from country to country.  You may call an artificial person who is invisible to others but exists in the books. It is an advanced type of business.

What are the Types of Companies

As you know sole trader ship is the simplest and oldest form of business, with the passage of time and need of people partnership come into existence. As there were limited needs of people and the area of work, so simple form of business was in use. But with the passage of time, people needs are increased and revolution of business, make it difficult for operating with kind of business. Then companies ideas introduce for getting more benefits with multiple resources.

Definition: It is a joined affiliation that appreciates the benefit of having a substantial number of individuals who contribute cash to a typical pool for running huge endeavours. The intrigue or offer of every part can be acquired, sold and exchanged without the assent of different individuals

Types of companies

Kinds of companies can be subcategories as per incorporation, ownership, liability and nationality.

Kinds of Companies by ownership

  • Public Limited Company: A company whose share is publically allotted without any restriction. Anyone can purchase the share. The minimum number of members is seven.
  • Private Company: That type of company is generally formed by businessman limiting their liabilities to the share. As per law there share are not transferable in public. The company should use Word Private Limited with its name.
  • Government Company: A company hold the paid-up share capital of at least 51%. The rest of the other shares is issued to the public or private as per registration. The Govt has the right to get the profit and bear loss as per share.
  • Holding and subsidiary Company: If ABC Company purchased more than 50% share of XYZ Company then, ABC Company will be called a holding company and XYZ will be a subsidiary company.

Types of Companies by liability

  • Limited by Shares: The company has liability limited up to paid-up share capital. They will not bear any more liability as per loss.
  • Limited by guarantee: In this type of company liability of the shareholders is limited up to the guarantee as per given. It may be more than paid-up share capital or less than of it. The word Guarantee limited is used with its name.
  • Unlimited Liability Company: In this type of company, the liabilities of the shareholders are unlimited. They have to pay the debts even by selling their own personal property.


Types of the company by Incorporation

  • Charted or Royal Company: that kind of companies is established with the royal ordinance. The word limited is not used with the name of the company. The liability of the members is zero.
  • Statutory company: is incorporated with the order of Government parliament act. Here no restriction for the use of the word ltd with its name
  • Registered Company: Incorporated by people by fulfilling the requirement of the local law of companies is Registered Company.

Kinds of Company by nationality

  • National Company: Operating within the country is called the national company. Who is listed in US Securities and Exchange Commission
  • Foreign/ Multinational company: The company operating in multiple countries is called a Multinational Company. The whose registered office is in another country with its operating law.