TYPES OF COMPANIES

CLASSIFICATION
2

TYPES OF COMPANIES:

Companies under the Companies Act, 1956 may be classified on various grounds as under: A. On the basis of business activities undertaken: Manufacturing Services Non Banking Finance Non Profit Making (Section-25) Producer (Section 581

TYPES OF COMPANIES
3

On the basis of liabilities of the members and directors: 1. Limited Liability Company Limited by shares Limited by guarantee and possesses share capital Limited by Guarantee 2. Unlimited Liability Company

TYPES OF COMPANIES
4

On the basis of membership pattern:

1. Public Listed Company Unlisted Company 2. Private Independent Company Subsidiary of public company 3. Government

TYPES OF COMPANIES
5

On the basis of place of registration: Indian Company (Incorporated in India ) Foreign Company ( Company incorporated out of India but possesses a place of business in India ) On the basis of control over the management: Holding Company Subsidiary Company

PRIVATE COMPANY
6

Section 3 (1) (iii) defines a private company as one which has a minimum paid-up share capital of Rs.1 Lakh or such higher capital as may be prescribed; and by its Articles Association: restricts the right of transfer of its share; limits the number of its members to 50 prohibits any invitation to the public to subscribe for any shares or debentures of the company; and Prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives

PRIVATE COMPANY CONTD.

Prohibits any invitation or acceptance of deposits
7

from persons other than its members, directors or their relatives Public company: A public company is one which has a mionimum paid up capital of Rs. 5 lakh or such higher amount and which is not a private company as in sec 3(1) (iv) The minimum number of members in a public company are 7

Differences between private and public company

8

Private company

Public company
Minimum number -7 Maximum number-no

Minimum number-2 Maximum number- 50 Two directors Shares are not

limit Three directors Shares are transferable

Statutory meeting and

transferable No statutory meeting or statutory report

submission of statutory report is mandatory

Differences between private and public company

9

Private company
It must end with words

Public company
It must end with words

private limited No legal restriction on remuneration of directors It can commence business immediately after obtaining certificate of incorporation

limited Legal restrictions exist on the remuneration of directors It has to obtain certificate of incorporation and can commence business only after receiving certificate of commencement of business

Privileges of a private company

10

The privileges of a private company are as follows: 1. Members 2. Remuneration to directors 3. No index of members 4. No prospectus 5. Simple quorum of meeting-2 directors 6. u/s 309- no restriction on managerial remuneration(11% of net profit) 7. u/s 81-no restriction on further issue of capital

Privileges of a private company

11

No mandatory statutory meeting and statutory report

ILLEGAL ASSOCIATIONS: If the provisions of section 11 are not complied with: by a company regarding the minimum(2) and maximum (10 in banking & 20 in other) in partnership firms , they shall be called illegal associations. It is a lawful association as far as its objects are considered but shall be called if section 11 are not complied with The consequence being no legal existence and contracts entered are void. Penalty of 10000 or more