Types Of Companies

There are different types of company, which can be classified on the basis of formation, liability, ownership, domicile and control.

1. Types Of Companies On The Basis Of Formation Or Incorporation

a. Chartered Companies

Companies which are incorporated under special charter or proclamation issued by the head of state, are known as chartered companies. The Bank Of England, The East India Company, Chartered Bank etc. are the examples of chartered companies.

b. Statutory Companies

Companies which are formed or incorporated by a special act of parliament, are known as statutory companies. The activities of such companies are governed by their respective acts and are not required to have any Memorandum or Articles Of Association.

c. Registered Companies

Registered companies are those companies which are formed by registration under the Company Act. Registered companies may be divided into two categories.

* Private Company
A company is said to be a private company which by its Memorandum of Association restricts the right of its members to transfer shares, limits the number of its members and does not invite the public to subscribe its shares or debentures.
* Public Company
A company, which is not private, is known as public company. It needs minimum seven persons for its registration and maximum to the limit of its registered capital. There is no restriction on issue or transfer of its shares and this type of company can invite the public to purchase its shares and debentures.

2. Types Of Companies On The Basis Of Liability

Registered companies are divided into two types, namely, companies having limited liability and companies having unlimited liability.

a. Companies Having Limited Liability

This liability can be limited in two ways:
* Liability Limited By Shares
These are those companies in which the capital is divided into shares and liability of members (share holders) is limited to the extent of face value of shares held by them. This is the most popular class of company.
* Liability Limited By Guarantee
These are such companies where shareholders promise to pay a fixed amount to meet the liabilities of the company in the case of liquidation.

b. Companies Having Unlimited Liability

A company not having any limit on the liability of its members as in the case of a partnership or sole trading concern is an unlimited company. If such a company goes into liquidation, the members can be called upon to pay an unlimited amount even from their private properties to meet the claim of the creditors of the company.

3. Types Of Companies On The Basis Of Ownership

a. Government Companies

A government company is a company in which at least 51% of the paid up capital has been subscribed by the government.

b. Non-government Companies

If the government does not subscribe a minimum 51% of the paid up capital, the company will be a non-government company.

4. Types Of Companies On The Basis Of Domicile

a. National Companies

A company, which is registered in a country by restricting its area of operations within the national boundary of such country is known as a national company.

b. Foreign Companies

A foreign company is a company having business in a country, but not registered in that country.

c. Multinational Companies

Multinational companies have their presence and business in two or more countries. In other words, a company, which carries on business activities in more than one country, is known as multinational company.

5. Types Of Companies On The Basis Of Control

a. Holding Companies

A holding company is a company, which holds all, or majority of the share capital in one or more companies so as to have a controlling interest in such companies.

b. Subsidiary Company

A company, which operates its business under the control of another company (i.e holding company), is known as a subsidiary company.