As per section 2 of Companies Act, 2013, companies are of various types. Companies are classified as follows:
[Section 2(68)] Private Company
(a) There is no minimum capital requirement,
(b) Private companies must include word "Private Limited" and "Pvt. Ltd." in their names,
(c) Private companies cannot freely transfer their shares to public,
(d) Maximum number of members shall be 200.
Notes: While counting limit of number of members of 200,
(i) Past and Present employees will not be counted,
(ii) Joint shareholder will be considered as one member.
[Section 2(71)] Public Company
(a) A company which is not a private company,
(b) Minimum number of members should be 7, no maximum limit is mentioned,
(c) Shares are freely transferable,
(d) Public offers is permitted,
(e) Memorandum of Association state the objective of the company, the total capital, name of the company and registered office.
Notes : Subsidiary of public company shall be deemed to be a public company, whether the subsidiary company is a private company.
[Section 2(62)] One Person Company
Only a natural person, who is an Indian citizen and resident of India, shall be eligible to incorporate OPC. "Resident in India" means that person should stay in India for not less than 182 days during immediately preceding financial year.
Following are the conditions while forming OPC:
(a) No person shall be eligible to incorporate and become nominee in more than one OPC,
(b) No minor shall become member or nominee of OPC,
(c) Such company cannot be converted or incorporated into Section 8 company,
(d) Such company cannot carry out Non Banking Financial Investment activities including Investment activities in securities of any body corporate.
(e) OPC cannot converted into any other company unless 2 years have expired from date of incorporation of OPC, except threshold limit of paid up share capital is increased beyond Rs.50 lakh or its average annual turnover during relevant period exceed Rs. 2 crore.
[Section 2(87)] Subsidiary Company
In relation to any other company (that is holding company), means a company in which the holding company:
(a) Controls the compositions of Board of Directors.
OR
(b) exercise or control more than one half of total Voting power either at its own or together with one or more of its subsidiary company.
[Section 2(46)] Holding Company
When company's share might be fully or partly held by another company. Here, the company owning those shares become the holding or parent company. Company's whose share the parent company owns become its subsidiary company.
Holding companies exercise control over their subsidiaries by dictating the composition of their board of directors.
[Section 2(6)] Associate Company
In relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a Joint Venture Company (JVC).
Significant Influence, means control of at least 20% (20% or more but upto 50%)of total share capital, or of business decisions under an agreement.
[Section 2(42)] Foreign Company
Any company and body corporate, incorporated outside India, which:
(a) conduct any business activity in India,
(b) place of business in India, whether it is in physical mode or through electronic mode (by itself or through an agent).
[Section 2(45)] Government Company
Any company in which not less than 51% of paid up share capital is held by:
(a) Central Government,
(b) State Government,
(c) Partly by central government and partly by state government.
(d) includes a company which is a subsidiary company of such government company.
[Section 2(85)] Small Company
A company other than a public company, whose:
(a) Paid up share capital does not exceed 50 lakh rupees, which can be increased to 10 crore rupees by the government.
(b) Turnover does not exceed 2 crore rupees for immediately preceding financial year, which can be increased to 100 crore rupees by government.
These conditions shall not apply to:
(i) A holding company or a subsidiary company,
(ii) A company registered under section 8 (Non-Profit company),
(iii) A company or body corporate governed by any special act.
[Section 8] Non-Profit company
Such companies need to obtain license from central government. If an association of persons proposed to be registered under the companies act, 2013 as a limited company, then:
(a) has its object of promotion of commerce, art, science, sports, education, research, social welfare, religion and charity,
(b) intend to apply its profit, in promoting its objects,
(c) intend to prohibit payment of any dividend to its members.
Comments