The term “kinds of companies” refers to the classification of companies based on various criteria such as incorporation, liability, ownership, and public interest. The Companies Act, 2013 provides a legal framework to recognize different types of companies, each serving specific purposes and functioning under distinct regulations.
Kinds of Companies:
1. One Person Company (OPC)
One Person Company (OPC) is a unique type of company introduced by the Companies Act, 2013 under Section 2(62). It allows a single individual to form a company with limited liability, combining the advantages of sole proprietorship and company structure. The OPC is a separate legal entity distinct from its owner, providing the benefit of limited liability protection.
The concept of OPC was introduced to encourage entrepreneurs and small business owners to formalize their business without the need for multiple members. An OPC can be incorporated with just one member, who is the sole shareholder and can also be the director. The member nominates a nominee who will take over the company in case of the member’s death or incapacity.
The key features of OPC include:
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Single member and one director (though more directors can be appointed later).
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Limited liability to the extent of shares held by the member.
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Restricted from carrying out non-banking financial investment activities and cannot voluntarily convert into a public company unless it crosses a prescribed turnover or capital limit.
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Simplified compliance and lesser regulatory burden compared to other companies.
2. Registered Company
The companies which are registered and formed under the Companies Act, 1956, or were registered under any of the earlier Companies Act are called Registered Company. These are commonly found companies.
They were of three types:
(i) Company Limited by Shares [Sec. 12(2)(a)]
In these companies, the liability of the shareholders is limited up to the extent of the face value of shares owned by each of them, i.e., the member is not liable to pay anything more than the fixed value of the shares, whatever may be the liability of the company.
It is interesting to note that the liability can be maintained either during the existence of the company or during the period of winding-up. Needless to mention, if the shares are fully paid, the liability of the shareholders are nil with the exception to the rule as laid down in Sec. 45. The type of company may be a Private Company or a Public Company.
(ii) Company Limited by Guarantee [Sec. 12(2)(b)]
In these companies, the liability of the shareholders is limited to a specified amount as provided in the memorandum, i.e., each member provides to pay a fixed sum of money in the event of liquidation of the company.
It has a legal entity distinct from its members. The liability of its members is limited. According to Sec. 27(2), the Article of Association of the company must express the number of members by which the company is actually registered.
It is interesting to note that these types of companies are not formed for the purpose of earning revenue/profit but for the purpose of promoting arts, sciences, commerce, culture, sports etc., and, as such, they may or may not have any share capital. So, the amount which has been guaranteed by the members is like reserve capital.
If the company has a share capital, it must conform to Table D in Schedule I, and, if it has no share capital, it must conform to Table C in Schedule I. It is also mentioned here that if it has a share capital, it is governed by the same provisions as governed by the company limited by shares. It cannot purchase its own shares [Sec. 77(1)]. This type of company may be a Private Company or a Public Company.
According to Sec. 426, if the company limited by guarantee is being wound-up, every member is liable to contribute to the assets of the company for:
- Payment of the liabilities
- Cost, charges and expenses of winding-up
- For adjustment of rights of the contributories among themselves
(iii) Unlimited Company [Sec. 12(2)(c)]
In these companies, every shareholder is liable for all the liabilities of the company like ordinary partnership in proportion to his interest. According to Sec. 12, any seven or more persons (two or more in case of private company) may form a company with or without limited liability and a company without limited liability is actually known as unlimited company. It may or may not have any share capital. It will be a private or a public company if it has a share capital. Its Articles of Association will provide the number of members by which the company is registered.
3. Holding Company
According to the Companies Act, 1956, a holding company may be defined as “any company which directly or indirectly, through the medium of another company, holds more than half of the equity share capital of other companies or controls the composition of the board of directors of other companies. Moreover, a company becomes a subsidiary of another company in those cases where the preference shareholders of the latter company are allowed more than half of the voting power of the company from a date before the commencement of this Act”.
The concepts of Holding Company and Subsidiary Company are defined under Section 2(46) and Section 2(87) respectively, of the Companies Act, 2013.
Holding Company is a company that controls another company, known as its subsidiary. Control is usually established when the holding company holds more than 50% of the subsidiary’s voting power or has the power to appoint or remove a majority of the subsidiary’s board of directors. The holding company can also exert significant influence over the subsidiary’s management and policies.
4. Subsidiary Company
Subsidiary Company is a company that is controlled by another company, which is called the holding company. This control is generally exercised through ownership of the majority of the shares or voting rights.
The relationship between holding and subsidiary companies allows for consolidation of accounts and centralized management while maintaining separate legal identities. Both companies are registered independently but connected through shareholding and control.
The Companies Act mandates that the holding company prepare consolidated financial statements that reflect the financial position of both the holding company and its subsidiaries. This ensures transparency and provides a true picture of the group’s overall financial health.
5. Government Company
Government Company is defined under Section 2(45) of the Companies Act, 2013. As per this section, a Government Company is any company in which not less than 51% of the paid-up share capital is held by the Central Government, any State Government, or jointly by the Central and one or more State Governments. It also includes a company which is a subsidiary of such a government company.
Government companies are incorporated under the Companies Act just like private companies, but they function under greater control and supervision of the government. These companies are formed to carry out commercial activities while fulfilling certain public welfare objectives, such as industrial development, infrastructure, and service delivery in key sectors.
They are required to follow most provisions of the Companies Act, 2013, except in cases where the Central Government exempts them under special circumstances. Their accounts are audited by the Comptroller and Auditor General (CAG) of India, and they are subject to Parliamentary or Legislative oversight.
Examples of Government Companies include Bharat Heavy Electricals Limited (BHEL), Oil and Natural Gas Corporation (ONGC), and Steel Authority of India Limited (SAIL). In essence, a Government Company blends commercial efficiency with public accountability, supporting national economic goals while maintaining regulatory compliance.
6. Associate Company
Associate Company is defined under Section 2(6) of the Companies Act, 2013. According to the Act, an associate company is a company in which another company has a significant influence but does not have full control. Specifically, it means a company in which the investing company holds 20% or more of the share capital or where the investing company has the power to exercise significant influence over the management or policy decisions of the company.
Significant influence refers to the power to participate in the financial and operating policy decisions of the investee company but does not amount to control or joint control. This influence can be exercised by shareholding, representation on the board of directors, or other contractual agreements.
The concept of an associate company is important for accounting and consolidation purposes. While an associate company is not a subsidiary, the investing company must disclose its interest and account for its share of profits or losses in the associate in its financial statements under the equity method of accounting.
This classification helps in providing transparency about the relationship between companies that share influence but maintain separate legal identities and operational autonomy. It ensures that investors and stakeholders understand the extent of control and financial interest in related businesses.
7. Small Company
Small Company is defined under Section 2(85) of the Companies Act, 2013. According to this section, a small company means a company, other than a public company, whose paid-up share capital does not exceed ₹2 crore or such higher amount as may be prescribed (not exceeding ₹10 crore), and whose turnover as per its last profit and loss account does not exceed ₹20 crore or such higher amount as prescribed (not exceeding ₹100 crore).
Small companies are generally private companies that are smaller in scale compared to larger private and public companies. The definition excludes companies engaged in banking, insurance, and other regulated sectors.
The classification of small companies aims to provide relaxation in compliance requirements under the Companies Act, 2013. These companies benefit from simplified procedures such as fewer board meetings, reduced disclosure norms, and less stringent auditing requirements. This makes it easier and more cost-effective for small businesses to operate formally.
Small companies play a vital role in the Indian economy by contributing to employment and economic growth. The legal recognition of small companies encourages entrepreneurship by providing an easy entry point with regulatory support tailored to their scale and capacity.
8. Foreign Company
The companies which are incorporated outside India but which had a place of business in India prior to commencement of the new Companies Act, 1956, and continue to have the same or which establishes’ a place of business in India after the commencement of the Companies Act, 1956, is called a foreign company. These companies are registered in a country outside India and under the law of that country.
At present Sec. 591(2) added by the Companies (Amendment) Act, 1974, informs that where not less than 50% of the paid-up share capital (whether equity or preference or partly equity or partly preference) of a foreign company, (i.e., a company incorporated outside India having an established place of business in India) is held by one or more citizens of India and/or by one or more Indian companies, singly or jointly, such company shall comply with such provisions as may be prescribed as if it was an Indian company.
Foreign Company is defined under Section 2(42) of the Companies Act, 2013. According to this section, a foreign company is any company or body corporate incorporated outside India which:
(a) has a place of business in India—whether by itself or through an agent, physically or through electronic mode; and
(b) conducts any business activity in India in any manner.
This definition ensures that any overseas company engaging in commercial operations in India falls within the regulatory scope of the Act. The company must register with the Registrar of Companies (RoC) within 30 days of establishing its business presence in India. It is required to file specific documents such as its charter, list of directors, details of principal place of business, and financial statements.
Foreign companies must comply with provisions related to filing annual returns, financial statements, and corporate disclosures as prescribed under the Act. If more than 50% of its paid-up share capital is held by Indian citizens or companies, it is treated as an Indian company for regulatory purposes.
Examples include companies like Google India Pvt. Ltd., Microsoft Corporation (India), and Amazon India, which are incorporated outside India but operate within the country. Thus, the Act ensures that foreign companies functioning in India maintain transparency and accountability.
9. Global Company
Global Company is not specifically defined in the Companies Act, 2013. However, it generally refers to companies that operate on an international scale, having business operations, subsidiaries, or branches across multiple countries. These companies manage production, marketing, and sales worldwide and often influence global markets.
In the Indian context, a global company typically includes large multinational corporations (MNCs) that are registered under the Companies Act, 2013, but conduct business beyond India’s borders. They must comply with Indian laws as well as the regulations of the countries where they operate.
Although the Companies Act, 2013 does not provide a formal definition, provisions related to Foreign Companies (Section 2(42)) and Branches of Foreign Companies (Section 380) cover Indian operations of global firms incorporated abroad.
Global companies usually maintain a network of subsidiaries, associate companies, and joint ventures, integrating their global strategies with local market demands. They are required to file consolidated financial statements under the Act to present an accurate financial picture of the entire group.
These companies contribute significantly to the Indian economy by bringing in foreign investment, technology, and management expertise. They also face stricter regulatory and compliance requirements due to their scale and complexity.
10. Body Corporate
Body Corporate is defined under Section 2(11) of the Companies Act, 2013 as a company incorporated under the Companies Act, or any other company formed by or under any other law for the time being in force, or a body corporate incorporated outside India but having a place of business within India. Essentially, a body corporate is a legal entity recognized by law, capable of entering into contracts, owning property, suing, and being sued.
11. Listed Company
Listed Company is a company whose securities (shares, debentures, etc.) are listed on a recognized stock exchange in India or abroad. Listing provides the company’s securities a platform for trading in the public market, enhancing liquidity and access to capital. Listed companies must comply with stringent regulatory requirements prescribed by the Securities and Exchange Board of India (SEBI) and the Companies Act, 2013.
Listed companies are subject to continuous disclosure requirements, including periodic financial reporting, corporate governance norms, and shareholder protection mechanisms. They must appoint independent directors, form audit and nomination committees, and adhere to strict transparency standards.
12. Chartered Company
Chartered companies are business entities formed under a special charter granted by a monarch or sovereign authority, rather than being established under general company law. These companies were historically prevalent in countries governed by a monarchy, especially during the colonial and mercantile periods. The charter provided by the monarch served as a legal document conferring specific rights, privileges, and obligations to the company and its members.
Under the Companies Act, 2013, there is no explicit provision for the formation of chartered companies. However, the term “chartered company” has historical significance and is understood as a type of company formed under a royal charter rather than a general company law. These companies were typically established in the colonial era when a monarch granted a charter to a group of individuals, authorizing them to undertake business ventures, often with exclusive rights and privileges.
Chartered companies were distinct from companies registered under the Companies Act. They were not formed by filing documents with the Registrar of Companies but through a special grant of powers by a sovereign authority. The charter served as the company’s constitution, defining its objectives, powers, and governance structure. Such companies often carried out trade, exploration, or colonial administration with sovereign-like authority. Examples include the British East India Company and the Hudson’s Bay Company.
While chartered companies are not recognized as a form of incorporation under the Companies Act, 2013, the Act does acknowledge companies formed under special legislation or charters in its definitions. These are categorized as companies not registered under the Act but governed by special provisions, and they may continue their operations as per their founding documents unless contrary to Indian law.
In contemporary India, all companies must be registered under the Companies Act, 2013, or under special statutes enacted by Parliament. Therefore, chartered companies, as traditionally understood, do not exist under current Indian corporate law, though their concept remains relevant for academic and historical reference.
13. Statutory Company
Statutory Company is a type of company that is established through a special Act passed by the Parliament or a State Legislature, rather than being incorporated under the Companies Act, 2013. These companies are governed by the provisions of their respective Acts, and not by the general provisions of the Companies Act, except where specifically mentioned.
The Companies Act, 2013 recognizes the existence of statutory companies under its definition of companies, but such companies are not registered with the Registrar of Companies under this Act. They operate under their own special laws, which define their powers, structure, functions, and governance. These laws override the provisions of the Companies Act in case of any conflict.
Statutory companies are typically formed for public utility services, such as finance, insurance, transportation, or infrastructure development, where government control and regulation are essential. Examples of statutory companies in India include the Reserve Bank of India (RBI), Life Insurance Corporation of India (LIC), State Bank of India (SBI), and Airports Authority of India (AAI).
These companies are required to follow the audit and accountability norms prescribed by their respective Acts and may be subject to oversight by the Comptroller and Auditor General of India (CAG). In summary, a statutory company is a legal entity formed by a special statute, playing a crucial role in delivering national and public-interest services.
14. Private Company
According to Sec. 3(1)(iii) of the Indian Companies Act, 1956, a private company is one which, by its Articles:
(i) Restricts the rights to transfer its shares, if any;
(ii) Limits the number of the members to fifty not including
- Persons who are in the employment of the company
- Persons who, having been formerly in the employment of the company, were members of the company while in that employment, and have continued to be members after the employment ceases
(iii) Prohibits any invitation to the public to subscribe for any shares in or debentures of, the company.
A private company must have its own Articles of Association which will contain the provisions laid down in Sec. 3(1)(iii).
This type of company is in the nature of partnership with mutual confidence among them.
15. Public Company
Public Company is a type of company defined under Section 2(71) of the Companies Act, 2013. According to the Act, a public company is a company that is not a private company and has a minimum paid-up share capital as prescribed (currently ₹5 lakhs or as notified). It may invite the general public to subscribe to its shares or debentures, and its securities can be listed on a stock exchange.
The key features of a public company include:
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No restriction on the transfer of shares, ensuring free trading of ownership.
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Minimum of seven members and no limit on the maximum number of members.
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It must have at least three directors.
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It can raise capital from the public through the issue of shares, debentures, and public deposits, subject to regulatory norms.
Public companies must follow stringent disclosure, compliance, and corporate governance norms, including regular audits, board meetings, and filing with the Registrar of Companies. They are also required to appoint independent directors and form key committees like the Audit Committee and Nomination & Remuneration Committee if listed.
Examples of public companies include Tata Steel Ltd, Infosys Ltd, and Reliance Industries Ltd. In essence, a public company serves as a transparent and regulated form of business, enabling broader public participation in ownership.
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