Kinds of companies

1. By mode of incorporation

• Chartered companies — incorporated by royal charter in England, such as the East India Company (1600). Of historical interest only in India.
• Statutory corporations — created by a special Act of Parliament or a State Legislature, such as the Life Insurance Corporation of India (LIC Act, 1956) or the Reserve Bank of India. They are governed by their own Act and are not registered under the Companies Act at all. (Contrast companies registered under the Companies Act but carrying on regulated business, such as banking or insurance companies: the Act applies to them except where it is inconsistent with the special Act, section 1(4).)
• Registered companies — incorporated by registration under the Companies Act, 2013 or an earlier Companies Act. These are the subject of the course.

2. By liability of members (section 3(2))

• Company limited by shares — liability limited to the amount, if any, unpaid on the shares held (section 2(22)). By far the commonest form.
• Company limited by guarantee — each member undertakes to contribute a fixed amount to the assets on winding up (section 2(21)). It may or may not have a share capital. Used for clubs, trade associations and charitable bodies, where working capital is not raised from members but the creditors want a guaranteed fund on liquidation.
• Unlimited company — no limit on members' liability (section 2(92)). The members are not liable directly to creditors; the liquidator calls on them as contributories when the company is wound up.

3. By number of members and access to capital

Private company (section 2(68)). A company which by its articles (i) restricts the right to transfer its shares, (ii) except in the case of a One Person Company, limits the number of its members to two hundred, and (iii) prohibits any invitation to the public to subscribe for its securities. Joint holders count as one member, and present and former employees who are members are not counted. The minimum paid-up capital of one lakh rupees was removed by the 2015 Amendment. It needs two members (section 3(1)(b)) and two directors (section 149(1)), and its name ends with “Private Limited”.

Public company (section 2(71)). A company which is not a private company. It needs seven members and three directors. A subsidiary of a public company is deemed to be a public company even if its articles describe it as private.

One Person Company (section 2(62), section 3(1)(c)). A private company with only one member. The memorandum must name a nominee who will become the member on the subscriber's death or incapacity. It need not hold an annual general meeting (section 96(1)). The OPC was new in 2013 and allows a sole trader to have separate personality and limited liability.

Differences between private and public companies

• Members: minimum two and maximum 200 (private); minimum seven, no maximum (public).
• Directors: minimum two (private); three (public); one for an OPC.
• Transfer of shares: restricted by the articles (private); freely transferable (public, section 58(2)).
• Raising capital: a private company cannot invite the public and may issue only by rights, bonus or private placement (section 23(2)); a public company may issue a prospectus.
• Regulation: many provisions on managerial remuneration, independent directors and related party transactions apply with full force only to public companies; the Central Government has granted private companies exemptions by notification.

4. By control: holding, subsidiary and associate companies

A company is a subsidiary of another (the holding company) if the other controls the composition of its Board, or exercises or controls more than one-half of the total voting power, either alone or together with its subsidiaries (section 2(87)). The holding company is defined by reference to it (section 2(46)). A subsidiary may not hold shares in its holding company (section 19). An associate company (section 2(6)) is one over which another company has significant influence, meaning control of at least twenty per cent of total voting power or of business decisions under an agreement, but which is not its subsidiary; it includes a joint venture company.

Holding and subsidiary are separate legal persons. Their separateness is respected unless the case for lifting the veil is made out: see Vodafone International Holdings B.V. v. Union of India, 2012 INSC 45, (2012) 6 SCC 613, where the Court treated a holding company and its wholly owned subsidiary as distinct legal persons, the holding company not owning the subsidiary's assets.

5. By ownership and purpose

• Government company (section 2(45)) — at least fifty-one per cent of the paid-up share capital held by the Central Government, one or more State Governments, or both together; includes a subsidiary of a Government company. It is a company under the Act and a separate entity from the Government, though it may be “State” under Article 12.
• Section 8 company — formed to promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment or similar objects; it must apply its income to those objects and is prohibited from paying dividends. It is registered under a licence from the Central Government and may omit “Limited” from its name. It cannot alter its memorandum or articles without the Government's approval, and the licence may be revoked.
• Producer company — a body of primary producers (farmers and the like) registered under Chapter XXIA (sections 378A onwards), inserted by the 2020 Amendment to bring over the provisions that had continued from Part IXA of the 1956 Act.

6. Other statutory categories

• Small company (section 2(85)) — a company other than a public company whose paid-up capital and turnover do not exceed the amounts prescribed by rules, within statutory ceilings of ten crore rupees (capital) and one hundred crore rupees (turnover). Holding and subsidiary companies, section 8 companies and companies under special Acts can never be small companies. Small companies have lighter compliance (fewer Board meetings, no cash flow statement) and may merge by the fast-track route in section 233.
• Listed company (section 2(52)) — a company any of whose securities are listed on a recognised stock exchange. Additional obligations follow: one-third independent directors (section 149(4)), an audit committee (section 177), and SEBI regulation.
• Dormant company (section 455) — formed for a future project or to hold an asset or intellectual property, with no significant accounting transaction; it may apply to the Registrar for dormant status and maintain minimal compliance.
• Foreign company (section 2(42)) — a company incorporated outside India which has a place of business in India, by itself or through an agent, physically or electronically, and conducts business activity here. Chapter XXII requires it to register and file documents with the Registrar.

How this is examined

June 2025 set “Explain the different types of company” for 10 marks; earlier papers ask for the distinction between a private and a public company, or a short note on the One Person Company, the Government company or the section 8 company. For the essay, use the headings in this note, quote the definition of private company in section 2(68) word for word because it carries the three conditions, and finish with the private-public distinctions. A short note on any single type needs the definition, the statutory consequences, and one practical sentence on why the form exists.