Kinds of Companies

There are various companies in the Indian market which contribute to the economic growth and development towards the nation. Section 2 of the Companies Act, 2013 defines various kinds of companies and their classification based on Incorporation, Liability, Members, Domicile, etc. Major classifications are explained as follows:

A. Classification Based on Incorporation

1. Chartered Companies: Companies established before independence are often known as Sovereign Companies. For example, The East India Company, a chartered company granted royal privileges for trade and played a significant role in India’s colonial history.
2. Statutory Companies: Entities created by a specific act of Parliament or State Legislature. For example, The Reserve Bank of India, established under the Reserve Bank of India Act, 1934, is a statutory company with a defined legislative mandate.
3. Registered Companies: Companies registered under the Companies Act, 2013, or earlier Acts. For example, Infosys Limited, a prominent Indian IT company, is registered under the Companies Act, 1956.

B. Classification Based on Liability

1. Unlimited Liability Company: Members are personally responsible for company debts. For example, A small partnership firm where partners are individually responsible for all debts.
2. Companies Limited by Guarantee: Members guarantee payment of debts during winding up. For example, Non-profit organizations often adopt this structure, where members commit to covering financial obligations in case of dissolution.
3. Companies Limited by Shares: Members liability is limited to the unpaid value of shares. For example, Most publicly traded companies, like Reliance Industries Limited, fall into this category.

C. Classification Based on Members

1. Public Company: Not private, with a minimum paid-up share capital. For example, Tata Consultancy Services (TCS), listed on stock exchanges, is a public company.
2. Private Company: Limited membership, restricting share transfer. For example, Wipro Limited, with fewer shareholders and restricted share transferability, is a private company.
3. One Person Company (OPC): Allows a single-individual establishment, promoting a corporate structure for small businesses. For example, A freelance consultant establishing a company with only themselves as the sole member represents an OPC.