Classification of Companies in India (Companies Act, 2013)
Classification of Companies in India (Companies Act, 2013)
Companies in India are classified on different bases under the Companies Act, 2013 the types possess unique legal characteristics, ownership structure, and regulatory obligations.
1. Based on Incorporation
(a) Statutory Companies
These are formed by a Special Act of Parliament or State Legislature.
They are not governed fully by the Companies Act.
Examples:
- Reserve Bank of India
- Life Insurance Corporation of India
(b) Registered Companies
They are included in the Companies Act, 2013, with the Registrar of Companies.
They include:
- Private Limited Company
- Public Limited Company
- One Person Company (OPC)
- Section 8 Company
2. Based on Liability
(a) Company Limited by Shares
Liability of members is restricted to the amount of their shares that is not paid.
- Most common type of company in India.
(b) Company Limited by Guarantee
Members’ liability is limited to the amount they guarantee during winding up.
(c) Unlimited Company
Liability is unlimited on members and personal assets may be utilized to pay debts.
3. Based on Number of Members
(a) One Person Company (OPC)
- Only 1 member
- Introduced under Companies Act, 2013
- Limited liability protection
(b) Private Limited Company
- Minimum: 2 members
- Maximum: 200 members
- Restrictions on share transfer
- Cannot invite public for investment
(c) Public Limited Company
- Minimum: 7 members
- No maximum limit
- Can raise funds from the public
4. Based on Control
(a) Holding Company
A company that controls another company.
(b) Subsidiary Company
A company controlled by a holding company.
(c) Associate Company
A company in which another company holds at least 20% voting power or has significant influence.
5. Based on Ownership
(a) Government Company
- At least 51% shareholding held by Central/State Government
(b) Non-Government Company
All companies not owned by the government.
6. Special Types as per Companies Act, 2013
(a) Section 8 Company (Non-Profit Company)
- Encourages learning, charity, social wellbeing etc.
- Profits are not distributed to members
(b) Foreign Company
A company incorporated outside India but having business presence in India.
(c) Listed Company
A company that has its securities listed on a stock exchange that is recognized.
(d) Unlisted Company
A company that is not listed in a stock exchange.
Conclusion
The Companies Act, 2013 gives a clear guideline to classification based on the ownership, liability and membership, control and purpose to maintain transparency and organized corporate governance in India.