Classification of the company can be done based on incorporation, on the numbers of the member, based on control, based on liability, and the basis of manner of access capital.
When the classification of a company is done on the manner of access to capital there are two types of companies that are formed that is listed company and unlisted company. As per subsection 56 of section 2 of the Companies Act 2013, if the security of a company is recognized under for Stock Exchange for public trading, it becomes a quoted company and is classified as a listed company. If the companies are not listed in any stock exchange and don't have any opportunity to raise funds, then They are classified as a non-listed company and usually, these companies are privately owned companies.
Classification of a company can also be done based on liability, they are limited companies and unlimited companies. When we discuss limited companies they are either limited by share or limited by guarantee. A company which is limited by share, The liability of members are also limited by the number of the share they have bought. According to section 2(22) If a company has the liability of its member limited by the memorandum of amount and share, that is held by them they are considered as a company limited by shares. Then a company is limited by guarantee, the members' liability is limited by memorandum. This liability is limited to fixed some which are specified in the memorandum and have been agreed upon by the members to contribute. When the company is classified as a limited company, then limited liability is considered a desirable option by the members of the company. So as per section 2(92), A company that does not have a limit on the liability of the members of a company is considered as an unlimited company, and the article of Association must state the number of members which has the amount of capital share registered 2 members.
When the classification is done based on incorporation then there are 2 types of companies that are formed, those are a statutory company and registered company. Registered companies are those companies that are incorporated under Section 7 of di Companies Act 2013, or Companies Act 1956, or any other previous company laws. then there is Statutory company, these companies have been incorporated under a special act of parliament or any other special act of state legislatures and do not come under Companies Act or any other previous Companies Act and the provisions and laws of the same do not apply to statutory companies. RBI, SBI is statuary company and they are formed under a special act of parliament.
One classified company is based on the number which is required for the incorporation of the company, then there can be 3 types of companies that can be formed. The first is a one-person company, the second is a private company, in the last one is a public company. A one-person company is a company that has been incorporated with only one person as its member and the definition of the same is given under subsection 62 of Section 2. Some exceptions have been specified under Section 3 of the act for making registration of the one-person company. In a private company, the limit of its member is 200 and the minimum paid-up capital needs to be prescribed. The last type of company based on its numbers is a public company which has been defined under subsection 71 of Section 2. a public company can exchange its share in an open trade market and issues it shared through initial public offering and it can be bought by the general public. There are a minimum number and a maximum number of members required in a public company, the minimum number is 7 which may extend to an unlimited number of members. In a public company, there is no restriction on transferring the shares.
There can be 3 categories of companies when the classification is done based on control, the first is holding companies, then subsidiary companies, and the last is associate companies. The same has been defined under subsection 46 of Section 2, subsection 87 of Section 2, and subsection 6 of Section 2 respectively. Holding companies are those companies where one company has control over the other companies’ composition of the board and the company holds the majority of shares of the other company. A subsidiary company is a company whose composition and control are regulated by some other company. The composition of the board of directors and half of the shares of the company is controlled by a holding company then it is a subsidiary company. Associate company has a significant influence on other company and the control needs to be at least 20% of the share, then it is considered as an associate company and these types of companies also have joint venture company.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.
