Company Law

Classification and Registration of Companies and types of companies

In this article we will study Classification and Registration of Companies and types of companies. we will discuss about different types of companies, which can be classified on the basis of formation, liability, ownership, domicile and control.

 Classification and Registration of Companies and types of companies

On The Basis Of Formation Or Incorporation.

(i) Chartered companies:

Companies companies are those which are incorporated under special grant  issued by the head of state, are known as chartered companies. The Bank Of England, The East India Company, Chartered Banketc. are the examples of chartered companies.

(ii) Statutory companies:

Those companies which are formed or created by special Act of the Parliament or any state legislature. Such companies are called statutory companies, Instances of statutory companies in India are Reserve Bank of India, the Life Insurance Corporation of India, the Food Corporation of India etc. The statutory companies are generally formed for carrying public sector business.

(iii) Registered companies:

Companies registered under the Companies Act 2013, or previous  Companies Acts are called registered companies. Such companies come into existence when they are registered under the Companies Act and a certificate of incorporation is granted to them by the Registrar.

 On the basis of number of members:

(i) Private company:

A private company means a company which by its articles of association:

(i) Restricts the right to transfer its shares

(ii) Limits the number of its members to fifty (excluding members who are or were in the employment of the company)

(iii) Prohibits any invitation  to public to subscribe for any securities of the company.

(ii) Public company:

(a)   It is not a private company


(b)  Minimum paid up capital as may be prescribed.


(c)   Minimum number  of members 7


(d)  No number of maximum limit.


On the basis of LIABILITY

 Limited Liability
This liability can be limited in two ways:
* Liability Limited By Shares
These are those companies in which the capital is divided into shares and they also limit to its shareholders
* Liability Limited By Guarantee
These are such companies where shareholders promise to pay a fixed amount to meet the liabilities of the company in the case of liquidation.

 Unlimited Liability
A company not having any limit on the liability of its members as in the case of a partnership or sole trading concern is an unlimited company and they are free to purchase shares. If such a company goes into liquidation, the members can be called upon to pay an unlimited amount even from their private properties to meet the claim of the creditors of the company.

Companies On The Basis Of Ownership

a. Government Companies
A government company is a company in which at least 51% of the paid up capital has been subscribed by the government.

b. Non-government Companies
If the government does not subscribe a minimum 51% of the paid up capital, the company will be a non-government company.

 On The Basis Of Domicile

a. National Companies
A company, which is registered in a country by restricting its area of operations within the national boundary of such country is known as a national company.

b.Foreign Companies
Aforeign company is a company having business in a country, but not registered in that country.

c. Multinational Companies
Multinational companies have their presence and business in two or more countries. In other words, a company, which carries on business activities in more than one country, is known as multinational company.

On The Basis Of Control

a. Holding Companies

A holding company is a company, which holds all, or majority of the share capital in one or more companies so as to have a controlling interest in such companies.

b. Subsidiary Company
A company, which operates its business under the control of another company (i.e holding company), is known as a subsidiary company.

So we have studied Classification and Registration of Companies and types of companies and if you have any queries please let us know in the comments section below.


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