Types Of Companies under Companies ACT,2013 by Samidha Hegde@Lexcliq


As per section 2(20) Companies Act 2013, Company denotes a Company incorporated either under this Act or under any previous company law.

Commonly a Company may be described as- “an incorporated association which is an artificial person, having a separate legal entity, with a perpetual succession, a common seal (if any), and a common capital compromised of transferable shares and limited liability.”


Classification of Company may be done on the basis of-

  • Liabilities
  • Number of Members
  • Control

Company Based on Liability:

  1. Company limited by shares

In this, the liability of the members is limited to the extent of unpaid amount on shares held by them respectively. The liability may be enforced during the life of Company or at the time of winding up and once the share capital has been fully paid up the members are absolved from their liabilities.

  1. Company limited by guarantee

Under this the members through memorandum of association limit their liability to the extent of guarantee undertaken by them. Here these members are the guarantors of the Company’s debts up to the agreed amount.

Clubs, trade associations, research associations and societies for promoting various objects are various examples of guarantee companies.

  1. Unlimited Liability Company

In this the members have unlimited liability over Company’s debts and obligations, meaning their personal assets may be used to meet the obligations of the Company.


Company based on the number of members:

  1. One-person Company

In this type of Company there is only one shareholder. This is different from Sole-proprietorship because here the Company is incorporated and is a separate legal entity from that of the member. One person companies don’t need to have minimum share capital. A unique feature of One Person Company is that the sole member is required to appoint a nominee while registering the Company so that after the death of the sole member the nominee may become its sole member.


  1. Private Company

Private Companies are restrictive in nature wherein it may in its Articles of Association restrict the right to transfer shares and cannot have more than 200 members and minimum number of directors is 2. The Company cannot invite public to subscribe to its shares or securities. The Company name has the suffix ‘Pvt Ltd’ attached to it.


  1. Public Companies

In this shares and debentures can easily be transferred and the public may be invited to Subscribe to its shares. Public Company must have a minimum of 7 members to register the Company. These companies are capable of being listed by recognized Stock Exchange.


Companies on the basis of Control or Holding

  1. Holding and Subsidiary Companies

Holding Company in relation to a Company means that the Company is a subsidiary of the Holding Company. Here holding Company is the parent company and can exercise control over its subsidiaries by dictating the composition of board of directors and the Holding Company also exercises control by owning more than 50% of the shares of its subsidiaries.


  1. Associate Companies

Associate companies in relation to a company means a company in which the other company has significant influence, means control over the company by owning at least 20% of its shares. The other company may influence business decisions of the associate company. Associate companies can also exist under joint venture agreements.


  1. Companies in terms of Access to Capital

When we consider the access a company has to capital, companies may be either listed or unlisted. Listed companies have their securities listed on stock exchanges. This means people can freely buy their securities. Hence, only public companies can be listed, and not private companies. Unlisted companies, on the other hand, do not list their securities on stock exchanges. Both, public, as well as private companies, can come under this category.







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