The companies can be divided into different types based on parameters such as Size of company, a number of its members, Control of ownership, Liability to shareholders, need of capital from public & On the basis of the manner in which capital can be accessed. A company is popularly referred as a group of person coming together with resources in terms of capital, manpower, and skill for the common objective of making profits.
In old companies Act 1956 a company should have at least 2 persons as its member or shareholder. However, the companies Act 2013 introduced a new concept of One Person Company in India wherein only one Indian person who is a citizen of India can register a private limited company with some limitation, the different types of companies can be classified based on different parameters.
CLASSIFICATION OF THE COMPANIES
1. Classification on the basis of Incorporation: Companies may be Incorporated under the following
(a) Statutory Companies: These are constituted by a special Act of Parliament or State Legislature.
The provisions of the Companies Act, 2013 do not apply to them. Examples of these types of
companies are Reserve Bank of India, Life Insurance Corporation of India, etc.
(b) Registered Companies: The companies which are incorporated under the Companies Act, 2013
or under any previous company law and registered with the Registrar of Companies, fall under
2. Classification on the basis of Liability: Under this category there are three types of companies: –
(a) Unlimited Companies: In this type of company, the liability of members of the company is
unlimited, Section 2(92) of the Companies Act, 2013 provides that unlimited company means a
company not having any limit on the liability of its members, Such companies may or may not have
share capital. They may be either a public company or a private company. . The members is liable
to the company and to any other person.
(b) Companies limited by guarantee: Section 2(21) of the Companies Act, 2013 provides that
a company that has the liability of its members limited to such amount as the members may
respectively undertake, by the memorandum, to contribute to the assets of the company in the
event of its being wound-up, is known as a company limited by guarantee. The members of a
guarantee company are, in effect, placed in the position of guarantors of the company’s debts up
to the agreed amount. the members is liable to the company and to any other person.
(c) Companies limited by shares: A company that has the liability of its members limited by the liability
clause in the memorandum to the amount, if any, unpaid on the shares respectively held by them
is termed as a company limited by shares. Section 2(22) of the Companies Act, 2013 provides that
“company limited by shares” means a company having the liability of its members limited by the
memorandum to the amount, if any, unpaid on the shares respectively held by them.
For example,a shareholder who has paid Rs. 75 on a share of face value Rupees 100 can be called upon to pay
the balance of Rupees.25 only’. Companies limited by shares are by far the most common and it
may be either public or private.
3. Other Forms of Companies
(a) Section 8 Companies: a person or an association of persons proposed to be registered under this Act as a limited company and proved to the satisfaction of the Central Government that the company –
i. has in its objects the promotion of commerce, art, science, sports, education, research,
social welfare, religion, charity, protection of environment or any such other object;
ii. intends to apply its profits, if any, or other income in promoting its objects; and
iii. intends to prohibit the payment of any dividend to its members such person or association of person may be allowed to be registered as a limited company without addition to its name of the word “limited” or private limited by the Central government by issuing a license and by prescribing specified condition.
The association proposed to be registered under section 8 shall not be proposed to be an unlimited
company. However the same may be company limited by guarantee or a Company limited by
(b) Government Companies: As per section 2(45) of the Companies Act, 2013 the Government
company” means any company in which not less than fifty-one per cent of the paid-up share
capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company;
(c) Foreign Companies: As per section 2(42) of the Companies Act, 2013 the “foreign company”
means any company or body corporate incorporated outside India which,-
(a) has a place of business in India whether by itself or through an agent, physically or through
electronic mode; and
(b) conducts any business activity in India in any other manner.
(d) Holding and Subsidiary Companies; As per section 2(46) of the Companies Act, 2013 46)
the “holding company”, in relation to one or more other companies, means a company of which
such companies are subsidiary companies and the expression “company” includes any body
As per section 2(87) of the Companies Act, 2013 “subsidiary company” or “subsidiary”, in relation
to any other company (that is to say the holding company), means a company in which the holding
(i) controls the composition of the Board of Directors or
(ii) exercises or controls more than one-half of the 19[total voting power] either at its own or
together with one or more of its subsidiary companies:
Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.
Explanation.- For the purposes of this clause, –
(a) a company shall be deemed to be a subsidiary company of the holding company even if the
control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the
(b) the composition of a company’s Board of Directors shall be deemed to be controlled by
another company if that other company by exercise of some power exercisable by it at its
discretion can appoint or remove all or a majority of the directors.
(c) the expression “company” includes any body corporate.
(d) “layer” in relation to a holding company means its subsidiary or subsidiaries.
As per section 2(11) of the Companies Act, 2013, the “body corporate” or “corporation” includes a company incorporated outside India, but does not include –
(i) a co-operative society registered under any law relating to co-operative societies and
(ii) any other body corporate (not being a company as defined in this Act), which the Central
Government may, by notification, specify in this behalf.
(e) Associate Companies/ Joint Venture Company: As per section 2(6) of the Companies Act,
2013 the “associate company”, in relation to another company, means a company in which that
other company has a significant influence, but which is not a subsidiary company of the company
having such influence and includes a joint venture company.
Explanation.- For the purpose of this clause, –
(a) the expression “significant influence” means control of at least twenty per cent. of total voting
power, or control of or participation in business decisions under an agreement.
(b) the expression “joint venture” means a joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the arrangement.
(f) Investment Companies: the term “investment company” includes a company whose principal
business is the acquisition of shares, debentures or other securities 13[and a company will be deemed to be principally engaged in the business of acquisition of shares, debentures or other securities, if its assets in the form of investment in shares, debentures or other securities constitute not less than fifty per cent. of its total assets, or if its income derived from investment business constitutes not less than fifty per cent. as a proportion of its gross income.
(g) Producer Companies: Producer Company means a body corporate having objects or activities
specified in section 581B of the Companies Act, 1956 and registered as Producer Company under
the Companies Act.
The objects of the Producer Company shall relate to all or any of the following matters, namely:
i. production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit: Provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution ;
ii. processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its Members ;
iii. manufacture, sale or supply of machinery, equipment or consumables mainly to its Members.
iv. providing education on the mutual assistance principles to its Members and others.
v. rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members.
vi. generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communications relatable to primary produce.
vii. insurance of producers or their primary produce.
viii. promoting techniques of mutuality and mutual assistance.
ix. welfare measures or facilities for the benefit of Members as may be decided by the Board.
x. any other activity, ancillary or incidental to any of the activities referred above or other activities which may promote the principles of mutuality and mutual assistance amongst the members in any other manner.
xi. financing of procurement, processing, marketing or other activities specified above which
include extending of credit facilities or any other financial services to its Members.
(h) Nidhi Companies: A nidhi company is a type of company in the Indian non-banking finance sector, recognized under section 406 of the Companies Act, 2013 their core business is borrowing and lending money between their members.
They are also known as Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company. These companies are regulated under the Nidhi Rules, 2014 issued by the Ministry of Corporate affairs.
(i) Dormant Companies covered under Section 455 of the Companies Act. 2013 and includes a company which is formed and registered under the Act for a future project or to hold an asset or intellectual property and which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years.
(j) Non-banking Financial Companies: A Non-Banking Financial Company (NBFC) is a company
registered under the Companies Act, 1956 / 2013 engaged in the business of loans and advances,
acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority
or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit
business but does not include any institution whose principal business is that of agriculture
activity, industrial activity, purchase or sale of any goods (other than securities) or providing any
services and sale/purchase/construction of immovable property.
A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions or in any other manner, is also a non-
banking financial company.
(k) Listed Company: “listed company” means a company which has any of its securities listed on
any recognised stock exchange.