Q.Explain the various kinds of companies recognised under the Companies Act, 2013.

The Companies Act, 2013 does not recognise only one type of company; it classifies companies on several different bases depending on how they are formed, how liability is fixed, who owns them, and how many members they have.

The Companies Act, 2013 classifies companies on several independent bases; a company can therefore be described in more than one way at the same time — for instance, a particular company may be a registered, public, listed company limited by shares.

On the basis of incorporation:

• Chartered companies were formed under a royal charter (for example, the historical East India Company); this mode is now obsolete in India.
• Statutory companies are created by a special Act of the Central or State Legislature — for example, the Reserve Bank of India and the Life Insurance Corporation of India — and their powers derive from that Act rather than a memorandum.
• Registered companies are incorporated by registration under the Companies Act, 2013, which is how the great majority of companies, private and public, are formed today.

On the basis of liability:

• A company limited by shares limits a member's liability to any amount unpaid on the shares held.
• A company limited by guarantee limits a member's liability to a fixed amount payable only if the company is wound up; this form suits non-profit or professional bodies.
• An unlimited company places no limit on a member's liability for the company's debts.

On the basis of number of members:

• A One Person Company (Section 2(62)) has a single member, allowing an individual entrepreneur separate legal identity and limited liability.
• A private company (Section 2(68)) has 2 to 200 members with restricted share transfer.
• A public company (Section 2(71)) has a minimum of 7 members, no maximum, and free share transfer.

On the basis of control:

• A holding company controls one or more other companies, by owning a majority of their share capital or controlling their board composition.
• A subsidiary company is the company so controlled.
• An associate company is one over which another company has significant influence (commonly holding 20% or more of its share capital) without being a subsidiary.

On the basis of ownership:

• A government company (Section 2(45)) is one in which not less than 51% of the paid-up share capital is held by the Central Government, one or more State Governments, or jointly by them; several public-sector undertakings operating in and around Andhra Pradesh are organised this way.
• All other companies are non-government companies.

Other recognised kinds: …

A common gap is forgetting that these classifications are independent bases, not a single ladder — a student should be able to say which SPECIFIC basis (incorporation, liability, membership, contr …