Types Of Company Part 1 by Advocate Sanyog Vyas

Summary

In this informative video, the speaker discusses the various types of companies based on their incorporation and ownership structure. Companies are categorized into chartered, statutory, and registered types, with registered companies further divided into unlimited and limited categories. The latter includes private and public companies, each with specific characteristics and legal implications. Additionally, the speaker covers government companies, holding companies, and associate companies, highlighting their unique roles in business. This comprehensive overview provides viewers with essential insights into company types and their regulatory frameworks.

Takeaways

• 🏢 Companies can be classified based on incorporation into three types: Chartered, Statutory, and Registered companies.
• 👑 Chartered Companies are no longer in existence and were created through royal charters (e.g., East India Company).
• 📜 Statutory Companies are established by an act of Parliament and operate under specific legislation (e.g., LIC).
• 📝 Registered Companies are those registered under the Companies Act, 1956 or 2013, which governs their operation.
• 🔒 Unlimited Companies have members with unlimited liability, meaning their personal assets can be claimed to settle company debts.
• 📉 Limited Companies have limited liability, dividing further into Limited by Guarantee and Limited by Share Capital.
• 💰 Limited by Guarantee companies only require members to guarantee a fixed amount in case of winding up.
• 👥 Private Companies can have a maximum of 200 members, restrict share transfers to outsiders, and have no minimum paid-up capital requirement after 2015.
• 📈 Public Companies have no limit on the number of members and can issue shares publicly without a minimum capital requirement after 2015.
• 🏛️ Government Companies are controlled by the government, requiring at least 51% shareholding to qualify.

Q & A

What are the three main types of companies based on incorporation?

The three main types of companies based on incorporation are Chartered Companies, Statutory Companies, and Registered Companies.

What is a Chartered Company?

A Chartered Company is one that was created by a charter granted by a king or queen, but such companies no longer exist today. Examples include the East India Company and the Bank of Japan.

How is a Statutory Company formed?

A Statutory Company is formed through an act passed by Parliament. For example, the Life Insurance Corporation of India (LIC) was established under the LIC Act of 1956.

What defines a Registered Company?

A Registered Company is one that is registered under the Companies Act of 1956 or the Companies Act of 2013. Companies registered under earlier acts, such as the Companies Act of 182, are not classified as Registered Companies.

What is an Unlimited Company?

An Unlimited Company is one where the liability of its members is unlimited, meaning their personal assets can be used to settle company debts. It may or may not have share capital.

What is a Limited Company and how is it categorized?

A Limited Company is one where the liability of its members is limited. It can be categorized into two types: Limited by Guarantee and Limited by Share Capital.

What distinguishes a Private Company from a Public Company?

A Private Company has restrictions on share transfers, a minimum of two and a maximum of 200 members, and cannot make a public issue. In contrast, a Public Company can have an unlimited number of members, can make a public issue, and has no capital requirement for establishment post-amendment in 2015.

What is a Government Company?

A Government Company is one where at least 51% of the shareholding is held by the Central Government, State Government, or a combination of both.

What is the difference between a Holding Company and a Subsidiary Company?

A Holding Company controls a Subsidiary Company, owning more than half of its share capital and influencing its board of directors. A Subsidiary Company is one that is controlled by a Holding Company.

What is an Associate Company?

An Associate Company is defined as a company over which another company (the investor) has significant influence, typically characterized by owning 20% to 50% of the voting shares. If the ownership exceeds 50%, it becomes a Subsidiary Company.