Classification of Companies
(i) Classification on the basis of Incorporation: There are three
ways in which companies may be incorporated.
(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, with ROC fall under this category.
(ii) Classification on the basis of Liability: Under this category
there are three types of companies:
(a) Unlimited Liability Companies: In this type of company, the
members are liable for the company’s debts in proportion to
their respective interests in the company and their liability is
unlimited. Such companies may or may not have share capital.
They may be either a public company or a private company.
(b) Companies limited by guarantee: 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.
(c) Companies limited by shares: A company that has the
liability of its members limited by the memorandum to the
amount, if any, unpaid on the shares respectively held by them
is termed as a company limited by shares. For example, a
shareholder who has paid `75 on a share of face value ` 100
can be called upon to pay the balance of `25 only. Companies
limited by shares are by far the most common and may be
either public or private.
HOLDING, SUBSIDIARY COMPANIES
On the basis of control companies can be classified into
holding, subsidiary and associate companies.
Holding company
