[Economy] Different Types of Companies: Pvt.Ltd, Public Ltd.

, Public
Corporation, Departmental Undertaking, PSUs
1. Paid up Capital
2. Private company
3. Public company
4. Holding company and subsidiary company
5. Departmental undertakings
6. Government Company
7. Public corporation
8. PSU (Public Sector undertakings)

Paid up Capital

This word is going to keep reappearing in next few articles, so better understand it in
advance.

You already saw that there are two ways to finance a company: Debt + Equity.

Paid up Capital means the amount of money contributed via Equity (shareholders)

Private company

It has a minimum paid-up capital of Rs.1 lakh

It needs minimum two members and maximum 50 members (i.e. The persons who hold its
equity)

This company is to use the word Private Limited at the end of its name.

It cannot have more than 50 members

It cannot borrow for general public.

For example Balaji Telefilms private ltd= Ektaa Kapoors company, involved in making those
boring Saas Bahu serials.

Another example: Neela telefilms private ltd. = Asit Modis company, they produce the
comedy serial Tarak Mehta Kaa oolta Chashmaa.

Flipkart.com : the online shopping website is also a private company, started by Sachin and
Binni Bansal.

Public company

It has minimum paid-up capital of Rs.5 lakh.

Requires minimum seven members to start a public company.

It has to hold annual general meeting of shareholders.

It can borrow from general public via IPOs and Bonds.

For example, Infosys started as a private ltd company in 1981, but in 1992, it re-registered
itself as a Public Ltd company and launched the IPO in 1993.

Holding company and subsidiary company

If company A holds more than 50% Shares of company B then,

Company A is a holding company

Company B is a subsidiary company

Example: Coal India is a holding company. Bharat Coking ltd, Mahanadi CoalFields ltd are its
subsidiary companies.

Similarly, Konkan Railway is a subsidiary company of Indian Railways. Although Indian

Railways is not a Holding Company, it is a Departmental undertaking.

Departmental undertakings
Government Company

It is a company in which government holds not less than 51% of paid-up

share capital.

For example, ONGC, SAIL

Here, The Government means the union government or the State

government(s) on both.

For example, in Company A, 30% shares are held by union government,

10% by Gujarat government, 11% by Madhya Pradesh government, still
Company A is a Government company (30+10+11=51%)

The government company is managed by the board of directors.

Board of Directors are appointed by the shareholders. But since

government owns majority of the shares, majority of directors are
chosen by the government.

They can borrow extra money from public via IPOs and bonds.

This company does not need Parliaments approval on how to use the
profit, But it will need approval of Board of directors on how to spend the
profit.

Theyre not directly audited by CAG, but CAG appoints the private firms
(Chartered accountants) as auditors.

RTI applies to Government companies.

Public corporation
PSU (Public Sector undertakings)

When we use the word PSU: it means Public corporations + Government companies.

Departmental undertakings (Railway/Postal) are not PSUs.

CAG has two wings:

1. The Civil wing looks after the auditing of Ministries + Departmental undertakings.

2. The Commercial wing looks after the auditing of Government companies +Public
Corporations.