COMPANIES ACT, 2013 WRITEN BY- GIRIJA PRASAD DASH

In tune with multifaceted global development in international

trade and commerce, the Companies Act, 2013 was enacted in
India which forms the primary source of Indian Company Law.
The companies act, 2013 has been enacted to consolidate and
amend the law relating to the companies.

The companies act, 1956 were indispensable due to

change in national and international economic
environment and for expansion and growth of economy
of our country. The Central Government decided to
replace the companies act, 1956 with a new legislation
to meet the changed national and international
economic environment and to further accelerate the
expansion and growth of our economy.
The companies act, 2013 was passed in the parliament
and signed in 29th August, 2013 and commenced from 1st
April, 2014. The companies act, 2013 aim to improve
corporate security, simplify regulations, strengthens the
interests of minority investors and for the first time
legislates the role of whistle-blowers. Thus, the
enactment is making our corporate regulations more
contemporary. There are 470 sections and 7 schedules.

TYPES OF COMPANIES
0N THE BASIS OF LIABILITY
1. Company limited by shares
Sec 2 (22) defines, “company limited by shares” as 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.
2.Company limited by guarantees
Sec2 (21) defines, “company limited by
guarantees” as a company having the
liability of its members limited by the
memorandum to such amount as the
members may respectively undertake to
contribute to the assets of the company in
the event of its being wound up.
3. Unlisted company
Sec 2 (92) defines “unlimited company” as a
company not having any limit on the
liability of its members.

ON THE BASIS OF NUMBER OF MEMBERS

1. Public Company
Sec 2 (71) defines “public company” as a
company which is not a private
company .A company which is a
subsidiary of a company, not being a
private company, for the purposes of this
act even where such subsidiary company
continues to be a private company in its
articles.
2. Private Company
Sec 2 (68) defines “private company” as a
company having a minimum paid up share
capital as may be prescribed and compny
which by its articles :-
 (1) restricts the right to transfer its
shares;
(2) except in case of OPC , limits the
number of its member to 200;
(3) restrict any invitation to the public to
subscribe for any securities of the
company.
3. One Person Company
Sec 2(62) defines, “one person company”
as a company which has only one person
as a member, it is also considered as a
private company. It is also known as OPC
as the company is being registered under
one person , under his/her name the
word private Limited is being added.
ON THE BASIS OF CONTROL
1. Holding Company
Sec 2 (46) defines holding company in
relation to one or more other companies,
 means a body corporate of which such
companies are subsidiary companies.
2. Subsidiary Company
Sec 2(87) defines “subsidiary company” in
relation to any other body corporate as a
company in which the holding company.
(1) Controls the composition of board of
director OR
(2) Controls more than one half of voting
power.
ON THE BASIS OF LISTING OF SHARES
1. Listed Company
The company which has any of its
securities listed on any stock
exchange.
2. Unlisted Company
The company which is not listed it
Share on any stock exchange.
OTHERS COMPANY
 Associate Company
Sec 2(6) of the act defines the term
associate company in relation to another
company, a company in which that other
company has a significant influence, but
which is not a subsidiary company of the
company having such influence.
 Banking Company
Sec 2(9) defines, the term banking company
as a banking company defined in sec 5(c) of
Banking Regulation Act, 1949.
 Investment Company
A company whose principal business is the
acquisition of shares, debentures, or other
securities is known as investment
company .
 Statutory Company
Companies set up by special acts of
parliament or state legislatures are called
statutory company. Example:-LIC, UTI, ETC.
FORMATION OF COMPANY
Sec 3 of the companies act provides for
the formation of a company. This
section provides that the company may
be formed for any lawful purpose. The
company cannot be formed for illegal
purposes or unlawful purposes. The
section further provides the number the
of members required for the formation
of a company, the public company
requires seven or more persons. The
minimum for the public company is
seven and there is no limit for the higher
number of persons. The private
company requires minimum two person
and maximum up to 200. OPC requires
one person , it is treated as private
company.
The required persons for the formation
of the above category of companies
shall subscribe their names or his name
to a memorandum and comply with the
requirement of the act in respect of
registration.