L. Q 1] Define and Explain Various Kinds of Company in Company Law.

1. introduction

In our country, various forms of business organizations are followed, such as sole proprietorship, partnership,
limited liability partnership, company, etc. However, with the rapid growth of the economy, the “company” form
of business organization gained significant popularity, and other forms started fading away gradually. Various
types of companies may look quite similar, but they all have some distinct characteristics. In this article, we will
explore the meaning of a company, and how many types of companies exist in India.

2. Meaning and Definition

Before heading toward the types of Companies, it is very essential to understand the meaning of a company. The
company is defined under Section 2(20) of the Companies Act, 2013. As per the section, a company is an
association of a person who has a separate legal entity and has a perpetual succession. The capital of the
company is divided into small denominations known as “shares”.

The term “separate legal entity” means that the company has a different existence from its shareholders. The
company can hold assets in its name and can be sued or be sued. Similarly, “perpetual succession” means that
the members may come or go, but the company will remain forever.

4. Types of Companies in India

Here is the list of all the different types of companies under the Companies Act 2013:

1. Statutory Companies
Based on incorporation, the companies can be divided into 2 categories - it refers to those companies which are
constituted by a special Act of Parliament or State Legislature. The main objective of this type of company is to
provide public service.

Since they are established under a special Act, the Company Act, 2013 has a limited application over such
companies. In case of any conflict, the special Act will prevail over the Companies Act, 2013. For Example –
Reserve Bank of India (RBI) Life Insurance Corporation of India (LIC), etc.

2. Registered Companies
The Companies which are registered as per the provisions of the Company Act 2013 or any previous Company
Law are called registered companies. This type of company comes into existence when they received a
certificate of incorporation from the registrar of Companies (ROC)

3. Companies Limited By Shares (Limited Liability)

Based on liability, the companies can be divided into 3 parts- It refers to the company in which the liability of its
members is limited by the amount mentioned in the memorandum of association of the company. However, any
unpaid amount on the share can be called to pay off the liability.
The liability against the members can be enforced during the existence of the company as well as during the
liquidation. It is important to note that when the shares are fully paid up, no amount can be claimed from the
members.

For instance- X is a shareholder who has paid 75 on a share of face value 100. The company can call upon X to
pay only the remaining 25 rupees and not exceed that. Companies limited by shares are by far the most
prominent ones.

4. Companies Limited By Guarantee

In this type of company, the liability of the members is limited to such an amount as they undertake to contribute
to the assets of the company in the event of its being wound-up. In simple terms, the liability of shareholders is
limited to the amount of guarantee given by them in the memorandum of Association.

During the winding-up of a company, the members are put in the position of guarantors to discharge the
company’s debt. Examples of such companies are Clubs, trade associations, research associations, etc.
5. Unlimited Liability Companies
It refers to those companies which do not fix the liability of their members. The members’ liability is unlimited
and their personal property can be used to satisfy the debt of the company. These types of companies may have
or may not have the share capital.

Types Of Companies On The Basis Of The Number Of Members

Under this category, the Companies can be divided into 3 parts-

6. Public Companies
A public company is defined under Section 2(71) of the Companies Act, 2013. For constituting a public company,
it is essential to have a minimum of 7 members. The rules also prescribe a minimum paid-up capital for this type
of Company.

One of the special features of a public company is that the buying and selling of shares are not restricted. Section
58 provides that the shares of a public company are freely transferable. If the Company fails to comply with the
aforesaid provisions, it will relinquish the status of a “private company”. For converting a public company into a
private company, it is essential to pass a special resolution (3/4th Majority) in the shareholders meeting.

7. Private Companies
A private company is defined under Section 2(68) of the Companies Act, 2013. It refers to an association of
persons wherein the maximum number of members is capped at 200. A private company can’t invite the general
public to subscribe to its shares or debentures.

The shares of a private company are not freely transferable and they can’t be transferred. All such restrictions
must be specifically provided in the Articles of Association (AOA) of the Company. Just like with the public
company, a private company can change its status by passing a special resolution (3/4th Majority) in the
shareholders meeting.

8. One Person Company (OPC)

As per Section 2(62) of the Companies Act, 2012, a One Person Company refers to a company that has only one
person as a member or shareholder. It must have 1 director on the board, and its sole member can function the
role of director also.

In this type of Company, the concept of “nominee” gains utmost significance as after the death of the original
member, the business of the company would become standstill. So, while registering such a company, it is
essential to give the name of a nominee. It is not followed in other types of companies as they have perpetual
succession.

9. Other Types Of Companies In India

Section 8 Company
Small Companies
Subsidiary Companies
Holding Companies
Associate Companies
Producer Companies
Dormant Companies

5. Conclusion
The Companies Act, 2013 provides for different types of Companies based on different factors. A company can
be either a public company or a private company either limited by shares or limited by guarantee or have no limit
of liability on its members. Further, a single person can also constitute a company. There are other types of
companies also such as Section 8 companies, dormant companies, subsidiary companies, etc.
S.N -2 ] Certificate of Incorporation

1. Introduction
A certificate of incorporation is a legal document/license relating to the formation of a company or
corporation. It is a license to form a corporation issued by the state government or, in some jurisdictions,
by a non-governmental entity/corporation. Its precise meaning depends upon the legal system in which
it is used. The certificate is proof that all the requirements of the Act concerning the aforementioned
matters have been complied with and that the association is a company authorized to be registered
under this Act.

2. Meaning
The word ‘Company’ has a strict legal meaning according to the provisions of the Companies Act of 2013,
a company refers to a company formed and registered under the Companies Act.
In common law, a company is a “legal person” or a “legal entity” that is separate and capable of surviving
beyond the lives of its members.

3. Definition
Section 7 of the Companies Act 2013 deals with the procedure for the incorporation of a company
which sets out Certificate of Incorporation (issued by the Ministry of Corporate Affairs or the State
Government) as the final step to the incorporation of a company. It provides legal identity to the company
and a license to commence business.

Incorporation of a company refers to the setting up of a company according to the provisions laid
out in the Companies Act of 2013.

4. Contents of Certificate of Incorporation

The Certificate of Incorporation of a private limited company includes the following:

• The full name of the company and its abbreviated form.
• The company registration number
• The date of incorporation – when the company was formed
• The jurisdiction in which the company and its registered office address / Legan address
• The type of company, which will reveal: public or private company / limited or unlimited / etc
• Company law under which it was registered – i.e. the Companies Act 2006
• Details of the issuing Registrar – Cardiff, Edinburgh or Belfast
• Official seal of the Registrar

5. When will I need the incorporation certificate?

You’ll sometimes need to show the certificate of incorporation when:

You open a bank account for the business

The company issues shares to new investors in the company
You apply for a loan for the company
You seek any other kind of funding for the business
You look to sell the company to someone else

6. Conclusion
The certificate of incorporation does not give details of who owns the company (its shareholders). That
information is instead available in the company’s register of members. Beyond stating the type of
company, the certificate also doesn’t provide any information on the rules that govern the management
of the company. The detailed rules that define how the company should be managed are instead within
the Articles of Association.