Kinds of Companies

Mrs. Shruti Reddy,

SoL, UPES
 Private Co.

Co.s regd. Under

Co.s Act [S. 3 Public Co.
(1)]

OPC
 Regd.
Co.

Statutory Existing
Co. Co.

Investment Kinds Assn.

not for
co.
of Co. profit

Holding &
Govt.
subsidiary
co.
co.
Foreign
co.
Private and Public
Co.
 S. 2 (68): Co. having min.
paid up capital of 01 lakh or
higher paid up capital as
prescribed [omitted by the
Companies Amendment Act,
2015]

Private Company
 AoA provides for:
a. Restriction on right to
transfer shares, if any;
b. Limits no. of members to
200 (except OPC)
c. Prohibits invitation to
public to subscribe for
securities of the co.
 For calculation of “200 members”
following are excluded
a. Persons who are employed in
the co.
b. Persons who were earlier both
members and employees of the
co., but continue to be the
members after employment
ceased Contd.
c. Joint shareholders – treated as
one member
 V.B. Nagaraj v. V. B.
Gopalakrishna, [1991] CLA 211
(SC): only restrictions in AoA
valid, terms as per pvt. agreement
not valid
 Other requirements:
a. Min.no. of members (s. 3)-02;
a co. as a legal person may
subscribe; member to be equity
shareholder and not preference
shareholder in case of only two
members Contd.
b. Pvt. Ltd. Co. [S. 4 (1) (a)]-
“Pvt. Ltd. Co.” must be
mentioned in the name of the
co.
 S. 2 (71): Co. having min. paid up
capital of 5 lakh or such higher
paid up capital as may be
prescribed [omitted by the
Companies Amendment Act, 2015]
AND
 Must not be a pvt . co. Public Company
 Pvt. co. as subsidiary of pub. co.-
deemed to be a public co.-
continues to be private company in
its articles
 Pvt. Co.
 Min. no. of members- 02
 Max. no. of members- 200
 Transferability of shares-restricted
 Prospectus- can’t issue
 Min. no. of directors- 02
 Retirement of directors- not by rotation
 Public deposit- can’t accept

Distinction
between Pvt. and

Pub. Co.
Pub. Co.
Min. no. of members- 07
 Max. no. of members- unltd.
 Transferability of shares- free
 Prospectus- can issue
 Min. no. of directors- 03
 Retirement of directors- at least 2/3 by
rotation
 Public deposit- free to accept
Co. ltd.by- shares, guarantee &
Unlimited co. [S. 3(2)]
 Co.ltd. by shares
 S. 4 (1) (d) (i)
 Liability of members – enforced at any
time during existence/winding up

Limited Liability
Co. ltd. by guarantee
Co.
 S 4(1) (d) (ii)
 Liability at the time of winding up
 No limit of liability of members
 Liability extends to whole amount
of co.’s debts & liabilities arising
during the continuation of the Unlimited
company and at the time of liability co. [S. 3
winding up
 S. 18: conversion into ltd. liability (2) & 4(1)(d)]
co., provided existing liability is
not affected by conversion
 OPC- pvt. co.- ltd. by shares or guarantee/unltd.
 S. 2 (62): co. which has only one person as member
 Another person to be nominated in case of the
member’s death/incapacity
 “OPC” or “One Person Company” to be mentioned in
the name of the company everywhere
 Co. to have minimum one director and maximum 15
directors
 Exemptions extended to OPC
 The Companies (Incorporation) Rules, 2014:
 Only natural person-an Indian citizen resident
in India- can incorporate OPC
OPC [S. 3 (1) (c)]
 One person can incorporate only one OPC
 A person can be a nominee only in one OPC
 Minors can’t be member/nominee
 Restriction on conversion into S.8 co. or a
NBFC co.
 Conversion into pvt./pub. co,
 Mandatory conversion into pub./pvt. co. if paid
up share capital exceeds 50 lakhs or turnover
exceeds 02 crores
 S. 2 (85): co. other than a public co. (thus,
necessarily a pvt. co.) with following
essentials:
a. paid-up share capital of which does not
exceed fifty lakh rupees or such higher
amount as may be prescribed which
shall not be more than five
crore rupees (ten crores); and
b. turnover of which as per its last profit
and loss account does not exceed two
crore rupees or such higher amount as
may be prescribed which shall not be
more than twenty crore (hundered
Small Company
crore) rupees
c. Provided that nothing in this clause
includes—
(A) a holding company or a subsidiary
company;
(B) a company registered under section
8; or
(C) a company or body corporate
governed by any special Act
Companies (Amendment) Act, 2017
Other co.s
 Life Insurance Corporation Act
(LIC of India), 1956
 Reserve Bank of India Act, 1934
 Not reqd. to have MoA Statutory Co.
 Application of the Companies Act,
2013?
 Co. regd. under Co.s act Registered Co.s
 Limited co.+license
 Co.’s for promotion of commerce, arts,
science, religion, charity, sports,
education, research, social welfare or
any other useful social purpose
 S. 8 co. exempted from S. 4- inclusion
of “pvt. ltd. co.” in name of co.
 Partnership firm as member
 Alteration of MoA and AoA- CG
sanction
 Conversion
Associations not
 Amalgamation with another co. of for profit (S.8)
similar objects only
 Assn. regd . as ltd. Liability co. – CG
may give license to it on fulfillment of
2 conditions:
1. Intention to form co. to promote the
objectives mentioned above
2. Co. prohibits payment of dividend
to its members, application of profits
or income to objects
 Section 2(45): any co. in which not
less than 51% paid up share capital
is held by:
1. CG, or
2. SG/s
3. Partly by CG and one or more
SG/s Government Co.’s
 Subsidiary of govt. co. also treated
as govt. co.
 Legal status of govt. co.?
 Govt. co.- state?
 Whether pub./pvt. Co.?
 S. 2 (6): co. in which antr co. has
significant influence, but is not a
subsidiary of the company having
such influence
 Includes a joint venture company
 Significant influence: control of at
least 20% of total share capital or Associate
of business decisions under an
agreement company
 Companies (Amendment) Act,
2017- control of at least twenty
per cent of total voting power, or
control of or participation in
business decisions under an
agreement
 S. 2 (52): co. with its securities
listed on any recognized stock Listed company
exchange
 S. 2(46): holding company
 S. 2 (87): Subsidiary co.: in relation
to any other co. (holding co.) is a
co. in which the holding co.:
a. Controls composition of BoD;
or
b. exercises or controls more than
one-half of the total share Holding and
capital (total voting power)
either at its own or together Subsidiary
with one or more of its Companies
subsidiary companies.
[Companies (Amendment)
Act, 2017]
 Class(es) of holding companies
shall not have layers of subsidiaries
beyond the prescribed stipulation
 A company shall be deemed to be a
subsidiary company of the holding
company even if the control referred
to in sub-clause (i) or sub-clause (ii)
is of another subsidiary company of
the holding company
 The composition of a company’s
Board of Directors shall be deemed to
be controlled by another company if
that other company by exercise of Holding and
some power exercisable by it at its
discretion can appoint or remove all
Subsidiary
or a majority of the directors Companies
 The expression “company” includes
any body corporate
 “Layer” in relation to a holding
company means its subsidiary or
subsidiaries
 Company includes body corporate
[Companies (Amendment) Act,
2017]
 S.455 (1) Where a company is formed and registered under this
Act for a future project or to hold an asset or intellectual property
and has no significant accounting transaction, such a company or
an inactive company may make an application to the Registrar in
such manner as may be prescribed for obtaining the status of a
dormant company.

 RoC may issue certificate granting status of dormant co.and

maintain records in register of dormant companies

 Explanation:
(i) “inactive company” means a company which has not been Dormant
carrying on any business or operation, or has not made any
significant accounting transaction during the last two financial
company
years, or has not filed financial statements and annual returns
during the last two financial years;
(ii) “significant accounting transaction” means any transaction
other than—
(a) payment of fees by a company to the Registrar;
(b) payments made by it to fulfil the requirements of this Act or
any other law;
(c) allotment of shares to fulfil the requirements of this Act; and
(d) payments for maintenance of its office and records.
Companies (Miscellaneous) Rules, 2014
 S. 464: no assn., partnership
consisting of more than a no. as
may be prescribed and not exceed
100- with object of acquisition of
gain-can’t be formed unless regd.
u/Co.’s Act or in pursuance of any
other Indian law Illegal
 Companies (Miscellaneous) Rules,
2014: not exceed 50 Association
 Exceptions:
a. Joint Hindu family
b. Assn. or partnership formed by
professionals who are governed
by spl Acts
 Effects:
1.Every member personally liable
for all liabilities incurred by Illegal
business
Association
2.Members punishable with fine
extendable upto INR1,00,000/-
 Section 375: partnership firm, LLP,
society, co-op society, assn., co.
consisting of more than 07 Unregd. Co.
members
 Exception- Railway co., Company
 S. 2(42): Co. or body corporate incorporated outside India
a. Has place of business in India itself or through an agent,
physically or through electronic mode, and
b. Conducts business in India in any other manner
 Rule 2 (c) of the Companies (Registration of Foreign Companies)
Rules, 2014: defn. of electronic mode- carrying out electronically
based, whether main server is installed in India or not, including but
not limited to-
a. Business to business and business to consumer transactions, data
interchange and other digital supply transactions;
b. offering to accept deposits or inviting deposits or accepting
deposits or subscriptions in securities in India or from citizens of
Foreign Co.
India;
c. financial settlements, web based marketing, advisory and
transactional services, database services and products, supply
chain management;
d. online services such as telemarketing, telecommuting,
telemedicine, education and information research; and
e. all related data communication services.
 Chapter XXII of 2013 Act
 Life Insurance Corporation of India
 Infrastructure and Development Finance Company
Limited
 Companies referred to in the Unit Trust of India
(Transfer of Undertaking and Repeal)Act, 2002
 Institutions notified by CG u/S. 4A (2) of the
Companies Act, 1956 Public Financial
 Institutions notified by CG in consultation with RBI Institutions

 Qualifications for institutions to be so notified:

[S. 2(72)]
a. It is established or constituted by or under any
Central or State Act; or
b. It is a govt. co.
 Examples: NABARD, GIC, The New India
Assurance Company Ltd., SIDBI
 Companies Act, 1956: Part IX A vide the
Companies (Amendment) Act, 2002, operative
since Feb 06, 2003
 Focus: multi state cooperative societies; facilitate
mainstream economic activities securing
cooperative principle of mutual assistance;
inculcate corporate culture
 Option to cooperative societies to convert into
companies
 Limitation on transfer of shares, membership; Producer
production, processing, manufacture and sale of Companies
primary produce + allied matters
 Agriculture- horticulture, pisci-culture, forestry,
bee farming, handloom, cottage industry, providing
education
 10 or more producer individuals/ 02 or more
producer institutions/ combination of 10 or more
individuals and producer institutions
 Treated as Pvt. Ltd. Co.
Conversion of a
company
 Spl. resln.: alteration of AoA;
effective from date of alteration
 Increase in membership (acc. to
S.3)
 Increase in no. of directors (acc. To
S. 149) Conversion of
 Filing of altered articles: with RoC pvt. co. into pub.
within 15 days
 Alteration to be noted in every
co. (Section 14)
copy [S.15(1)]; default- co. and
offr. Punishable with fine- INR
1,000/- for every copy of articles
issued without alteration
 Spl. resln.: alteration of articles
 Changing the name of the co. (this
doesn’t require spl. resln. according Conversion of
to S. 13) pub. co. into pvt.
 NCLT approval [second proviso to
S. 14 (1)] co. (Section 14)
 Filing with the RoC [S. 14(2)]
 Spl. resln.
 Outstanding debt continues Conversion of
unaffected unlimited liability
 S. 65: Increase in nominal value of
share (with conditions regarding
into a limited
call on shares) liability co. &
 Companies, (Incorporation) Rules,
2014; Companies (Incorporation)
vice versa (S.18)
Third Amendment Rules, 2016
Company vis-à-vis
Body corporate
 An assn. of person incorporated
under some statute
 Perpetual succession, common
seal, separate legal entity
 S. 2(11) Co.’s Act: ‘Body
corporate’ or ‘corporation’ includes
a co. incorporated outside India,
but does not include Body Corporate
a. A cooperative society
incorporated under any law
relating to cooperative society
b. Any other body corporate not
being a co. which the CG may
by notification in the Official
Gazette, specify in this behalf.
 Includes all Public Financial
Institutions, nationalized banks,
Co.s
 All incorporated co.s are body Body Corporate
corporate , but all body corporate
are not co.s
 Company- a citizen???