TYPES OF COMPANIES

Group No:2(A)
COMPANY
The company Act 1956 defines the word ‘COMPANY’ as a company
formed and registered under the Act or an existing company formed and
registered under any of the previous company law.
FEATURES OF THE COMPANY

 Incorporated Association.  Transferability Of

 Artificial Person. Shares.
 Separate Legal Entity.  Perpetual Existence.

 Limited Liability.  Common Seal.

 Separate Property.  Company May Sue And

Be Sued In Its Own
Name.
CLASSIFICATIONS OF COMPANY

 Private companies limited by shares.

 Public Limited Companies (PLC).

 Property Management Companies.

 Companies Limited by Guarantee.

 Unlimited companies.

 Limited Liability Partnerships (LLPs).

 Community Interest Companies (CICs).

PRIVATE COMPANIES LIMITED BY
SHARES

 The vast majority of trading companies are

private companies limited by shares. There are
nearly two million such companies registered at
Companies House. A private company limited by
shares must have the word 'Limited' or 'Ltd' at
the end of its name. Many private companies are
very small
PRIVATE COMPANIES LIMITED BY
SHARES
PUBLIC LIMITED COMPANIES (PLC)

 A small proportion of companies are public companies.

Such a company must have a name ending in the words
'public limited company' or 'PLC'.
 This type of company is appropriate for larger businesses
where shares are intended to be available to the general
public.
 This is the only type of company which may raise capital
by offering securities (shares or debentures) to the
public. This is usually done by obtaining a listing on the
Stock Exchange.
CONT…..
 Public companies are subject to more stringent legal
requirements than private companies on a wide range of
matters, but especially in relation to share capital,
directors and accounts.
PUBLIC LIMITED COMPANIES
(PLC)
PROPERTY MANAGEMENT COMPANIES

 A property management company is a type of private

limited company. Such a company will be set up in order
to hold an interest in property which is divided into
units, each unit being owned separately.
PROPERTY MANAGEMENT
COMPANIES
COMPANIES LIMITED BY GUARANTEE:-

 A company limited by guarantee is private

company, very like a private company limited by
shares, but it does not have a share capital. It is
widely used for charities, clubs, community
enterprises and some co-operatives.
 The vast majority of such companies are non-
profit
CONT…..
 The directors are often called a management committee
or council of management
 The memorandum states that the members of the
company guarantee to pay its debts, but only up to a
fixed amount each.
UNLIMITED COMPANIES:-

 Many people refer to a sole trader's business or a

partnership as an unlimited company ,If the company
needs money to pay its debts a call can be made on each
of the shareholders to contribute a fixed amount on each
share held by them.
 Has all the other features of a private company limited
by shares
CONT……
 Its one major advantage is that it is not required to
register annual accounts at Companies House.
 This type of company is suitable for a business where the
risk of insolvency is very low or non-existent
 There are few unlimited companies, but this may be
because their existence and advantage are not widely
appreciated.
LIMITED LIABILITY PARTNERSHIPS (LLPS)

 This is a comparatively new type of business structure

which became available in 2001. It is a hybrid between a
private company limited by shares and a partnership.
 An LLP is a separate legal entity conferring full limited
liability on its members.
 It is created by registration at Companies House.
 There must be at least two members, but there is no
upper limit. An LLP is subject to the same rules as a
private limited company for the registration of accounts
at Companies House, and the auditing of its accounts.
 partner is liable to income tax under Schedule D for his
or her share of the profits, and to Capital Gains Tax in
respect of any gains made.
COMMUNITY INTEREST COMPANIES (CICS):-

 Community Interest Companies are a new type of

company (from 2005) which can only be registered for
objects which are for the good of the community.
 The Companies (Audit, Investigations and Community
Enterprise) Act 2004 ('the Act')
CONT…..
 the two main features that distinguish CICs from
'normal' companies are the asset lock and the
Community Interest Statement and Report.
 Under the asset lock provisions, the assets and profits
must be permanently retained within the CIC, and used
solely for community benefit, or transferred to another
organization
CONT….
 the directors, must describe the company's objects and
certify that the company is formed to serve the
community rather than for private profit.
DISTINCTIONS
PRIVATE COMPANY
 The number of person to
form a company is two.
 The number should not
exceed 50.
 The right to transfer shares
is restricted.
 The directors of the
company are not required to
retire by rotations.
PUBLIC COMPANY
 The number of person to
form a company is seven
 There is no restriction on
the maximum members in
public company.
 The shares are freely
transferable.
 At least 2/3 of the directors
must retire by rotations.
CONT…
PRIVATE COMPANY PUBLIC COMPANY

 The number of directors  The numbers of director

may be increased by any
number without the
permission of central
government.
has to be twelve, if they
want more than twelve
they have take the
permission from central
government.
CONVERSION OF PRIVATE INTO PUBLIC
COMPANY
 Under the section 44 of company act 1956,it gives the
procedures of changing the company
1) The company in general meeting must pass a special
resolution altering its articles in such a manner it should
repeat under section 3(1)(iii)
2) Within thirty days of passing the special resolution it
shall file for the registration.
CONT….
 If the members are is below seven , steps should be taken
to increase the members.
 The word “private” is to be deleted before the word
“limited” in the name.
CONVERSION OF PUBLIC INTO PRIVATE
COMPANY
Under the section 31(1) of company act 1956,it gives the
procedures of changing the company
1) The word “private” should be added before “limited”.
2) The approval of the central government to the alteration
in the articles for converting a public or private
company should be obtained.
CONT….
 Within one month of the date of the receipt of the
approval ,a printed copy of the articles and filed to the
registration.
 Within thirty days of the passing of the special resolution
a printed or type –written should be submitted.