Are you someone who intends to start your own business? Then you should be aware that there are many kinds of companies with diverse legal structures in India.
The Companies Act of 2013 categorizes companies based on their size, number of members, liability, control, ownership, and access to capital.
Explore the list of several Indian company types by scrolling below.
A List of India’s Various Company Types
Based on several parameters, the following table provides a list of the different categories of corporations in India:
- Considering the total number of members
Private Limited Company
Public Limited Company
One Person Company
- Based on each member’s liabilities
Businesses With Guarantees
Businesses With Share Limitations
No Limitless Enterprise
- Considering the size
Small Companies
Micro Companies
Medium Companies
- Considering control
Holding Company
subsidiary Company
- Depending on one’s ability to get capital
Listed Company
Unlisted CompanyÂ
- According to ownership
Government Company
Foreign Company
Associate Company
Section 8 Company
Dormant Company
An Overview of India’s Various Company Types
Below is a quick summary of the many categories of Indian companies:
Public Limited Business
India’s general public owns shares in this corporation, and since the shares are traded on a stock exchange, trading them is simple. The establishment of this corporation requires the presence of at least 7 members, even though the number of stockholders is unlimited.
Private Limited Business
A privately held corporation with restricted liability is known as a private limited company in India. A business of this kind can have up to 200 shareholders. This company’s shares cannot be exchanged or transferred in public.
One Person Business
One Person Companies (OPCs) are those that have just one shareholder, who may also serve as the company’s director. Because OPCs don’t need a minimum share capital, they maintain total operational control, which makes them ideal for small enterprises looking to reduce their liability.
Businesses With Guarantees
Known by another name, Guarantee Company, its members pledge to donate a certain sum to the company’s assets in the event that it closes.
This pledge restricts their financial responsibilities. The amount each member commits determines their ownership stake in the company.
Businesses With Share Limitations
The Memorandum of Association (MOA) limits the members’ liability in a business limited by shares. Only the outstanding amounts on the shares they own make members accountable. These businesses use initial public offerings (IPOs) to sell shares. A shareholder’s equity shares represent their ownership stake in the company.
Unlimited Company
Members of this type of private company are not subject to any restrictions on their responsibility. This business could or might not have stock. Members’ personal assets may be subject to increased liability in the event of a sudden increase in the company’s debt.
Small Businesses
The Companies Act of 2013 deems firms with paid-up share capital less than ?4 crore and annual turnover less than ?40 crore as small firms, conferring several advantages upon them.
Micro Companies
Micro companies are defined as those with an annual sales of little more than ?5 crore and plant and machinery investments of no more than ?1 crore.
Mid-Sized Businesses
Medium-sized businesses invest no more than ?50 crore in equipment and have yearly sales of no more than ?250 crore.
Holding Company
A company that owns one or more other companies is known as a holding company. It functions similarly to a parent corporation, with its owned businesses referred to as subsidiaries. Either directly or indirectly through another firm, the holding company either owns more than 50% of the shares of the other company or controls its board of directors.
Subsidiary Company
A parent or holding company is a different business that owns and manages a subsidiary. The parent firm may own the subsidiary entirely or through a number of owners. A subsidiary that is entirely owned by its parent company is referred to as a “wholly-owned subsidiary.”
Listed Company
One kind of public sector company that has its shares listed and traded publicly on the stock exchange market is a listed corporation.
Unlisted Business
Private corporations are those that are not listed on the stock exchange. These businesses are unable to raise financing and engage in public fundraising. Exchange laws are circumvented when shares are traded “over the counter,” with agreements customized for both buyers and sellers. Companies that are not publicly traded have greater operational autonomy.
Government-Originated Enterprise
If the federal, state, or both governments own more than 50% of its shares, a corporation is referred to as a government company.
International Business
corporations that are incorporated outside of India are considered foreign corporations. They either operate independently or in partnership with other businesses to carry out business operations in India.
Associate Company
A firm that is heavily influenced by other companies is called an associate company. It takes ownership of at least 20% of a company’s shares to have influence over it. One kind of affiliate company is a joint venture company.
Section 8 Company
Section Eight According to the Companies Act of 2013, companies are organizations that support trade, the arts, science, education, charitable giving, and environmental preservation in an effort to benefit society. These businesses are frequently referred to as non-profit organizations because their primary objective is to benefit society rather than generate revenue for their members.
Inactive Business
A company that has not conducted business for a period of time, often two consecutive fiscal years, is said to be inactive. It may be waiting to begin something new or temporarily halting operations, which is why it is still registered but not operating. Even if they are dormant, these corporations nevertheless have some obligations, such as maintaining a certain number of directors and filing certain records.
The Final Word
For anyone intending to launch a firm, it is vital to comprehend the many kinds of Indian organizations. Every kind of business has a unique set of benefits and constraints. A clear road map for corporate structuring is provided by these classifications based on membership, liability, size, control, access to finance, and ownership.