Types of Companies in India
A Comprehensive LL.B. Study Guide with Interactive Content
📖 Meaning and Definition
A Company is an artificial legal person created by law, capable of owning property, entering into contracts, and suing/being sued in its own name. Under the Companies Act, 2013, a company is an association of persons incorporated under the Act.
💰 Classification by Liability
1. Limited Liability Company
- Member's personal assets are protected
- Creditors can claim only company assets
- Suitable for commercial ventures with risk
Examples: TCS Ltd., HDFC Bank Ltd., Infosys Limited
2. Unlimited Liability Company
- Rare in practice in India
- All members equally liable for company debts
- Often used for partnerships and professional firms
Examples: Some LLPs (Limited Liability Partnerships)
👥 Classification by Number of Members
Private Company
Max Members: 200
- Shares not freely transferable
- No public offering allowed
- Min paid-up capital: Rs. 1 lakh
- Fewer compliance formalities
- Flexible board meeting rules
Examples: Family businesses, startups, SMEs
Public Company
Max Members: Unlimited
- Shares freely transferable
- Can invite public subscription
- Min paid-up capital: Rs. 5 lakhs
- Listed on stock exchanges
- Strict compliance requirements
Examples: TATA Steel, Reliance, Bajaj Auto
📋 Classification by Incorporation
1. Registered/Incorporated Company
- Registration with Registrar of Companies (RoC)
- Requires Memorandum of Association (MoA)
- Requires Articles of Association (AoA)
- Certificate of Incorporation issued by RoC
Status: Separate legal entity from date of incorporation
2. Unregistered Company
- Formed by special parliamentary acts
- Examples: Central Bank, Insurance companies
- Governed by specific legislation
Examples: Reserve Bank of India, Life Insurance Corporation
🏛️ Classification by Ownership
Government Company
- 51%+ capital held by Government
- Ownership: Central/State Government
- Public interest driven
- Specific audit requirements
- Employee recruitment by public commission
Examples: ONGC, NTPC, BHEL, Indian Oil
Non-Government Company
- Ownership: Private individuals/entities
- Profit-motive driven
- Freedom in policy-making
- Flexible corporate governance
- Market-competition based
Examples: TCS, Infosys, Wipro, HUL
🌍 Classification by Jurisdiction
1. Indian Company
- Subject to Indian company laws
- Regulated by RoC of respective states
- Full compliance with Companies Act, 2013
2. Foreign Company
- Must register with RoC in India
- Must appoint local representative
- Subject to restrictions under Companies Act
- Different compliance requirements
Examples: Apple Inc., Microsoft, Google, Amazon
⭐ Special Classification of Companies
1. One-Person Company (OPC)
Members: 1 (single natural person)
Max Paid-up Capital: Rs. 50 lakhs
Max Annual Turnover: Rs. 2 crores
- Ideal for single entrepreneur ventures
- Reduced compliance burden
- Limited personal liability
- Cannot convert to public company
2. Producer Company
Min Members: 10
Objective: Promote agricultural production & marketing
- Cooperative model for farmers
- Tax benefits under Income Tax Act
- Special dividend provisions
3. Holding & Subsidiary Company
Subsidiary Company: Company controlled by holding company (owns >50% shares)
- Creates corporate group structure
- Consolidated financial statements required
- Subsidiary has separate legal identity
- Parent liable for subsidiary debts in some cases
📊 Summary Comparison Table
| Basis | Type A | Type B | Key Difference |
|---|---|---|---|
| Liability | Limited | Unlimited | Investor asset protection |
| Members | Private (2-200) | Public (7+) | Share transferability & public offering |
| Incorporation | Registered | Unregistered | RoC registration |
| Ownership | Government (51%+) | Non-Government | Public vs. private capital control |
| Jurisdiction | Indian | Foreign | Formation country & legal jurisdiction |
| Persons | OPC (1) | Regular (2+) | Single vs. multiple entrepreneurs |
✅ Key Points to Remember
📊 Interactive Flowchart
✓ Member assets protected
✓ Liability limited to investment
✓ Most common in India
✓ Personal assets at risk
✓ All debts member's liability
✓ Rare in practice
✓ Min: 2, Max: 200
✓ No public offering
✓ Min capital: Rs. 1L
✓ Restricted transfer
✓ Min: 7, Max: Unlimited
✓ Public offering allowed
✓ Min capital: Rs. 5L
✓ Free transfer
✓ Under Companies Act
✓ RoC registration
✓ Certificate required
✓ Special statutory
✓ RBI, Insurance Act
✓ Special regulations
✓ Public sector
✓ PSU classification
✓ Examples: ONGC, NTPC
✓ Private ownership
✓ Profit-driven
✓ Market-based
✓ Incorporated in India
✓ Registered office in India
✓ Full compliance
✓ Incorporated outside
✓ Carries business in India
✓ RoC registration required
Single member
Rs. 50L cap
Entrepreneur
Min 10 members
Farmers/Agri
Cooperative
Parent-Child
>50% shares
Group structure
🧠 Interactive Mind Map
💰 LIABILITY
👥 MEMBERS
📋 INCORPORATION
🏛️ OWNERSHIP
🌍 JURISDICTION
⭐ SPECIAL TYPES
🔑 KEY INSIGHT:
Each company can have multiple classifications simultaneously. For example:
📌 Example: TCS Ltd is a Private + Limited + Registered + Non-Government + Indian company
🗺️ Learning Roadmap - 5 Stages (49 Days)
Goal: Understand fundamentals
Learn definitions, why classifications matter, liability concepts
Activities:
- Read Companies Act sections
- Create flashcards
- Solve 5 MCQs
Difficulty: ⭐ Easy
Goal: Master all 6 classifications
Learn Liability, Members, Incorporation, Ownership, Jurisdiction
Activities:
- Create comparison tables
- Identify companies
- Solve 20 MCQs
- Mock test 50 Q
Difficulty: ⭐⭐ Medium
Goal: Understand special companies
Learn OPC, Producer, Holding & Subsidiary, Dormant, Small
Activities:
- Study case studies
- Compare structures
- Solve 30 Q
- Analyze real companies
Difficulty: ⭐⭐⭐ Harder
Goal: Connect with judicial precedents
Study Salomon, Lee, Macaura, Dhanoa cases
Activities:
- Brief 5 cases
- Identify holdings
- Case analysis
- Moot prep
Difficulty: ⭐⭐⭐ Harder
Goal: Final exam preparation
Review all concepts, practice exams, manage time
Activities:
- Revise definitions
- Speed MCQs
- Mock exams
- Review mistakes
Exam: 100 marks, 3 hours | MCQs: 20 | Short Ans: 5 | Long Ans: 3
Difficulty: ⭐⭐⭐ Exam-level
🎯 Success Indicators
✅ Define company and explain classifications
✅ Distinguish between types confidently
✅ Solve MCQs with 80%+ accuracy
✅ Score 70+ marks in exam