Meaning and Definition of Company
Company means an artificial person incorporated under the Companies Act, having a separate existence and perpetual succession from its members, formed for the fulfillment of a particular purpose and having a common seal.
1. According to Justice Lindley, “company means association which raises capital for the attainment of a common object.”
2. L. According to H. Hanney, “A company is an artificial person created by law, having a separate and permanent existence from its members and having a common currency 3. According to section 2(20) of the Companies Act, 2013, “ the meaning of the company
which is amalgamated or incorporated under this Act or any earlier Companies Act.”
Various Kind of Company
In the present economic world, many types of companies are formed to manage the increasing demand for capital for business and industries. Even the central and state governments also form companies for the organization of public sector and government industries by special act. Apart from this, there has been a lot of development of companies in the private sector as well. These companies are as follows
(I) Classification on the basis of amalgamation
(Classification on the basis of Incorporation) Companies can be of following three types on the basis of amalgamation
(1) By Royal Charter – These are the companies whose amalgamation is done by the state mandate. They are made for the fulfillment of certain purposes; For example, East India Company, Hudson Way Company etc. This is the ancient method of company formation, which was prevalent in England, where companies were formed by royal decree. Such companies do not exist in today’s democratic era.
(2) Companies Incorporated by Special Act of Parliament These are the companies which are formed for national importance by a special Act of Parliament; Like- Reserve Bank of India, State Bank of India, Life Insurance Corporation etc. Such companies are also called statutory companies. Although the liability of these companies is limited, but they are not required to write the word ‘Limited’ at the end of their name.
Companies Act) This is the most popular system of company formation. The amalgamation of companies is done under the Companies Act of the country. Such companies are also called registered companies; For example, Banking Companies Act, 1949 AD for banking companies, Insurance Companies Act for insurance companies, 1938 AD, Electricity Supply Act for electricity companies, 1948 AD etc. etc.
(II) Classification on the basis of Liability
Companies can be of two types on the basis of liability (1) Limited Liability Company – Limited Liability Company
The liability of the members of the companies is limited. It is mandatory for such companies to use the word ‘Limited’ at the end of their name; Like – Hans Kala Private Limited These companies are of the following two types (i) Companies Limited by Shares – The liability of every shareholder in a company limited by shares is limited to the amount unpaid on the shares purchased by them.
it happens. For example, if the shareholder has paid ₹ 70 on a share of ₹ 100 and ₹ 30 is yet to be paid,
So his liability will be limited to ₹ 30 only. Such companies are more prevalent in India. (ii) Companies Limited by Guarantee: The liability of the members in such companies is limited to the amount of guarantee given by them. It is mentioned in the memorandum of council of such companies that the members of the company give a guarantee to the company that if the company becomes insolvent at the time of their membership or within one year of the termination of membership, they will contribute a certain amount to the company’s treasury. Will submit The purpose of formation of such companies is not to earn profit, but to work for social welfare, like
Sports organizations etc. These companies can be with share capital and without share capital. (2) Unlimited Liability Company: In unlimited companies, the liability of the members is unlimited like a partnership firm, but the members of the company are only jointly liable jointly and not individually each member in proportion to his interest. Is liable for the liabilities before the termination of membership and he will also be liable for one year after the termination of his membership, these companies can be private or public company with share capital and without share capital.
(III) on the basis of number of members
(On the basis of Number of Members) Companies can be divided into the following two parts on the basis of the number of members (1) Private or Alok Company (Private Company) Section 2 of the Companies Act 2013
(68), a private company is a company having a minimum paid-up capital of ? one lakh and by its Articles
(i) withholds the right to transfer its shares; (ii) The number of members of the company is limited to 200. In counting this number 200, only one member of the joint shareholder is counted and the existing and old employee shareholders of the company are not counted; And
(iii) Invitation to the public for the sale of shares and debentures of the company is prohibited. (2) A clear definition of a public company has not been given in the Public Company Companies Act. As per section 2 (71) of the Companies Act, 2013, “public company” means a company which is- (i) not a private company, (ii) having a minimum paid-up capital of ? five lakh and (iii) A public or private company which is a subsidiary of a company which is not a private company. In other words, a public company is one which possesses the following characteristics:
(i) there is no restriction on the transfer of shares; (ii) be at least 7 members and there is no restriction on the maximum number; and (iii) be free to sell shares and debentures to the public. (iv) having a minimum paid-up capital of at least T five lakh. (v) every company (private or subsidiary) which is a subsidiary of a public company.
(3) One Person Company – According to Section 2 (62) of the Companies Act, 2013, “One Person Company means a company having only one member.” Thus a one person company is also an artificial person which has been amalgamated under the company with only one member and which has a separate existence from the member under the Decision Tax Act, 2013 and enjoys perpetual succession. A one person company can be amalgamated as a limited or unlimited liability company. In the case of a limited liability company, the liability of its member is also limited to the amount unpaid on the shares held by him. Every one person shall have a common seal of the company on which the name of the company shall be engraved or engraved. By setting up a one person company, even a single person can start and operate risky works with limited liability. This will encourage young entrepreneurs. NS
(IV) Classification on the basis of Control
On the basis of control, companies can be of the following types (1) Holding Company Section 2 (46) of the Companies Act, 2013
According to, “A company shall be said to be a subsidiary company of another company or companies when the other company or companies are its subsidiaries.” Thus, holding company means (a company which has direct or indirect control over any other company or companies. In other words, when a company has a majority of its board of directors to obtain its control in another company. If it acquires the right to nominate members or acquires ownership of more than 50% of its equity share capital, then such a company is called a holding company.(2) Subsidiary Company – As per the Companies Act, 2013 Section 2 (870
Subsidiary company means a company on which the holding company has the following
get any power in
(i) When the holding company controls the constitution of the board of directors of this company. (ii) when the holding company controls more than half the share capital or voting power of this company.
Thus it is clear that subsidiary company means a company whose board of directors is controlled by another company or whose total equity share capital is controlled by another company.
(3) Associate company – By associate or associated company, means a company in which another company has a significant influence, but the company is not a subsidiary of the company having that effect. A company is considered important to the company when that other company controls at least 20% of that company’s total equity or that other company controls the company’s business decisions under a contract.
(V) Classification on the basis of Ownership Companies can be divided into the following three parts on the basis of ownership
(1) Government Company – According to section (45) of the Companies Act, 2013, a Government company means a company whose paid-up share capital is not less than 51% of the share capital of the Central Government or the State Government or Central and partly with more than one State Governments. Subsidiaries of government companies will also be treated as government companies. Every government company has a separate legal entity from the state government that created or established it. Even a government company can sue the government and the government can also sue a government company. Government companies are audited by those auditors appointed by the Central Government in consultation with the ‘Comptroller & Auditor General’ of India.
(2) Non-Government Companies: Companies that are not government companies are called non-government companies. Most of such companies exist in India.
(VI) Classification on the basis of nationality
(Classification on the basis of Nationality) Companies can be divided into two parts on the basis of nationality (1) Inland Companies – Domestic companies mean such companies.
Which are manufactured in India and which work under the Companies Act 2013. Some domestic companies are such that they have been formed under the Companies Act, but separate acts have been made for their regulation and control. These special types of companies can be divided into the following parts
(i) Banking Company The companies which do banking business (ie, deal in money and letters of credit), are called banking companies. These companies are registered under the Indian Companies Act, but for their regulation and control, the Banking Companies Act, 1949 was made.
(ii) Insurance Company – “A company which carries on the business of insurance or the business of insurance along with other businesses, is called an insurance company.” The amalgamation of insurance companies is also done under the Companies Act, but they are regulated by the Insurance Companies Act, 1938. (iii) Charitable Company – When an association is made under the Companies Act
If registered as a limited liability company for the following purposes
it’s called charitable
(a) for the advancement of trade, art, science, charity or other profitable purposes, and
(b) established to use its profits or other income for the pursuit of suitable purposes and to pay dividends to its members. (iv) Investment Company Those companies whose main objective is to invest in shares, debentures or other types of securities are called investment companies.
(2) Foreign Companies – Foreign companies means such companies which have been amalgamated in any other country outside India and which also carry on their business in India. Under the Indian Companies Act, they are divided into the following two parts (i) Companies that have established their business in India even before the commencement of the Act.
(ii) Companies which established their business in India after the enactment of the Act. Every foreign company, which has established its business in India after the commencement of this Act, shall, within 30 days, submit the necessary forms (address of registered office, liability of members, copy of the memorandum and articles of association etc.) to the Registrar. .