Get Register Your Company in India
Company is formed for the purpose of business having a distinct identity or name and limited liability. It is an association of persons created by the process of law. Under Indian law the rules are set down in The Companies Act 1956 for the establishment of both public and private companies. A company is formed by registering the Memorandum and Articles of Association with the State Registrar of Companies of the state in which the office is located. Under the Companies Act, an entrepreneur can form mainly two types of companies, namely a private company or a public company. The companies can be further classified as:
1) Public Company
2) Private Company
3) Limited and Unlimited Companies
4) Section 25 Company or Non Profit Organization(NPO)
5) Holding and Subsidiary Companies
6) Government Company
7) Foreign Company
Public Company - It is a company in which shares are held collectively by the general public instead of few individuals. Minimum number of members is seven and if members become less than seven than the company is no longer a public company. Its shares are freely transferable and there is no ceiling on its membership. It can invite general public to subscribe to its shares. Public Company can be registered with minimum of rupees five lakh as capital with seven members and three directors.
Private Company - It is the most popular form of business entity used for Foreign Investors in India, including USA investors in India. It restricts the right of members to transfer its shares and limits the number of its members to fifty. Minimum number of members in a private company is two. A private company does not need a separate certificate from the Registrar of Companies for the commencement of its business. Public Company can be registered with minimum of rupees two lakh as capital with two members and two directors.
Limited and Unlimited Companies - Companies may be limited, limited by shares or limited by guarantee.
a) Company limited by shares - In this the liability of the members is limited to the amount of uncalled share capital. No member of the company limited by the shares can be called upon to pay more than the face value of shares or so much of it as has remained unpaid. The members of limited companies have no liability in case of fully paid up shares.
b) Company limited by the guarantee – In this company the liability of members are limited by its Memorandum of Association (MoA) to such amount as the members may thereby undertake to pay if necessary on liquidation of the company. The liability of the members to pay the guaranteed amount arises only when the company has gone into liquidation and not when it is a going concern.
c) Unlimited Company - In this company the liability of the members is similar to that of the liability of the partners in a partnership firm and the members of an unlimited company are unlimited.
Section 25 Company or Nonprofit Organization - It is a company established for promoting commerce, science, art, religion, charity or other socially useful objectives .The company apply its profits and other income in promotion of its objectives instead of paying any dividend to its members. Under Section 25, the Central Government may allow companies to remove the word "Limited / Private Limited” from the name. Many privileges and exemptions are provided to these companies under Company Law like it is exempted from requirement of Minimum Paid-up capital and Stamp duty for registration.
Holding and Subsidiary Companies - When the other company controls the board of directors and holds more than half (>50%) in face value of its equity share capital than the company is Holding or Subsidiary Company. The holding company has the power of discretion over the subsidiary company. It can appoint or remove all or majority of directors without consent or concurrence of any other person.
Government Company - A Government Company is the one in which all the decisions related to management and operations are taken by the government and 51% or more is held either by the central government or by the state government or is jointly held by the central and the state government.
Foreign Company- which has set up its business in India and has been incorporated outside India, under the law of some other country, is registered in that country and is called a Foreign Company.
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