A promoter can Incorporate or Form Certain types of companies under Companies act, 2013, based on their requirements. This article discusses the Types of Companies that can be formed under the companies act,2013.
As per Section 3(20) of the Companies act,2013, the company can be defined as an entity which is registered under the Companies Act,2013 or any other Previous Company Laws.
The company can be Broadly Categorized as follows
- Private Limited Company
- Public Limited Company
- One Person Company
- Companies with Charitable Purpose (Section-8)
The Above Prescribed Companies can be divided by the following measures
- Company Limited by Shares
- Company Limited by Guarantee
- With Capital
- Without Capital
- Unlimited Company
- With Capital
- Without Capital
Company Limited by Shares
A company limited by shares means the company where the liability of the members of the company is limited by the memorandum of the amount, if any, unpaid on the respective shares held by them.
Company Limited by Guarantee
A company limited by Guarantee means the company where the liability of the members of the company is limited by the memorandum to such amount, which is guaranteed by the members to contribute to the assets of the company in case of wound up.
Unlimited Company
Unlimited Company is the company where the liability of the members is unlimited.
Private Limited Company
As per Section 3(68) of companies act,2013, having a minimum prescribed paid-up share capital.
Private limited companies have certain restrictions
- Restriction on Transfer of Shares (shares cannot be freely transferable)
- Restricts on a number of members to 200.
- Prohibition on the invitation to the public for the subscription of shares
- Number of directors requirement
A private limited company can be formed as the following types :
- A company limited by shares
- Company Limited by Guarantee (with or without capital)
- Unlimited Company (with or without capital)
Persons Required
Two or more persons are required to form a private limited company.
In case number of persons required falls below two and the company carries it’s business operations for a period of 6 months or more, the existing member of the company carrying business operations for those six months and he is aware of the fact that the company is carrying it’s business operations with less than two, he shall be severally liable and sued for the whole debts contracted during the period after six months.
Public Limited Company
As per section 3(71) of companies act,2013, a public company is defined as the company which is not a private company and having a minimum paid-up share capital as may be prescribed.
Restriction on the number of members
Minimum and Maximum number of directors
A public limited company can be formed as the following types :
- A company limited by shares
- Company Limited by Guarantee (with or without capital)
- Unlimited Company (with or without capital)
Persons required
Seven or more persons are required to form a Public limited company
In case number of persons required falls below seven and the company carries it’s business operations for a period of 6 months or more, the existing members of the company has carrying it’s business operations for those six months and they have been aware of the fact that the company is carrying it’s business operations with less than seven members, they shall be severally liable and severally sued for the whole debts contracted during the period after six months.
One Person Company
As per section 3(62) of the companies act, 2013, a one-person company has been defined as a company which has only one person as a member.
Persons Required
Only one person (who is a citizen and resident of India) is required to form a One Person Company.
In the case of One Person Company, Nominee (who is a citizen and resident of India) should be appointed and the nominee name shall be specified in the Memorandum Of Association (MOA) of the company who shall take his place in case of his Incapacity to contract or Death.
The words OPC shall be printed in brackets below the name of One Person Company.
Companies with Charitable Purpose (Section-8)
As per the provisions of the Companies act,2013, The Companies which are formed to promote the charitable objects of art, sports, education, commerce, social welfare, religion, charity, etc..,
Companies formed under section 8 of companies act, should use profits only for the purpose of the promotion of its charitable objects of the company.
It cannot distribute any Dividends.