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Explaining the Most Important Types of Company

When you plan to register your company there is a lot of options available. That’s why it is very important to choose the right one before you start your company. In this article, we’ll be discussing the types of companies with examples. We really hope that you will find this article informative. Please read the article thoroughly and don’t forget to tell us in the comments about your views.

Company:

A company is a legal entity formed by a group of individuals to engage in and operate a business—commercial or industrial—enterprise. A company may be organized in various ways for tax and financial liability purposes depending on the corporate law of its jurisdiction.

Investopedia

Types of Companies:

On the Basis of Incorporation:

Royal Chartered Companies

Statutory Companies

Registered or Incorporated Companies

On the Basis of Number of Members:

Public Limited

Private Limited

One Person

On the Basis of Liability:

Limited by Shares Companies

Limited by Guarantee Companies

Unlimited Liability Companies

On the Basis of Incorporation:

In this category, those companies fall that are created by special order or special act or they are registered as a normal company.

Royal Chartered Companies:

Royal Chartered companies are created either by the order of king or queen or by special order.

Example:

Bank of England

East India Company etc.

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Statutory Companies:

Statutory companies are incorporated by means of a special legislature or special act. These companies have special compulsory powers.

Example:

Life Insurance Corporation of India

Reserve Bank of India

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Registered or Incorporated Companies:

In this section, those companies which are incorporated under the companies’ act are listed. Incorporated companies come into existence when the register themselves and when the registrar passes the certificate of incorporation.

Examples:

Google India Pvt Limited

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On the Basis of Number of Members:

Public Limited Companies:

Public Limited Company has limited liability. That means that its existence doesn’t get affected in the case of retirement or death of shareholders. For the formation of a Public limited company, you need at least seven members. And there is no maximum limit. The Board of directors performs all the important decisions of the company. And the shareholders can’t participate in the daily management of the company.

Examples:

Barclays Public Limited Company

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Private Limited Companies:

The minimum number of members for a private limited company is 2 and the maximum number of members can be up to 50. As well as liability is concerned it can be limited or unlimited it depends on the type of company. The general public can’t subscribe to shares and debentures of a private limited company. These kinds of companies do not need a certificate of commencement and it can start its business after receiving a certificate of incorporation.

One Person Company:

It is a company type that was introduced in the companies’ act of 2013 in India. It resembles sole proprietorship but it differs in a way that it has limited liability while sole proprietorship has unlimited liability. And that’s why the personal assets can’t be sold out in case of losses.

Based on the Liability of the Members:

Companies Limited by Shares

In this category, the liability of the shareholders remains limited to extent of the face value of shares. The majority of Pvt. Ltd. companies fall into this category.

Companies Limited by Guarantee

In these types of companies at the moment of liquidation, shareholders promise to pay a certain amount to cover the liabilities.

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Unlimited Companies:

In these types of companies, the liability of the shareholders is unlimited. And in case of loss, the personal assets can also be sold out to pay the debts of the companies. This type of company is not so popular because of the unlimited liability.

Huma
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