Forms of Business Organisation-2 — OCM STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceOCMForms of Business Organisation-23 Marks
Question
Explain the types of Company ?
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Answer
The different types of companies are explained below:
$(A)$ Statutory company:
A statutory company is a public enterprise brought into existence by a special act of the parliament or legislative assembly.
Reserve Bank of India $(RBI)$, Life Insurance Corporation $(LIC)$ of India, etc. are statutory companies.
$(B)$ Companies from the view point of number of members:
$(I)$ Public company:
As per Companies Act, a company which is not a private company is called a public company.
A public company needs to have minimum $7$ members. There s no limit on maximum number of members.
Such companies can invite public to buy its shares and debentures. Moreover, one can easily transfer the shares.
From liability of member’s point of view a public limited company can be divided In three parts. They are:
$1.$ Company limited by share capital:
In such companies the liability of members is limited to the face value of the number of shares held by them These companies put a word Limited’ at the end of the company. name. For example. National Insurance Company Limited.
$2.$ Company limited by guarantee :
A company limited by guarantee does not usually have a share capital or shareholders but instead has members who act as guarantors.
The guarantors give an undertaking to contribute the amount guaranteed by them at the time of liquidation of the company.
$3.$ Company by unlimited liability:
A company in which the liability of members is unlimited is called a company by unlimited liability.
If the debts of such companies exceed their assets or if the company goes under liquidation than the members may have to pay their contribution even by selling their personal assets.
$(II)$ Private company:
A private company is a company that has minimum $2$ members and maximum $200$ members.
Unlike public company there are restrictions on the transfer of shares of a private company.
From liability point of view a private company can be divided into three types. They are:
$1.$ Company limited by share:
The liability of the members is limited to the face value of the number of shares they possess.
Such private company has to put the words ‘Private Limited’ at the end of its name. For example, $ABC$ Private Limited.
$2.$ Company limited by guarantee:
A private company in which the liability of members of the company is limited to the amount of guarantee given by them is called a company limited by guarantee.
In case of liquidation of the company the members have to pay the guaranteed amount to the company.
Such companies add the word ‘private’ at the end of company name.
$3.$ Company with unlimited liability:
A company in which the liability of members is unlimited is called a company by unlimited liability.
If the debts of such companies exceed their assets or if the company goes under liquidation than the members may have to pay their contribution even by selling their personal assets.
Such companies add the word ‘private’ at the end of company name.
$(III)$ One person company:
The concept of One Person Company $(OPC)$ is a new form of private company introduced by the Companies Act, $2013$. It consists of only one member (person) and so the name.
One Person Company can enter into contract with director who is its member (i.e. the person itself as a director) through written consent of that person.
The $OPC$ needs to present the Memorandum and Articles before the Registrar of Companies during the incorporation of the company.
$(C)$ Companies from the point of view of domination:
$1.$ Government company:
A company whose $51 \%$ or more capital is held by either $(1)$ Central government or $(2)$ State government or $(3)$ more than one state governments or $(4)$ Central government and one or more than one state governments is called a government company.
For example, Ashok Hotels Limited, Bharat Heavy Electricals Limited $(BHEL)$, Bharat Sanchar Nigam Limited $(BSNL)$, etc. are government companies.
$2.$ Holding company:
A company which holds more than $50\%$ shares of another company and holds the right to appoint majority of directors of that company is called a holding company.
$3.$ Subsidiary company:
A company whose more8 shares are with the holding company and the right to appoint majority of its directors also lie with the holding company is called a subsidiary company.
$(D)$ Types of companies with the view point of place of registration.
$1.$ Indian company:
A company which is registered in India under the Indian Companies Act or under the special act passed by the parliament is called an Indian company.
An Indian company can be private company, public company or government company.
$2.$ Foreign company:
A company which is registered outside India and whose registered office is also outside India, but whose place of business is in India is called a foreign company. For example, Vodafone.
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