Preliminary | Corporate & Other Laws for CA Intermediate PDF Download

 Page 1


                                    
   
 
 
PRELIMINARY 
• BACKGROUND AND AIM OF THE ACT 

 It came into existence at once from the date of notification in the Official Gazette 
i.e., from 30th August, 2013,  

 It extends to the whole of India. 

 Structure of the Act: The Companies Act, 2013 has 470 Sections (covered in 29 
Chapters) and 7 Schedules as against 658 Sections (covered in 13 Parts) and 15 
Schedules of the Companies Act, 1956.  

 promote the development of the economy. 

 encourage transparency, accountability and high standards of corporate 
governance; 

 recognize various new concepts and procedures facilitating convenience of doing 
business 

 enforce stricter action against fraud 
 
The word 'company' is derived from the Latin words (com= with or together; and 
panis = bread or meal); and originally referred to an association of persons who took their 
meals together. 
The term 'company' has been defined under Section 2(20) of the Companies Act, 2013. As 
per this, 'company' means a company incorporated under Companies Act, 2013 or 
under any of the previous laws relating to companies.  
'Company' shall be used in the sense as defined above for the entire Companies Act, 2013, 
unless the context otherwise requires.  
1. Separate legal entity 
2. Limited liability 
3. Perpetual Succession 
4. Separate Property 
5. Transferability of Shares  
6. Common Seal 
7. Capacity to sue and be sued 
8. Separate Management:  
9. Voluntary Association for Profit 
 
 IS COMPANY A CITIZEN? 
Although, a company is regarded as a legal person (though artificial), it is not a citizen 
either under the Constitution of India or the Citizenship Act, 1955. 
 
 HAS COMPANY A NATIONALITY AND RESIDENCE?  

 Corporate veil: refers to a separate legal existence enjoyed by the company 
which is distinct from people who own & manage it. 
It is an artificial curtain created by law which separates the company from the 
people who own and manage it. 

 It means looking behind the company as a legal person, i.e., disregarding the 
corporate entity and paying regard, instead, to the realities behind the legal 
facade. Where the Courts ignore the company and concern themselves directly 
with the members or managers, the corporate veil may be said to have been 
lifted. Only in appropriate circumstances, the Courts shall lift the corporate 
veil. 
 
Page 2


                                    
   
 
 
PRELIMINARY 
• BACKGROUND AND AIM OF THE ACT 

 It came into existence at once from the date of notification in the Official Gazette 
i.e., from 30th August, 2013,  

 It extends to the whole of India. 

 Structure of the Act: The Companies Act, 2013 has 470 Sections (covered in 29 
Chapters) and 7 Schedules as against 658 Sections (covered in 13 Parts) and 15 
Schedules of the Companies Act, 1956.  

 promote the development of the economy. 

 encourage transparency, accountability and high standards of corporate 
governance; 

 recognize various new concepts and procedures facilitating convenience of doing 
business 

 enforce stricter action against fraud 
 
The word 'company' is derived from the Latin words (com= with or together; and 
panis = bread or meal); and originally referred to an association of persons who took their 
meals together. 
The term 'company' has been defined under Section 2(20) of the Companies Act, 2013. As 
per this, 'company' means a company incorporated under Companies Act, 2013 or 
under any of the previous laws relating to companies.  
'Company' shall be used in the sense as defined above for the entire Companies Act, 2013, 
unless the context otherwise requires.  
1. Separate legal entity 
2. Limited liability 
3. Perpetual Succession 
4. Separate Property 
5. Transferability of Shares  
6. Common Seal 
7. Capacity to sue and be sued 
8. Separate Management:  
9. Voluntary Association for Profit 
 
 IS COMPANY A CITIZEN? 
Although, a company is regarded as a legal person (though artificial), it is not a citizen 
either under the Constitution of India or the Citizenship Act, 1955. 
 
 HAS COMPANY A NATIONALITY AND RESIDENCE?  

 Corporate veil: refers to a separate legal existence enjoyed by the company 
which is distinct from people who own & manage it. 
It is an artificial curtain created by law which separates the company from the 
people who own and manage it. 

 It means looking behind the company as a legal person, i.e., disregarding the 
corporate entity and paying regard, instead, to the realities behind the legal 
facade. Where the Courts ignore the company and concern themselves directly 
with the members or managers, the corporate veil may be said to have been 
lifted. Only in appropriate circumstances, the Courts shall lift the corporate 
veil. 
 
                                    
TYPES OF COMPANY  
 Company limited by shares:  
  Section 2(22), company limited by shares is a registered company having the liability 
of its members limited to the amount, if any, unpaid on the shares respectively held by 
them. If his shares are fully paid - up, he has nothing more to pay.  
 
 Company limited by guarantee: 
Section 2(21), "guarantee company" is a company having the liability of its members 
limited to such an amount as the members may respectively thereby undertake, by the 
memorandum of association of the company, to contribute to the assets of the 
company. 
 
 But a guarantee company having a share capital raises its initial capital from its 
members, while the normal working funds would be provided from other sources, such 
as fees, charges, subscriptions.  
 
Unlimited Company: 

 As per Section 2(92), unlimited company is a company not having any limit on the 
liability of its members. In such a company the liability of a member ceases when he 
ceases to be a member. 

 Thus, the maximum liability of the members of such a company could extend to their 
entire personal property to meet the debts and obligations of the company.  

 The members of an unlimited company are not liable directly to the creditors of the 
company, unlike in the case of partners of a firm. The liability of the members is only 
towards the company, so long it is a going concern; and in the event of its being 
wound up, only the Liquidator can ask the members to contribute to the assets of the 
company.  
 
Private Company: 
Section 2(68),  

 restricts the right to transfer its shares; 

 limits the number of its members to two hundred (except in case of One Person 
Company) 

 prohibits any invitation to the public to subscribe for any securities of the company. 

 There should be at least two persons to form a private company i.e., the minimum no. 
of members in a private company is two. A private company should have at least two 
directors. The name of a private limited company must end with the words "Private 
Limited". 
 
Public Company: 

 As per Section 2(71), 
•   is not a private company 
•   Seven or more members are required to form the company. 
•   a private company which is a subsidiary of a public company shall also be 
deemed to be a public company for the purposes of this Act, even where such 
subsidiary company continues to be a private company in its articles 
•   A public company should have at least three directors. The name of a public 
limited company must end with the word "Limited". 
 
 
 
 
 
Page 3


                                    
   
 
 
PRELIMINARY 
• BACKGROUND AND AIM OF THE ACT 

 It came into existence at once from the date of notification in the Official Gazette 
i.e., from 30th August, 2013,  

 It extends to the whole of India. 

 Structure of the Act: The Companies Act, 2013 has 470 Sections (covered in 29 
Chapters) and 7 Schedules as against 658 Sections (covered in 13 Parts) and 15 
Schedules of the Companies Act, 1956.  

 promote the development of the economy. 

 encourage transparency, accountability and high standards of corporate 
governance; 

 recognize various new concepts and procedures facilitating convenience of doing 
business 

 enforce stricter action against fraud 
 
The word 'company' is derived from the Latin words (com= with or together; and 
panis = bread or meal); and originally referred to an association of persons who took their 
meals together. 
The term 'company' has been defined under Section 2(20) of the Companies Act, 2013. As 
per this, 'company' means a company incorporated under Companies Act, 2013 or 
under any of the previous laws relating to companies.  
'Company' shall be used in the sense as defined above for the entire Companies Act, 2013, 
unless the context otherwise requires.  
1. Separate legal entity 
2. Limited liability 
3. Perpetual Succession 
4. Separate Property 
5. Transferability of Shares  
6. Common Seal 
7. Capacity to sue and be sued 
8. Separate Management:  
9. Voluntary Association for Profit 
 
 IS COMPANY A CITIZEN? 
Although, a company is regarded as a legal person (though artificial), it is not a citizen 
either under the Constitution of India or the Citizenship Act, 1955. 
 
 HAS COMPANY A NATIONALITY AND RESIDENCE?  

 Corporate veil: refers to a separate legal existence enjoyed by the company 
which is distinct from people who own & manage it. 
It is an artificial curtain created by law which separates the company from the 
people who own and manage it. 

 It means looking behind the company as a legal person, i.e., disregarding the 
corporate entity and paying regard, instead, to the realities behind the legal 
facade. Where the Courts ignore the company and concern themselves directly 
with the members or managers, the corporate veil may be said to have been 
lifted. Only in appropriate circumstances, the Courts shall lift the corporate 
veil. 
 
                                    
TYPES OF COMPANY  
 Company limited by shares:  
  Section 2(22), company limited by shares is a registered company having the liability 
of its members limited to the amount, if any, unpaid on the shares respectively held by 
them. If his shares are fully paid - up, he has nothing more to pay.  
 
 Company limited by guarantee: 
Section 2(21), "guarantee company" is a company having the liability of its members 
limited to such an amount as the members may respectively thereby undertake, by the 
memorandum of association of the company, to contribute to the assets of the 
company. 
 
 But a guarantee company having a share capital raises its initial capital from its 
members, while the normal working funds would be provided from other sources, such 
as fees, charges, subscriptions.  
 
Unlimited Company: 

 As per Section 2(92), unlimited company is a company not having any limit on the 
liability of its members. In such a company the liability of a member ceases when he 
ceases to be a member. 

 Thus, the maximum liability of the members of such a company could extend to their 
entire personal property to meet the debts and obligations of the company.  

 The members of an unlimited company are not liable directly to the creditors of the 
company, unlike in the case of partners of a firm. The liability of the members is only 
towards the company, so long it is a going concern; and in the event of its being 
wound up, only the Liquidator can ask the members to contribute to the assets of the 
company.  
 
Private Company: 
Section 2(68),  

 restricts the right to transfer its shares; 

 limits the number of its members to two hundred (except in case of One Person 
Company) 

 prohibits any invitation to the public to subscribe for any securities of the company. 

 There should be at least two persons to form a private company i.e., the minimum no. 
of members in a private company is two. A private company should have at least two 
directors. The name of a private limited company must end with the words "Private 
Limited". 
 
Public Company: 

 As per Section 2(71), 
•   is not a private company 
•   Seven or more members are required to form the company. 
•   a private company which is a subsidiary of a public company shall also be 
deemed to be a public company for the purposes of this Act, even where such 
subsidiary company continues to be a private company in its articles 
•   A public company should have at least three directors. The name of a public 
limited company must end with the word "Limited". 
 
 
 
 
 
                                    
One Person Company: 

 Definition: As per Section 2(62),one person company is a company which- 
One Person Company' means a company which has only one person as a member.  
It is basically a private company with some unique features.  
As regards the name of a One Person Company, the Act provides that the words "One 
Person Company" or 'OPC' shall be mentioned in brackets below the name of such 
Company, wherever its name is printed, affixed or engraved.  
 

 Law with respect to formation of OPC provides that—  
   The memorandum of OPC shall indicate the name of the other person, who shall, 
in the event of the subscriber’s death or his incapacity to contract, become the 
member of the company. 
   The other person whose name is given in the memorandum shall give his prior 
written consent in prescribed form and the same shall be filed with Registrar of 
companies at the time of incorporation. 
   Such other person may be given the right to withdraw his consent. 
   The member of OPC may at any time change the name of such other person by 
giving notice to the company and the company shall intimate the same to the 
Registrar. 
   Any such change in the name of the person shall not be deemed to be an 
alteration of the memorandum. 
   Only a natural person who is an Indian citizen and resident in India (person who 
has stayed in India for a period of not less than 182 days during the immediately 
preceding one calendar year)-  
a)   Shall be eligible to incorporate a OPC;  
b)   Shall be a nominee for the sole member of a OPC.  
   A natural person shall not be a member of more than a OPC at any point of time 
and the said person shall not be a nominee of more than a OPC. 
   Where a natural person being member in OPC becomes member in another such 
company by virtue of his being a nominee in that OPC, such person shall meet 
the eligibility criteria (as given in point above) within a period of 182 days. 
   No minor shall become member or nominee of the OPC or can hold share with 
beneficial interest.  
   Such Company cannot be incorporated or converted into a company under 
section 8 of the Act. Though it may be converted to private or public companies 
in certain cases. The procedure of conversion is given in the rules 6 & 7 of the 
Chapter II.  
   Such Company cannot carry out Non-Banking Financial Investment activities 
including investment in securities of anybody corporate.  
   OPC cannot convert voluntarily into any kind of company unless two years have 
expired from the date of incorporation, except where the paid up share capital is 
increased beyond fifty lakh rupees or its average annual turnover during the 
relevant period exceeds two crore rupees. 
 
Small Company 
Section 2(85), 
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher 
amount as may be prescribed which shall not be more than ten crore rupees;  
And 
(ii) turnover of which as per as per profit and loss account for the immediately preceding 
financial year does not exceed two crore rupees or such higher amount as may be 
prescribed which shall not be more than one hundred crore rupees: 
Page 4


                                    
   
 
 
PRELIMINARY 
• BACKGROUND AND AIM OF THE ACT 

 It came into existence at once from the date of notification in the Official Gazette 
i.e., from 30th August, 2013,  

 It extends to the whole of India. 

 Structure of the Act: The Companies Act, 2013 has 470 Sections (covered in 29 
Chapters) and 7 Schedules as against 658 Sections (covered in 13 Parts) and 15 
Schedules of the Companies Act, 1956.  

 promote the development of the economy. 

 encourage transparency, accountability and high standards of corporate 
governance; 

 recognize various new concepts and procedures facilitating convenience of doing 
business 

 enforce stricter action against fraud 
 
The word 'company' is derived from the Latin words (com= with or together; and 
panis = bread or meal); and originally referred to an association of persons who took their 
meals together. 
The term 'company' has been defined under Section 2(20) of the Companies Act, 2013. As 
per this, 'company' means a company incorporated under Companies Act, 2013 or 
under any of the previous laws relating to companies.  
'Company' shall be used in the sense as defined above for the entire Companies Act, 2013, 
unless the context otherwise requires.  
1. Separate legal entity 
2. Limited liability 
3. Perpetual Succession 
4. Separate Property 
5. Transferability of Shares  
6. Common Seal 
7. Capacity to sue and be sued 
8. Separate Management:  
9. Voluntary Association for Profit 
 
 IS COMPANY A CITIZEN? 
Although, a company is regarded as a legal person (though artificial), it is not a citizen 
either under the Constitution of India or the Citizenship Act, 1955. 
 
 HAS COMPANY A NATIONALITY AND RESIDENCE?  

 Corporate veil: refers to a separate legal existence enjoyed by the company 
which is distinct from people who own & manage it. 
It is an artificial curtain created by law which separates the company from the 
people who own and manage it. 

 It means looking behind the company as a legal person, i.e., disregarding the 
corporate entity and paying regard, instead, to the realities behind the legal 
facade. Where the Courts ignore the company and concern themselves directly 
with the members or managers, the corporate veil may be said to have been 
lifted. Only in appropriate circumstances, the Courts shall lift the corporate 
veil. 
 
                                    
TYPES OF COMPANY  
 Company limited by shares:  
  Section 2(22), company limited by shares is a registered company having the liability 
of its members limited to the amount, if any, unpaid on the shares respectively held by 
them. If his shares are fully paid - up, he has nothing more to pay.  
 
 Company limited by guarantee: 
Section 2(21), "guarantee company" is a company having the liability of its members 
limited to such an amount as the members may respectively thereby undertake, by the 
memorandum of association of the company, to contribute to the assets of the 
company. 
 
 But a guarantee company having a share capital raises its initial capital from its 
members, while the normal working funds would be provided from other sources, such 
as fees, charges, subscriptions.  
 
Unlimited Company: 

 As per Section 2(92), unlimited company is a company not having any limit on the 
liability of its members. In such a company the liability of a member ceases when he 
ceases to be a member. 

 Thus, the maximum liability of the members of such a company could extend to their 
entire personal property to meet the debts and obligations of the company.  

 The members of an unlimited company are not liable directly to the creditors of the 
company, unlike in the case of partners of a firm. The liability of the members is only 
towards the company, so long it is a going concern; and in the event of its being 
wound up, only the Liquidator can ask the members to contribute to the assets of the 
company.  
 
Private Company: 
Section 2(68),  

 restricts the right to transfer its shares; 

 limits the number of its members to two hundred (except in case of One Person 
Company) 

 prohibits any invitation to the public to subscribe for any securities of the company. 

 There should be at least two persons to form a private company i.e., the minimum no. 
of members in a private company is two. A private company should have at least two 
directors. The name of a private limited company must end with the words "Private 
Limited". 
 
Public Company: 

 As per Section 2(71), 
•   is not a private company 
•   Seven or more members are required to form the company. 
•   a private company which is a subsidiary of a public company shall also be 
deemed to be a public company for the purposes of this Act, even where such 
subsidiary company continues to be a private company in its articles 
•   A public company should have at least three directors. The name of a public 
limited company must end with the word "Limited". 
 
 
 
 
 
                                    
One Person Company: 

 Definition: As per Section 2(62),one person company is a company which- 
One Person Company' means a company which has only one person as a member.  
It is basically a private company with some unique features.  
As regards the name of a One Person Company, the Act provides that the words "One 
Person Company" or 'OPC' shall be mentioned in brackets below the name of such 
Company, wherever its name is printed, affixed or engraved.  
 

 Law with respect to formation of OPC provides that—  
   The memorandum of OPC shall indicate the name of the other person, who shall, 
in the event of the subscriber’s death or his incapacity to contract, become the 
member of the company. 
   The other person whose name is given in the memorandum shall give his prior 
written consent in prescribed form and the same shall be filed with Registrar of 
companies at the time of incorporation. 
   Such other person may be given the right to withdraw his consent. 
   The member of OPC may at any time change the name of such other person by 
giving notice to the company and the company shall intimate the same to the 
Registrar. 
   Any such change in the name of the person shall not be deemed to be an 
alteration of the memorandum. 
   Only a natural person who is an Indian citizen and resident in India (person who 
has stayed in India for a period of not less than 182 days during the immediately 
preceding one calendar year)-  
a)   Shall be eligible to incorporate a OPC;  
b)   Shall be a nominee for the sole member of a OPC.  
   A natural person shall not be a member of more than a OPC at any point of time 
and the said person shall not be a nominee of more than a OPC. 
   Where a natural person being member in OPC becomes member in another such 
company by virtue of his being a nominee in that OPC, such person shall meet 
the eligibility criteria (as given in point above) within a period of 182 days. 
   No minor shall become member or nominee of the OPC or can hold share with 
beneficial interest.  
   Such Company cannot be incorporated or converted into a company under 
section 8 of the Act. Though it may be converted to private or public companies 
in certain cases. The procedure of conversion is given in the rules 6 & 7 of the 
Chapter II.  
   Such Company cannot carry out Non-Banking Financial Investment activities 
including investment in securities of anybody corporate.  
   OPC cannot convert voluntarily into any kind of company unless two years have 
expired from the date of incorporation, except where the paid up share capital is 
increased beyond fifty lakh rupees or its average annual turnover during the 
relevant period exceeds two crore rupees. 
 
Small Company 
Section 2(85), 
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher 
amount as may be prescribed which shall not be more than ten crore rupees;  
And 
(ii) turnover of which as per as per profit and loss account for the immediately preceding 
financial year does not exceed two crore rupees or such higher amount as may be 
prescribed which shall not be more than one hundred crore rupees: 
                                    
Provided that nothing in this clause shall apply to--  
(i) a holding company or a subsidiary company;  
(ii) a company registered under section 8; or 
(iii) a company or body corporate governed by any special Act.  
 It is basically a private company meeting prescribed threshold. 
 
Following are some of the important relaxations provided to a small company: 
(i)  Financial statements of small company may not include the cash flow statement. 
(ii)  Small company shall be deemed to have complied with the provisions relating to 
Board meeting if at least one meeting of the Board of directors has been conducted in 
each half of a calendar year and the gap between the two meetings is not less than 
ninety days. 
(iv) Merger or amalgamation between two or more small companies have been simplified 
without the requirement of court process.  
 
Holding & Subsidiary Company 
(a)  that other controls the composition of its Board of Directors;  
(b)  that other exercises or-controls more than one-half of the total voting power either at 
its own or together with one or more of its subsidiary companies; or  
(c)  the first-mentioned company is a subsidiary of any company which is  that other's 
subsidiary.  
 
Associate company 
(a) Section 2(6), In relation to another company, means a company in which that other 
company has a significant influence, but which is not a subsidiary company of the 
company having such influence and includes a joint venture company. 
(b) "significant influence" means control of at least twenty per cent. of total voting 
power, or control of or participation in business decisions under an agreement;  
 
BASED ON CAPITAL 
• Listed company: 
• Unlisted company:  
 
OTHER COMPANIES 
1. Government Company 

 Section 2(45), government company means any company in which not less than 
fifty- one per cent. of the paid-up share capital is held by- 
(i)   the Central Government, or 
(ii)    by any State Government or Governments, or 
partly by the Central Government and partly by one or more State 
Governments, 

 And the section includes a company which is a subsidiary company of such a 
Government company; 
 
2. Foreign Company 
As per Section 2(42),  
(i)    has a place of business in India whether by itself or through an agent, physically 
or through electronic mode; and 
(ii)  conducts any business activity in India in any other manner. 
 
Page 5


                                    
   
 
 
PRELIMINARY 
• BACKGROUND AND AIM OF THE ACT 

 It came into existence at once from the date of notification in the Official Gazette 
i.e., from 30th August, 2013,  

 It extends to the whole of India. 

 Structure of the Act: The Companies Act, 2013 has 470 Sections (covered in 29 
Chapters) and 7 Schedules as against 658 Sections (covered in 13 Parts) and 15 
Schedules of the Companies Act, 1956.  

 promote the development of the economy. 

 encourage transparency, accountability and high standards of corporate 
governance; 

 recognize various new concepts and procedures facilitating convenience of doing 
business 

 enforce stricter action against fraud 
 
The word 'company' is derived from the Latin words (com= with or together; and 
panis = bread or meal); and originally referred to an association of persons who took their 
meals together. 
The term 'company' has been defined under Section 2(20) of the Companies Act, 2013. As 
per this, 'company' means a company incorporated under Companies Act, 2013 or 
under any of the previous laws relating to companies.  
'Company' shall be used in the sense as defined above for the entire Companies Act, 2013, 
unless the context otherwise requires.  
1. Separate legal entity 
2. Limited liability 
3. Perpetual Succession 
4. Separate Property 
5. Transferability of Shares  
6. Common Seal 
7. Capacity to sue and be sued 
8. Separate Management:  
9. Voluntary Association for Profit 
 
 IS COMPANY A CITIZEN? 
Although, a company is regarded as a legal person (though artificial), it is not a citizen 
either under the Constitution of India or the Citizenship Act, 1955. 
 
 HAS COMPANY A NATIONALITY AND RESIDENCE?  

 Corporate veil: refers to a separate legal existence enjoyed by the company 
which is distinct from people who own & manage it. 
It is an artificial curtain created by law which separates the company from the 
people who own and manage it. 

 It means looking behind the company as a legal person, i.e., disregarding the 
corporate entity and paying regard, instead, to the realities behind the legal 
facade. Where the Courts ignore the company and concern themselves directly 
with the members or managers, the corporate veil may be said to have been 
lifted. Only in appropriate circumstances, the Courts shall lift the corporate 
veil. 
 
                                    
TYPES OF COMPANY  
 Company limited by shares:  
  Section 2(22), company limited by shares is a registered company having the liability 
of its members limited to the amount, if any, unpaid on the shares respectively held by 
them. If his shares are fully paid - up, he has nothing more to pay.  
 
 Company limited by guarantee: 
Section 2(21), "guarantee company" is a company having the liability of its members 
limited to such an amount as the members may respectively thereby undertake, by the 
memorandum of association of the company, to contribute to the assets of the 
company. 
 
 But a guarantee company having a share capital raises its initial capital from its 
members, while the normal working funds would be provided from other sources, such 
as fees, charges, subscriptions.  
 
Unlimited Company: 

 As per Section 2(92), unlimited company is a company not having any limit on the 
liability of its members. In such a company the liability of a member ceases when he 
ceases to be a member. 

 Thus, the maximum liability of the members of such a company could extend to their 
entire personal property to meet the debts and obligations of the company.  

 The members of an unlimited company are not liable directly to the creditors of the 
company, unlike in the case of partners of a firm. The liability of the members is only 
towards the company, so long it is a going concern; and in the event of its being 
wound up, only the Liquidator can ask the members to contribute to the assets of the 
company.  
 
Private Company: 
Section 2(68),  

 restricts the right to transfer its shares; 

 limits the number of its members to two hundred (except in case of One Person 
Company) 

 prohibits any invitation to the public to subscribe for any securities of the company. 

 There should be at least two persons to form a private company i.e., the minimum no. 
of members in a private company is two. A private company should have at least two 
directors. The name of a private limited company must end with the words "Private 
Limited". 
 
Public Company: 

 As per Section 2(71), 
•   is not a private company 
•   Seven or more members are required to form the company. 
•   a private company which is a subsidiary of a public company shall also be 
deemed to be a public company for the purposes of this Act, even where such 
subsidiary company continues to be a private company in its articles 
•   A public company should have at least three directors. The name of a public 
limited company must end with the word "Limited". 
 
 
 
 
 
                                    
One Person Company: 

 Definition: As per Section 2(62),one person company is a company which- 
One Person Company' means a company which has only one person as a member.  
It is basically a private company with some unique features.  
As regards the name of a One Person Company, the Act provides that the words "One 
Person Company" or 'OPC' shall be mentioned in brackets below the name of such 
Company, wherever its name is printed, affixed or engraved.  
 

 Law with respect to formation of OPC provides that—  
   The memorandum of OPC shall indicate the name of the other person, who shall, 
in the event of the subscriber’s death or his incapacity to contract, become the 
member of the company. 
   The other person whose name is given in the memorandum shall give his prior 
written consent in prescribed form and the same shall be filed with Registrar of 
companies at the time of incorporation. 
   Such other person may be given the right to withdraw his consent. 
   The member of OPC may at any time change the name of such other person by 
giving notice to the company and the company shall intimate the same to the 
Registrar. 
   Any such change in the name of the person shall not be deemed to be an 
alteration of the memorandum. 
   Only a natural person who is an Indian citizen and resident in India (person who 
has stayed in India for a period of not less than 182 days during the immediately 
preceding one calendar year)-  
a)   Shall be eligible to incorporate a OPC;  
b)   Shall be a nominee for the sole member of a OPC.  
   A natural person shall not be a member of more than a OPC at any point of time 
and the said person shall not be a nominee of more than a OPC. 
   Where a natural person being member in OPC becomes member in another such 
company by virtue of his being a nominee in that OPC, such person shall meet 
the eligibility criteria (as given in point above) within a period of 182 days. 
   No minor shall become member or nominee of the OPC or can hold share with 
beneficial interest.  
   Such Company cannot be incorporated or converted into a company under 
section 8 of the Act. Though it may be converted to private or public companies 
in certain cases. The procedure of conversion is given in the rules 6 & 7 of the 
Chapter II.  
   Such Company cannot carry out Non-Banking Financial Investment activities 
including investment in securities of anybody corporate.  
   OPC cannot convert voluntarily into any kind of company unless two years have 
expired from the date of incorporation, except where the paid up share capital is 
increased beyond fifty lakh rupees or its average annual turnover during the 
relevant period exceeds two crore rupees. 
 
Small Company 
Section 2(85), 
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher 
amount as may be prescribed which shall not be more than ten crore rupees;  
And 
(ii) turnover of which as per as per profit and loss account for the immediately preceding 
financial year does not exceed two crore rupees or such higher amount as may be 
prescribed which shall not be more than one hundred crore rupees: 
                                    
Provided that nothing in this clause shall apply to--  
(i) a holding company or a subsidiary company;  
(ii) a company registered under section 8; or 
(iii) a company or body corporate governed by any special Act.  
 It is basically a private company meeting prescribed threshold. 
 
Following are some of the important relaxations provided to a small company: 
(i)  Financial statements of small company may not include the cash flow statement. 
(ii)  Small company shall be deemed to have complied with the provisions relating to 
Board meeting if at least one meeting of the Board of directors has been conducted in 
each half of a calendar year and the gap between the two meetings is not less than 
ninety days. 
(iv) Merger or amalgamation between two or more small companies have been simplified 
without the requirement of court process.  
 
Holding & Subsidiary Company 
(a)  that other controls the composition of its Board of Directors;  
(b)  that other exercises or-controls more than one-half of the total voting power either at 
its own or together with one or more of its subsidiary companies; or  
(c)  the first-mentioned company is a subsidiary of any company which is  that other's 
subsidiary.  
 
Associate company 
(a) Section 2(6), In relation to another company, means a company in which that other 
company has a significant influence, but which is not a subsidiary company of the 
company having such influence and includes a joint venture company. 
(b) "significant influence" means control of at least twenty per cent. of total voting 
power, or control of or participation in business decisions under an agreement;  
 
BASED ON CAPITAL 
• Listed company: 
• Unlisted company:  
 
OTHER COMPANIES 
1. Government Company 

 Section 2(45), government company means any company in which not less than 
fifty- one per cent. of the paid-up share capital is held by- 
(i)   the Central Government, or 
(ii)    by any State Government or Governments, or 
partly by the Central Government and partly by one or more State 
Governments, 

 And the section includes a company which is a subsidiary company of such a 
Government company; 
 
2. Foreign Company 
As per Section 2(42),  
(i)    has a place of business in India whether by itself or through an agent, physically 
or through electronic mode; and 
(ii)  conducts any business activity in India in any other manner. 
 
                                    
3. Company not for profit/Non-Profit companies 
(i) Object of formation of Section 8 Company : Section 8 of the Companies Act, 
2013 deals with the formation of companies which are formed to promote the 
charitable objects of commerce, art, science, sports, education, research, social 
welfare, religion, charity, protection of environment etc. Such company intends to 
apply its profit in promoting its objects and prohibiting the payment of any 
dividend to its members. 
 
(ii) Power of Central government to issue the license : 
   This section allows the Central Government to register such person or 
association of persons as a company with limited liability without the 
addition of words ‘Limited’ or ‘Private limited’ to its name, by issuing 
licence on such conditions as it deems fit. The registrar shall on application 
register such person or association of persons as a company under this 
section. 
   In exercise of powers conferred by Section 458 of the Companies Act, 2013 
the Central Government hereby delegates to the ROC the power & 
functions vested in it under the section 8 (1), subject to the condition that 
the Central Government may revoke such delegation of powers or may 
itself exercise the powers & functions under the said sections, if in its 
opinion, such course of action is necessary in the public interest.  
(iii) Privileges of Limited Company: On registration the company shall enjoy same 
privileges and obligations as of a limited company. 
(iv) A firm may be a member of the company registered under section 8. 
(v) Alteration of Memorandum and Articles: A company registered under this 
section shall not alter the provisions of its memorandum or articles except with 
the previous approval of the Central Government. 
 
4. Dormant company: 

 Where a company is formed and registered under this Act for a future project or 
to hold an asset or intellectual property and has no significant accounting 
transaction, such a company or an inactive company may make an application to 
the Registrar in such manner as may be prescribed for obtaining the status of a 
dormant company. 
 

 "Significant accounting transaction" means any transaction other than— 
(i)   payment of fees by a company to the Registrar; 
(ii)   payments made by it to fulfil the requirements of this Act or any other law; 
(iii)   allotment of shares to fulfil the requirements of this Act; and 
(iv)   payments for maintenance of its office and records. 
 
5. Nidhi company: 
 As per Section 406, a company which has been incorporated as a nidhi with the object 
of cultivating the habit of thrift (cost cutting) and savings amongst its members, 
receiving deposits from, and lending to, its members only, for their mutual benefits and 
which complies with such rules as are prescribed by the Central Government for 
regulation of such class of companies.