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Information about the various kinds of companies (Business Studies).

Information about the various kinds of companies (Business Studies).

Joint stock company can be classified into different kinds from different angles and considerations. Various kinds of companies can be found from the following angles or basis:

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  • On the basis of incorporation.
  • On the basis of nature of liability.
  • From the point of view of nationality.
  • From the point of view of transferability of shares.
  • From the point of view of ownership.

On the basis of incorporation:

From the point of view of incorporation or formation, there are there types of companies like:

Charted company: The companies formed by the charter or special permission by the kings are called chartered company. These companies function and regulate their activities according to the charter laid down. the glaring example of a chartered company is the East India Company which is formed by the special royal charter of the British crown.

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Statutory company: The companies formed by the special act of the state legislature or the parliament are called statutory company. These companies are governed by the special act of the parliament. The glaring examples of statutory companies in India are, the Industrial Finance Corporation of India (IFCI), the Life Insurance Corporation of India (LIC), the Reserve Bank of India (RBI), and the Indian Posts and Telegraph department. The best examples of statutory companies in Orissa are State Financial Corporation of Orissa (OSFC) and the Industrial Development Corporation of Orissa (IDC).

Registered company: The companies registered and incorporated under the Indian Companies Act, 1956 are called registered company. The registration of companies are made in the registrar of companies which is a central government official.

On the basis of nature of liability:

From the point of view of liabilities, there are three types of companies called:

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Company with limited liabilities: In this type of company, the liability of the shareholders is unlimited. In case of winding up of a company, the shareholders are liable to contribute the entire amount necessary to meet the obligation of the company. These companies are rare and the Indian companies act does not provide not for existence of such type of companies.

Liability limited by guarantee: In this company the liability of its members is limited upto the guaranteed amount. The members of the company furnish guarantee to pay an amount in addition to the value of their share held. The additional amount beyond the share amount is laid in the memorandum of Association. The shareholders will contribute the guaranteed amount in case of dissolution. These companies are formed with non-profit making objectives like chamber of commerce and other social clubs.

Liability limited by shares: In this type of company, the liability of the member is limited to the extent of the face value of the shares held by the members. These type of companies are most popular and common type of companies found in modern times.

From the point of view nationality:

From the nationality point of view, there are two types of companies called:

  1. National company: The companies formed and operated within national boundary of a country are called national companies. The operation of these companies are restricted within the country of registration.
  2. Multi-national company: The companies which operate beyond the country of the original registration are called multinational companies.

On the basis of transferability of shares:

From the point of view of transferability of shares, there are two types of companies called:

Private company: A private company is a company where the provisions of the articles of association restrict the right to transfer its shares. Its membership is restricted to a maximum of fifty only excluding the employees of the company. These companies prohibits invitation to the public to subscribe to its share capital. The minimum number of persons required to start a private limited company is 2.

Public Company: A public company is a company where the minimum number of persons required to form a company is seven and there is no limit to maximum number of persons. The shares of a public limited company are transferable and it can invite public to subscribe to its share capital. This type of company is otherwise called as widely held company.

On the basis of ownership:

From the ownership point, there are four types of company like:

Government company: A government company is a company where either the central government or the state government or both held at least 51 percent of the paid-up share capital. The glaring examples of government companies are Orissa Road Transport Company Ltd., Rehabilitation Housing Corporation Ltd. and the Eastern shipping Corporation Ltd.

Holding Company: A company which holds majority of shares of another company is called a holding company.

Subsidiary company: The company whose majority of shares are held by other company is called a subsidiary company.

Joint Stock company: The companies owned jointly by the government and private parties are called stock companies.

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