From the point of view of formation, the companies are of three kinds:
(1) Chartered Companies
Those companies which are incorporated under a special charter by the king or sovereign such as East Indian Company. Such companies are rarely formed now-a-days as trading companies.
(2) Statutory Companies
These companies are formed by special acts of Legislatures or Parliament. e.g.; the Reserve Bank of India, the Industrial Finance Corporation, Damodar Valley Corporation.
(3) Registered Companies
Such Companies which are incorporate under the Companies Act, 1956 or were registered under the previous Companies Act.
Form the point of view of liability there are three kinds of Companies
(1) Limited Companies
In case of such companies, the liability of each member is limited to the extent of a face value of shares held by him. Suppose A takes a share of Rs 10., he remains liable to the extent of that amount. As soon as that amount in paid, he is no more liable.
(2) Guarantee Companies
The liability of the member of such companies is limited to the amount he has undertaken to contribute to the assets of the company in the event of its wound up. This guaranteed amount is limited to fixed sum which is specified in the memorandum. Cambers of commerce, trade associations and sports clubs are usually guarantee concerns. The object of such companies is not to make profit and distribute dividend.
(3) Unlimited Companies
They are nothing but large partnership registered under the Companies Act and the members just like partners have unlimited liability and both share contribution as well as their property are at stake when the company is to be wound up. Such companies are rare these days.
From the point of view of Public investment companies may be of two kinds:
(1) Private Companies :
A private company means a company which by its articles (a) restricts the right to transfer its shares, if any (b) limits the number of its members to fifty excluding past or present employees of the company who are also members of the company. (c) Prohibits any invitation to the public to subscribe for any shares in our debentures of the company.
(2) Public Companies :
Public companies are those companies which are not private companies. All the three restrictions are not imposed on such companies.