Classification of Company: On the Basis of Number of Members

On the basis of the number of members in a company, there are four types of companies, Public Company, Private Company, Small Company, and One Person Company. Let us discuss the classification of company in detail.

Classification of Company
Classification of Company

Classification of Company

According to basis of the members, Companies may be classified into our categories:

  • Public Company
  • Private Company
  • Small Company
  • One Person Company

Public Company

According to Section 2(71) of the Company Act 2013, public company is a company which-

A. is not a private company.

B. has a minimum paid-up share capital of Rs 5,00,000 or such higher paid-up capital as may prescribed.

C. has seven or more members.

The company can invite the public for subscription of shares and debentures. The term public limited is added to its name at the time of incorporation.

There is no restriction on the maximum number of members.

As per the provision of the Company Act 2013, a company which is a subsidiary of a company (not being a private company) shall be deemed to be a public company even where such subsidiary company continues to be a private company in Article of Association (AOA).

Private Company

According to Section 2(68) of the Company Act 2013, the private company means a company having a minimum paid-up share capital as may be defined and which by its Article-

a. Restricts the rights to transfer its shares. This restriction is basically to preserve the private character of the company.

Rest will updated soon

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