Types of Limited Company

Incorporation
author05 6 Apr 2 min read

One Person Company (OPC)

Incorporation
author06 6 Apr 2 min read

Private Limited Company

Incorporation
author07 6 Apr 2 min read

Public Limited Company

Incorporation
author08 6 Apr 2 min read

Section 8 Companies

Incorporation
author01 6 Apr 2 min read
Incorporation

Types of Limited Company

author05 6 Apr 2 min read
  • Private Limited Company:

    It is the most common incorporated business organisation available for business. It is generally called as a 'Private Company'. A Private Limited Company is more flexible than a Public Limited Company as many of the restrictive provisions of Companies Act are not applicable to Private Limited Companies.

  • Public Limited Company:

    As the name reveals, public limited company has a wider coverage than a private limited company. It is generally called as a 'Public Company'. Generally companies requiring huge capital investment are opting for registering as Public Limited Company.

  • One Person Company (OPC):

    One Person Company or OPC means a company which has only one person as a member. OPC has all benefits of a private limited company such as protecting personal assets from business liability, separate legal entity and perpetual succession. One Person Company (OPC) is a Company registered with ONLY ONE PERSON as its shareholder. An OPC is classified as a private company under Companies Act.

  • Section 8 Companies - Non Profit Company:

    Generally companies are promoted with an object of making profit by carrying commercial transactions. But a company can be registered with charitable motive with the object not to make any profit also.

    The registration of such company is subject to the provisions of Section 8 of the Companies Act, 2013. So, these companies generally called as Section 8 Company. These companies must be formed with an object to promote of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object.

  • Guarantee Company:

    Guarantee Company is a sub classification of Private and Public Companies. Usually it does not have share capital but instead has members who act as guarantors. The guarantors give an undertaking to contribute a nominal amount (typically very small) in the event of the winding up of the company. This type of company may also have capital and in that case, members are liable to pay the capital amount taken as well as the guarantee amount.

  • Producer Company:

    Producer Company is another classification of Private and Public Company. These types of companies have the features of co-operative societies. Only 'primary producers' or 'producer institution' can form a producer company and participate in the ownership of such companies.

    Primary Producers' means people engaged in the process of Primary Produce. Primary produce means produce of farmers arising from agriculture including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re-vegetation, bee raising and farming plantation products: produce of persons engaged in handloom, handicraft and other cottage industries: by - products of such products; and products arising out of ancillary industries.

Incorporation

One Person Company (OPC)

author06 6 Apr 2 min read

One Person Company or OPC means a company which has only one person as a member. OPC has all benefits of a private limited company such as protecting personal assets from business liability, separate legal entity and perpetual succession. One Person Company (OPC) is a Company registered with ONLY ONE PERSON as its shareholder. An OPC is classified as a private company under Companies Act.

Features and Advantages of OPC

  • Only a natural person who is Resident in India and Citizen of India can become member of One Person Company.
  • An individual can register ONLY 1 One Person Company.
  • Only One shareholder is allowed in a One Person Company.
  • A one person company cannot add more shareholder or investors to the Company.
  • A one person company should have a minimum paid-up share capital of One Lakh Rupees and maximum of Fifty Lakhs.
  • A One Person Company is required to get converted itself into a public company or a private company when the paid up share capital of a One Person Company exceeds INR 50 lakhs.
  • Maximum turnover a One Person Company can make is Two Crore Rupees.
  • A One Person Company is required to get convert itself into a public company or a private company in when its average annual turnover exceeds Two Crore Rupees during the period of immediately preceding three consecutive financial years.
  • OPC should have at least one Director. In case the articles of the company doesn't state otherwise, the Subscriber / Sole shareholder shall be deemed to be its first director until another is appointed by the member. A One Person Company can have more than one Director.
  • The following persons are not eligible to register an OPC in India.
    • Minor – A minor cannot even hold beneficial interest in OPC.
    • Foreign National.
    • Overseas Citizen of India
    • Non Resident Indian.
    • Company/LLP/Body Corporate.
Incorporation

Private Limited Company

author07 6 Apr 2 min read

It is the most common incorporated business organisation in India. It is generally called as a 'Private Company'

A private limited company is registered with the below mentioned features and restrictions:

  • Minimum and maximum number of shareholders in a private company is 2 and 200, respectively.
  • Minimum paid-up capital is Rs.1,00,000
  • Minimum number of directors are 2
  • Share transfer can be restricted as per Articles of the company.
  • Cannot accept deposits from the public and it can take loans only from shareholders, directors and relatives of directors.
  • Cannot issue shares to the public.
  • Less compliance with respect to company laws.
  • Name of the company should end with the words 'Private Limited'.

A Private Limited Company is more flexible than a Public Limited Company as many of the restrictive provisions of Companies Act are not applicable to Private Limited Companies.

Incorporation

Public Limited Company

author08 6 Apr 2 min read

As the name reveals, public limited company has a wider coverage than a private limited company. It is generally called as a 'Public Company'.

A public limited company has the following features:

  • Minimum number of shareholders is 7. There is no restriction on maximum number of shareholders.
  • Minimum number of directors is 3
  • Subject to the compliance of the Companies Act, the Company can issue shares to public.
  • Subject to the compliance of the Companies Act, it can accept deposits from public.
  • Operations of public limited companies are subject to compliance of many of the restrictive provisions of Companies Act.

Generally companies requiring huge capital investment are opting for registering as Public Limited Company.

Incorporation

Section 8 Companies

author01 6 Apr 2 min read
  • Generally companies are promoted with an object of making profit by carrying commercial transactions. But a company can be registered with charitable motive with the object not to make any profit also.
  • The registration of such company is subject to the provisions of Section 8 of the Companies Act. 2013. So, these companies generally called as Section 8 Company. These companies must be formed with an object to promote of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object

    The name of a Company registered under Section 8 of the Act, the name shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust etc.

    A Section 8 Company shall not pay any dividend to its members but apply its surplus of receipts over payments for promotion of its objects. These companies need not use the words Limited or Private Limited after the name

    The registration process of a Section 8 company is slightly different from a regular limited company. A license for registration must be obtained from the Ministry of Corporate Affairs for registration as a Section 8 Company.

    These companies are generally registered as Guarantee Company with limited liability with or without capital. This company can be private or public in nature depends on the number of persons involved in it.