On The Basis of Liability Part 2

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  • Company limited by shares: The liability of the member of such company is limited to the face value of its shares.

  • Company limited by guarantee: The liability is limited to the extent of guarantee undertaken by the member. It may arise in the event of its being wound up.

  • Unlimited Company: No limit on the liability of its members and liability in such a case extends to the personal property of its shareholders.

Note: Company under section 25: In order to promote art, culture and societal aims government formed a special section i.e. section 25 in Companies Act.

Ex:

On the Basis of Ownership:

Private Company: A company which is registered with Registrar of Companies and it possess ‘Private Ltd.’ at the end of the company name.

Ex: Lalitha Jewellerys (Pvt) Ltd.

Characteristics of Private Company as per Articles of Association:

sMinimum paid up capital is Rs.1 lakh

  • Minimum of 2 members and maximum of 50 members

  • Restricts the rights of members to transfer its shares

  • No subscription to general public on its shares and debentures.

  • Public Company: A company which is registered with Registrar of Companies and it possess ‘Ltd.’ at the end of the company name. It does not consists any restrictions in its Articles of Association. (Note: No need of mentioning ltd. At the end)

    Ex: State Bank of India ltd., Reliance Industries ltd., ITC limited.

    Characteristics of Public Company:

  • Minimum paid up capital is Rs.5 lakh

  • Minimum of 7 members and no restriction on maximum number of members

  • Members can transfer its shares easily to anyone.

  • Always available to general public for the subscription of its shares and debentures

  • Government Company: Government Company is one in which not less than 51% of its paidup capital is held by either Central Government or State Government, or partly by Central Government and partly by State Government.

    Ex: State Bank of India, IOCL, Andhra Bank,

  • Foreign company: A Company incorporated outside India and doing its activities in India. Ex: Philips, L.G, Samsung etc.

On Control Basis:

Holding company and Subsidiary company: A holding company is a company which controls another company (called subsidiary company) either by acquiring more than half of the equity shares of another company or by controlling the composition of Baord of Directors of another company or by controlling a holding company which controls another company.

On Basis of Listing:

  • Listed company: A company which is listed in Stock Exchange for listing of its shares is called Listed Company.

  • Unlisted company: A company whose securities do not appear on the list of the stock exchange is called unlisted company.

Difference Between Private Company and Public Company:

Table of Difference between Private Company and Public Company
Title: Table of Difference Between Private Company and Public Company

Basis of Difference

Public Company

Private Company

  1. Minimum number of members

  2. Maximum Number of Members

  3. Name Posses

  4. Commencement of Business

  5. Subscription of shares

  6. Transfer of shares

  7. Number of Directors

  8. Minimum Paid up capital

Seven

No limit

Ltd. At the end

It can start business activities only after getting certificate of commencement.

Available to general public

No restriction

At least three directors

Rs.5 lakh

Two

Fifty

Pvt. Ltd. At the end

It can start business activities after getting incorporation certificate.

Not available to general public.

There are restrictions

At least two directors

Rs.1 lakh