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Types of Companies

Last updated date: 16th May 2024
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What is a public Company?

Many people perceive the public Company as the Company having a public share. However, the public Company is essentially a corporation where the ownership is distributed to various people by the general public shareholders through free trade of the shares in the nation’s stock exchange. Daily trading in the market is one of the best ways of determining the true values of the Company. A Company can be termed as public when shareholders can purchase the Company’s stock. 

The Different Types of Companies in India

India is one of the fastest-growing economies in the world and the service industry needs appreciation for its contribution to the economy of the country. Many foreign investors have now turned their attention to Indian, considering its immense potential, for future investments. Some of the different types of Companies in India are as follows: Public Company, Private Company, Joint-venture Company, Partnership firm, person Company, Sole proprietorship, Branch office, and Non-government organisations. 

Private Company and Public Company

The Private Company differs from the Public Company in several different ways. The public Company is publicly traded in the open share market of the nation. Comparing a public Company to a Private Company, public Companies tend to have a specific advantage. Some of the public Companies in India are the State Bank of India, Indian OIl Corporation, and Hindustan Petroleum Ltd.

According to the definition of the public Company, the Company having a minimum paid-up share capital of a minimum of Rs. 5 lakh or more is described as a public Company. The member's list of the public limited Company has no end. There is no limit on the maximum capacity; however the minimum number of the owners should be at least seven, and the minimum number of directors should be three simultaneously.

In contrast to the public Companies, the Private Company needs to have a minimum of two founding members and also the Company must have two directors. The founding members of the Company are also eligible for becoming directors as well. The minimum capital should be 1 lakh. 

For the Private limited Company, each of the shareholders’ liability or Company members are limited. Due to this, if the Company experiences a loss, Company members and the shareholders are completely reliable and they have the option of selling the Company’s share for clearing out the debt. The asset of the shareholders is not at risk, so you don’t have to worry about selling your land or apartment when the Company is in a dire state. 

FAQs on Types of Companies

1. What is the meaning of the public limited Company in India?

The public limited Company is founded by a voluntary association of the members thus making it a distinct legal existence with a limited number of members. All the work-related issues and information plus rules and regulations fall under the Indian Companies Act. 1956. In India, the public limited Company must have a minimum of seven members however there is no cap on the max number of board members. 

2. What are the advantages of owning a Private Company?

When you launch a Private Company, you don’t have to worry about the minimum capital. The Company can be registered with the mere amount of 10 thousand rupees as authorised share capital. The Private limited Company is a distinct and separate legal entity under the court of law. This is why liabilities and assets are different from the liabilities of the directors running the Company. In India, Private Companies can raise funds from various angel investors and venture capitalists.

3. How can I incorporate or register a Company in India?

If you want to incorporate or register a Company in India then you need to follow a series of comprehensive steps. Some of these steps are as follows. First, you need to reserve the name of the Company under Spice or RUN then you have to procure the certificate of digital signature. Next, you need to apply for a director identification number also known as DIN. After that, you have to write a Memorandum of Association (MoA) followed by writing the articles of association (AoA). Finally, you can proceed to apply for the incorporation of the Company.

4. How can I download the Vedantu notes on “Types of Companies”?

If you want to refer to the Vedantu notes on “Types of Companies” then you have the option of downloading it from the app or the website. These notes are available in PDF format and are available to download for free. If you want to download these notes just go to the specific section and then click on the “Download PDF” button that is available at the top of the page. The file will be downloaded to your device.

5. Are the Vedantu notes on “Types of Companies” reliable?

Yes, Vedantu notes on the “Types of Companies” are very reliable. These notes are prepared by well-qualified teachers and experts with considerable experience in the subject. The notes are incredibly accurate and provide the students with high-quality reference material for the preparation of their exams. These notes are also very well structured and presented in a clear and simple format for making learning easier for students.

6. What is a Public Limited Company in India?

A public limited company is found by the voluntary association of members, making it a separate legal existence with a limited number of members. All the information, work-related issues along with rules and regulations, come under the Indian Companies Act, 1956. A public limited company in India needs to have at least seven members. However, when it comes to the maximum number of board members, there is no limitation whatsoever. 

7. What Are the Benefits of Having a Private Company?

When you start a private company, you don't need to worry about minimum capital. It can be registered with a mere sum of Rs 10,000 as your authorized share capital. On the other hand, a private limited company is a separate legal identity in the eyes of court and law. Thus, liabilities and assets are not the same as the liabilities of directors running the company. A private company in India is the only form of business that can raise funds from different venture capitalist and angel investors.