Written by Saritha Paruchuri. Posted in Commerce on 27 September 2012.
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Company form of business organisation came into existence to overcome the defects of sole trading concern and partnership firm.

The joint stock company came into existence first in Italy in 14th century and spread later onto England with greater advantages. The joint stock companies developed a lot in England during 17th and 18th centuries. These company organisations are known as corporations in America. In India the company form of business organisation were started based on the "British Companies Act". In our country the companies Act came into force in the year 1850. The contents in it were carried from British act. After Independence by taking different forms of business organizations into considerations a comprehensive "Companies Act" was enacted in the year 1956. Now, all the companies which exist in our country are functioning under the "Indian Companies Act, 1956".

Types of Companies:

The types of companies are as follows:

Chartered Companies

The Company which is incorporated under a special royal charter issued by the king is called chartered company. Such companies were generally started in the 17th and 18th centuries.

The East India Company, Chartered Bank of Australia Etc....

Statutory Companies

Statutory companies are there which are incorporated under the special act of parliament or legislature. Generally, all public utility concerns like Railways, Electricity, water Works and gas works are incorporated by special acts of parliament.

Ex: Railways, Electricity Companies....

Government Companies

Government companies are those in which the government is required to hold 55% or more of the share capital. A Gov. Company may conduct any business or industry on behalf of the state on public interest.

Ex: Hindustan Steels Ltd, Hindustan Machine Tools Ltd, Etc....

Registered Companies

The Company which is registered under the Indian Companies Act is called registered company.

Companies Limited by Guarantee

Such companies are generally not for carrying on business for profit but for the promotion of art, education, science, sports, etc.., generally such companies do not have share capital. The members of such companies give an undertaking i.e..; Guarantee to pay certain amount when the company goes in to Liquidation.

Unlimited Companies

If the companies go in to liquidation the private properties of members will be liable for attachment for paying debts of the company. Such companies are not popular.

Companies Limited By shares

In these companies the liability of the shareholders is limited to nominal value of shares. The member knows that he cannot ask to pay a single rupee more than a nominal value of the shares.

Foreign Company

The Company registered abroad and started its business centre in India such company is called foreign company.

Banking and Insurance Companies

The companies established under banking companies Act 1949 and Insurance Companies Act 1956 are called banking and insurance companies

Private Companies

The essential features of private companies are

  1. Limit on membership
  2. Restrictions on transfer of shares
  3. Prohibition on the public issue of capital
  4. Number of directors
  5. Issue of share Warrants
  6. Annual Accounts
  7. No restriction by Rotation
  8. Managerial Remuneration
  9. Loans to directors
  10. Meeting Quorum
  11. Name
  12. Restrictions to allotment of shares


Saritha Paruchuri

Author: Saritha Paruchuri

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