What are the types of Companies under the Companies Act, 2013? Distinguish between a Public and a Private company.

Question: What are the types of Companies under the Companies Act, 2013? Distinguish between a Public and a Private Company.

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Answer

Under the Companies Act, 2013, the following are the types of companies:

One Person Company (OPC): An OPC is a type of private limited company where there is only one shareholder and director. It is defined under Section 2(62) of the Companies Act, 2013 and can be incorporated under Section 3 of the Act.

Private Limited Company: A private limited company is a type of company where the liability of shareholders is limited to their share capital and the company has restrictions on the transfer of shares. It is defined under Section 2(68) of the Companies Act, 2013 and can be incorporated under Section 7 of the Act.

Public Limited Company: A public limited company is a type of company where the liability of shareholders is limited to their share capital and the company can issue shares to the public for subscription. It is defined under Section 2(71) of the Companies Act, 2013 and can be incorporated under Section 7 of the Act.

Limited Liability Partnership (LLP): An LLP is a type of partnership where the liability of partners is limited to their agreed contribution. It is defined under Section 2(2) of the Limited Liability Partnership Act, 2008 and can be incorporated under Section 5 of the Act.

Unlimited Company: An unlimited company is a type of company where the liability of shareholders is unlimited and they are responsible for the company's debts. It is defined under Section 2(92) of the Companies Act, 2013.

Formulation of companies with charitable objects, etc. (Section 8):  A company formed for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object. It is defined under Section 8 of the Companies Act, 2013.

Producer Company: A Producer Company is a type of company formed by producers for the primary purpose of their collective economic interests. It is defined under Section 581B of the Companies Act, 1956 and can be incorporated under Section 465 of the Companies Act, 2013.

Difference between a Public and a Private Company

The main differences between a public company and a private company are:

Definition: A public company is defined under Section 2(71) of the Companies Act, 2013 as a company which is not a private company and which satisfies the conditions as provided in Section 3 and Section 4 of the Act.

A private company is defined under Section 2(68) of the Companies Act, 2013 as a company which has a minimum paid-up share capital of one lakh rupees or such higher paid-up share capital as may be prescribed and which by its articles, restricts the right to transfer its shares, if any, limits the number of its members to two hundred and prohibits any invitation to the public to subscribe for any securities of the company.

Liability of Shareholders: In a public company, the liability of shareholders is limited to the extent of their share capital while in a private company, the liability of shareholders is unlimited.

Ownership: A public company can issue shares to the public for subscription, while a private company restricts the transfer of shares and cannot issue shares to the public.

Number of Shareholders: A Public Company can have any number of shareholders, while a Private Company can have a maximum of 200 shareholders.

Regulations: Public companies are subject to more regulations and disclosure requirements compared to private companies

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