A Complete Guide to Different Types of Companies in India

The term ‘company’ is often used to represent a business in legal aspects. However, many of you might not know about the different types of companies that exist in India. If you are running a business or have plans to start one, it is important to gain knowledge about the classification of companies under different subheads.

As per the Companies Act, 2013, companies are classified into different types based on the number of their members. On the other hand, the Micro, Small, and Medium Enterprises (MSME) Act classifies them into micro, small, and medium companies to enable them to avail various MSME benefits. Similarly, there are other types of companies based on the members’ liability, listing status, and company ownership.

In this guide, we will cover different types of companies based on distinct parameters.

Types of companies based on size

Under the MSME Act, companies are classified in terms of their size, turnover, and investment in plant and machinery and receive MSME benefits accordingly. The following table explains the different types of companies in India as per their size:

Types of Companies	Annual Turnover	Investment in Plant and Machinery
Micro companies	Less than Rs. 5 crore	Less than Rs. 1 crore
Small companies	Less than Rs. 50 crore	Less than Rs. 10 crore
Medium companies	Less than Rs. 250 crore	Less than Rs. 50 crore

** As per the Companies Act 2013, a company having a paid-up share capital of less than Rs. 2 crores and an annual turnover of less than Rs. 20 crores is considered a small company.

Types of companies under the Companies Act, 2013

Business owners can also register different types of companies under the Companies Act, 2013 to give them a legal status and structure. The following table enlists these types of companies in India:

Types of Company	Description
One person company	It has only one member, hence the name. The member can also be the company’s director. It can have 15 directors at max.
Private limited company	It can have at most 200 members. A minimum of two members are required. Members cannot transfer their share. A minimum of two directors are required (a maximum of 15 directors allowed).
Public limited company	The general public holds the company’s shares. There is no limit to the maximum number of shareholders. Minimum of seven members are required to establish these types of companies. A minimum of two directors is required (maximum 15 directors).
Section 8 company	It refers to the association of individuals registered under Section 8 of the Act for charitable purposes. These types of companies in India prohibit any dividend payment to the members.

Types of company as per liability

In general, the members of a company can have either unlimited or limited liability, which usually arises at the time of company loss, bankruptcy, or paying a debt. Here, the companies established under the Companies Act can also be classified as per the liability share of their shareholders.

The following table covers different types of companies based on liability:

Types of company	Description
Company limited by shares	The liability of members is limited by the company Memorandum of Association (MOA). Members are liable only for the unpaid amount on the shares they hold. The shareholder’s ownership is measured by the equity shares by him/her.
Company limited by guarantee	The liability of the members is limited to the amount they guarantee to contribute towards the assets of the company. Liability is limited as per company MOA.
Unlimited company	The members do not have any limit on their liability. In case of debt, the liability may extend to their personal assets.

Types of companies based on control

The following table encompasses two types of companies in India based on the control and ownership structure:

Types of Company	Description
Holding company	These companies have the majority of the voting powers of their subsidiaries. They control the assets, policies, and management decisions made in the subsidiaries.
Subsidiary company	They are owned by a holding company either entirely or partially. The composition of the board of directors is also controlled by the holding company.

Types of companies based on access to capital

The classification of companies is also made on the basis of access to capital, as covered in the table given below:

Types of Company	Description
Listed company	These types of companies are registered on various stock exchanges in or outside India. They follow SEBI’s guidelines. A company can list its shares through an Initial Public Offering (IPO). But an already listed company can make an FPO or Further Public Offer.
Unlisted company	They are not listed on any recognised stock exchanges. Their shares are not freely tradable. To list its securities on the stock exchanges, these companies must get converted to a public company first.