Tuesday, April 20, 2010

TYPES OF JOINT STOCK COMPANY

comapany
There are several types of companies. Their classifications can be made from many angles. In brief they are :

1. According to Incorporation
2. According to Liability
3. According to Number of Members

1. According to Incorporation

According to incorporation companies may be divided into three categories.

a. Chartered Companies : This type of companies are incorporated under Royal Charter issued by King or Head of the state. Under the charter, certain exclusive rights and privilege are granted to the company for undertaking certain commercial activities. The East India Company, The Charter Bank of India and Australia were incorporated under Charter. These companies are no longer formed in any country.

b. Statutory Companies : These companies are formed under the special Act of Parliament. A Parliament passes special act to form such company. The objects, powers, rights and responsibilities are clearly defined in the Act. When a company requires special rights and power these types of companies are established. Generally, companies for public utility services are formed. In our country, several such Acts have been passed. For example, Nepal Rastra Bank, Nepal Industrial Development Corporation, RNAC, Karmachari Sanchaya Kosh, etc.

c. Registered Companies : In general the companies are established under the Company Act of the country concerned. They are known as registered companies. In our country most of the companies have been established under the provisions of Company Act. The Act contains comprehensive provisions with regard to establishment, management, dissolution, etc.

2. According to Liability

According to liability, the companies may be classified into three categories.

a. Companies Limited by Shares : In general, the liability of a company is limited by shares. The capital of a company is divided into shares. Any person can be member of the company by purchasing its shares. The shareholders pay share money at one time or by installment up to the face value of the shares. He is not responsible beyond the face value of the shares, whatever be the liabilities of the company. This type of companies, are most common in actual practice.

b. Companies Limited by Guarantee : Non-profit earning companies are mostly registered with guarantee capital. These companies are formed by giving the written guarantee that members will pay up to a certain fixed amount in the event of the liquidation of the company. This guarantee amount is specified in Memorandum of Association. They may or may not have any share capital. The liability of its members in case of need extends to be unpaid value of the shares held by them plus the amount guaranteed by them. It implies that their liability exceeds the face value of the shares. Such companies are not found in the field of business.

c. Unlimited Companies : The companies registered without limiting the liability of shareholders to the value of shares are called unlimited companies. The liability of the shareholders remains unlimited as in partnership. Such companies are not usually found.

3. According to Number of Members

According to the number of members, companies may be classified into two categories.

a. Private Company : A private company can be formed with one member but the maximum number of shareholders cannot be exceed fifty. Shares and debentures are sold among its members only. According to Company Act, 2053, a private company is one which (1) restricts the right to transfer its shares, (2) limits the member of shareholders to fifty only, and (3) prohibits any invitation to the public to subscribe for any shares or debentures. A private company must use the words ‘Private Limited’ (Pvt. Ltd.) in its name.
b. Public Company: Clause 2(c) of Company Act, 2053 defines “Public Company” means any company incorporated under this Act. A minimum of seven members is required to constitute and register a public company. There is no restriction on the maximum number of shareholders. The shareholders are free to sell their shares in the market. Public companies must issue a prospectus for inviting people to purchase their shares.




3 comments:

Edprime said...

This post is good and i am hopeful that you will post such informative thing, it help me a lot in understanding this topic type of companies

prathab said...

really well explained blog. do check my blog also Company Registration in kolkata

Sarah Jordan said...

I am heartily impressed by your blog and learned more from your article. Thank you so much for sharing with us. I find another blog as like it. If you want to look, visit here RJSC Registration, It’s also more informative.

Post a Comment