The Company Zoo – So Many Types! 🦁🐘🐍
Imagine walking into a zoo. You see lions, elephants, snakes - all animals, but SO different! Companies are similar – all are "Joint Stock Companies" but come in wildly different avatars!
Let's meet the family! 👨👩👧👦
The Main Classifications
Based on Incorporation
1. Statutory Company – The Government's Child!
Who creates it? Parliament (through special Act)
Examples:
- Reserve Bank of India (RBI Act, 1934) – India's central bank
- Life Insurance Corporation (LIC Act, 1956) – India's insurance giant
- Food Corporation of India (FCI Act, 1964)
Fun fact: RBI's original shareholders? Private citizens! Government took over in 1949. Now it's like India's financial parent! 🏦
2. Registered Company – The Common Citizen!
Who creates it? Entrepreneurs like you & me (registered under Companies Act, 2013)
Examples: 99.9% of companies!
- TCS, Infosys, Flipkart, your local "ABC Traders Pvt Ltd"
This is what WE study! The rest of this lesson focuses on these. ✅
3. Chartered Company – The Historical Relic!
Who created them? British Crown (Royal Charter)
Example: East India Company (the OG company that RULED India! 😮)
Status today: Obsolete (none exist in India now!)
Based on Liability (How Much You Lose!)
1. Limited by Shares (Most Common!)
Your risk = Value of shares you bought
Example: You bought 100 Reliance shares @ ₹2,500 = ₹2,50,000
Company fails? You lose ₹2,50,000. Period. Your car/house? SAFE! ✅
Most companies: TCS, Infosys, every listed company you know!
2. Limited by Guarantee (The Noble One!)
Used for: NGOs, clubs, associations (NOT-FOR-PROFIT)
How it works: Members guarantee to pay a FIXED amount if company winds up
Real Example: India International Centre (IIC, Delhi)
- Members guarantee: ₹1,000 each
- Company fails? Each member pays only ₹1,000!
###3. Unlimited Liability (The Rare Dinosaur!)
Your risk = UNLIMITED (like partnership!)
Why would ANYONE do this? They won't! 😂
Reality: Extremely rare, almost extinct in India!
Based on Number of Members (The Size Game!)
1. One Person Company (OPC) – The Solo Superhero! 🦸
Introduced: 2013 (Companies Act)
The revolutionary idea: What if you could get limited liability WITHOUT needing partners?
Priya's Story:
Priya designs jewelry. She wants:
- Limited liability (protect personal assets)
- Full control (no partners!)
- Legal recognition
Old days: Forced to take dummy partner (usually a family member) – hassle!
2013 onwards: "Priya Designs OPC Pvt Ltd" – SHE's the only member! 🎉
Rules:
- 1 member (owner) + 1 nominee (takes over if owner dies)
- Max turnover: ₹2 crores (if exceeded, must convert to Pvt Ltd)
- Suffix: "OPC" mandatory (e.g., "StyleCraft (OPC) Pvt Ltd")
Perfect for: Solo entrepreneurs, freelancers, consultants
Real Example: Thousands of CA, CS, architects now run OPCs!
2. Private Limited Company – The Family Business Grown Up! 🏠
The Startup Darling!
Characteristics:
- Min members: 2
- Max members: 200 (excluding employees)
- Shares: Cannot sell to public (no stock exchange!)
- Name: Must end with "Private Limited" or "Pvt Ltd"
Why startups LOVE it:
Flipkart's Journey:
-
2007: Sachin & Binny Bansal start "Flipkart Internet Pvt Ltd"
- 2 members (founders)
- Limited liability (safe from risks!)
- Can raise funds from VCs (Tiger Global invested!)
-
2018: Walmart acquires for $16 BILLION!
- Still "Pvt Ltd" (not publicly listed)
Advantages:
- ✅ Limited liability
- ✅ Easy to raise VC funding
- ✅ Less compliance than Public company
- ✅ Control remains with founders
Restrictions:
- ❌ Can't sell shares to random public
- ❌ Can't list on stock exchange (until you convert!)
- ❌ Can't do IPO
Famous Indian Pvt Ltd:
- Byju's Think & Learn Pvt Ltd
- OYO Rooms Pvt Ltd
- Zomato Media Pvt Ltd (was Pvt Ltd before IPO in 2021!)
3. Public Limited Company – The Stock Market Celebrity! 🌟
Characteristics:
- Min members: 7
- Max members: UNLIMITED!
- Shares: Can sell to public (list on BSE/NSE!)
- Name: Must end with "Limited" or "Ltd"
The TCS Story:
1968: Tata Consultancy Services starts (Pvt Ltd)
2004: "We need MASSIVE capital for global expansion!"
Solution: Convert to Public Ltd + IPO (Initial Public Offering)!
Result:
- Raised ₹5,500 crores from public!
- Today: ₹14 lakh crore market cap!
- 26 lakh+ shareholders (you could be one!)
Advantages:
- ✅ Raise UNLIMITED capital from public
- ✅ Shares tradable on stock exchange (liquidity!)
- ✅ Huge prestige & credibility
Disadvantages:
- ❌ TONS of compliance (SEBI regulations!)
- ❌ Quarterly reporting (public sees everything!)
- ❌ Risk of hostile takeover
India's Public Giants:
- Reliance Industries Limited
- HDFC Bank Limited
- Tata Consultative Services Limited
Based on Control (Who's the Boss?)
1. Holding Company – The Parent! 👨👧👦
Owns controlling stake in other companies (subsidiaries)
Example: Tata Sons Ltd
- Holds majority shares in:
- Tata Steel, TCS, Tata Motors, Titan, Tata Power, etc.
- Tata Sons decides strategy for ALL!
Like: A joint family where father (holding co.) controls family businesses!
2. Subsidiary Company – The Child!
Controlled by another company (holding company owns 50%+ shares)
Example: Tata Motors is subsidiary of Tata Sons
Fun chain:
- Tata Sons (parent)
- → Tata Motors (subsidiary/child)
- → Jaguar Land Rover (subsidiary's subsidiary/grandchild!)
- → Tata Motors (subsidiary/child)
3. Associate Company – The Cousin!
Significant influence but NOT control (20-50% ownership)
Example: Company X owns 30% of Company Y
- Not enough to control (needs 50%+)
- But enough to influence decisions!
Based on Ownership (Government vs Private)
1. Government Company
51%+ owned by Central/State Government
Examples:
- Indian Oil Corporation (Govt owns 51.5%)
- State Bank of India
- ONGC, Coal India
2. Non-Government Company
Private ownership
Examples: 99% of companies!
The Magical Transformation: OPC → Pvt Ltd → Public Ltd
The Zomato Evolution:
2008: Foodiebay Media Pvt Ltd (started as partnership, then Pvt Ltd)
- 2 founders, small team
2010-2020: Raised funds from VCs
- Still Pvt Ltd!
- Valuation grew to $5+ billion!
2021: Zomato Limited (converted to Public Ltd)
- Listed on NSE/BSE (IPO!)
- Raised ₹9,000 crores!
- Market cap: ₹1 lakh+ crores!
Lesson: Every giant started small! 🌱➡️🌳
Comparison Table - Quick Reference!
| Type | Min Members | Max Members | Share Transfer | IPO? | Example |
|---|---|---|---|---|---|
| OPC | 1 | 1 | Very restricted | ❌ | Solo CA firms |
| Private Ltd | 2 | 200 | Restricted | ❌ | Flipkart |
| Public Ltd | 7 | ∞ | Free | ✅ | TCS, Reliance |
Quiz
Test Your Knowledge
Question 1 of 6
1. One Person Company (OPC) can have maximum how many members?
💡 Final Wisdom: "Choosing company type is like choosing a vehicle – OPC is a bike (solo, fast), Pvt Ltd is a car (friends can join), Public Ltd is a chartered train (thousands can board)! Pick based on your journey!" 🏍️🚗🚂
Next up: How are these corporate giants born? Company Promotion – where ideas become empires! 🚀