Business Studies XI Content
Types of company
Types of companies
On the basis of incorporation:
- Chartered company
A chartered company is established by the royal charter or a special sanction granted by the head of the state. East India company, Hudson’s bay are the examples of this type of company. This type of company is no more popular today.
- Statutory company
A company created by the special act of the parliament is called statutory company. Its objectives, powers and activities are defined by the act. Nepal Rastra Bank, Agriculture Development Bank, Nepal Industrial Development Corporation are some examples.
- Registered company
It is formed under company act of the country. The working of registered company is governed by the provision of the company act. Himal Cement Company, Gorkha Biscuits Pvt Ltd is some examples.
On the basis of liability:
- Unlimited company
It is a company in which the liability of the members is unlimited like that of partnership firm. If the assets of the company are not sufficient for satisfying the claims of the creditors, the shareholders are liable to pay more than the face or nominal value of shares held by them even form their personal property.
- Company limited by shares.
A company limited by shares is registered under the provisions of the Company act with a specific amount of share capital divided into a definite number of shares. The liability of shareholders is limited to the extent of face value of the shares they have paid for. This type of company is quite common these days.
- Company limited by guarantee:
The company, under which each shareholder promises to pay a specific sum as guarantee at the time of winding up of company, is called company limited by guarantee. Such guarantee is specified in the Memorandum of Association of the company. The amount of such guarantee may differ from member to member.
On the basis of ownership
- Government companies
A government company is a company in which no less than 51 % of the paid up share capital is held by the government
- Non government companies:
A company which is not a government undertaking is called non government company. Generally, company owned, managed and controlled by the private sector come under this category.
On the basis of number of members
A private company is a company which, by its Memorandum Of Association, limits the number of its members not exceeding 50 and prohibits the sales of its shares to the general public. A private company must use the words ‘private limited (Pvt. Ltd.) in its name.
Privileges of private company
- Established by single person
- Does not need to publish prospectus at the time of issue of its shares
- It can refuse transfer of shares from one member to another.
- It is not necessary for such a company to obtain the certificate of commencement of business before starting its business activities
- It is not necessary to held statutory meeting.
A public company is a company which, by its Memorandum of Association, limits the number of its members not to be at least 7 and to open the boundary of having the maximum number of shareholders to the fullest. It doesn’t prohibit the sales of its shares to the general public but rather it allows collecting major capital by offering shares to the public. The public company is governed by the authorized capital with which is registered. The shares are transferable. A public company must use the word ‘limited (Ltd.) in its name.
Privileges of public company
- Established by at least 7 promoters
- Needs to publish prospectus at the time of issue of its shares
- It cannot refuse transfer of shares from one member to another.
- It is necessary for such a company to obtain the certificate of commencement of business before starting its business activities
- It is necessary to held statutory meeting.