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5 Types Of Company + Origin and Definition

Hi, today we discuss the 5 Types Of Company + Origin and Definition, for the company is an entity in which people are comming together to invest there money, skills and time for a common purpose and that is to earn a profit

 

What is the company?

A company is a legal entity made up of people who are working for a common goal or objective

Origin Of Company

The English word company has its origins in the Old French military term compaignie (first recorded in 1150), meaning a “body of soldiers

5 Types Of Company + Origin and Definition

5 Types Of Company + Origin and Definition

5 Types Of Company

  1. According to incorporation
  2. According to ownership
  3. According to liability
  4. Modaraba company
  5. According to nationality

Let move to the 5 Types Of Company

(1) According to Incorporation

Chartered company

  • These companies are formed by the royal order or charter
  • The word “limited” is not used by the name company
  • The management of a company is run according to the provisions of a charter
  • The members are not liable for the debts of a company

Statutory company

  • These companies are formed by the order of president or by the special act of parliament
  • The main purpose of these companies is the welfare of the public is not so important
  • It is not essential for these companies to use the word “limited”
  • These companies have the monopoly in their respective fields
  • The liability of shareholders is limited to the value of shares purchased

Registered company

  • The registered company is formed under companies ordinance 1984
  • These companies are allowed to do various industrial, agricultural and trading business
  • The rules regarding company’s formation, management and winding up are stated in company’s ordinance.

(2) According to Ownership

Public company

  • In the listed company, a minimum number of members is seven but there is no restriction for maximum
  • The word limited is used after the name of a company
  • The minimum number of directors is seven
  • Shares of the company can easily be sold and transferred
  • The liability of the shareholders is limited to the value of shares purchased
  • It is essential for the company to issue prospectus
  • The audit of a company’s accounts is compulsory every year
  • It is necessary for the company to call the statutory meeting within three to six months of its commencement
  • The minimum number of promoters is seven

Private company

Single member company

  • There is only one member or shareholder of this company
  • The company uses the words( S.M.C private LTD) after its name
  • The single person is responsible for the management of the company
  • The shares of the company are non-transferable
  • The liability of the owner of a company is limited
  • A separate legal entity from the single owner
  • Life of company is long and durable
  • The promoter of SMC is its single owner
  • It cannot be listed on a stock exchange

Multi members company

  • In this company, the minimum number of members is two and the maximum is fifty
  • The company uses the word “private” with its name
  • Minimum number of directors is 2
  • The shares of the company are not transferable
  • The liability of shareholders is limited
  • Not essential for the company
  • The audit is not compulsory
  • No restriction on the call of the statutory meeting
  • Minimum number of promoters is 2

Government company

  • These companies are owned by a federal or provisional government
  • The company all or 51% shares are held by government
  • The company may be registered as public or private
  • The government is responsible for profit and loss of the company

Holding company

  • A company that holds at least 51% shares of another company
  • The company may have the powers to appoint more than 51% of directors of another company

Subsidiary company

  • It is a company whose more than 50% are held by another company
  • It more than 50% of directors may be selected by the holding company

(3) According to Liability

It includes

Limited by shares

  • It is a company which collects its capital by selling shares
  • The liability of shareholders is limited up to the value of purchased shares
  • It may be private or public
  • It uses the word “limited” at the end of its name

limited by guarantee

  •  Every member give the guarantee to contribute a specified amount of money to the winding up of the company
  • The liability of members is limited up to the guaranteed amount
  • It may be formed with or without share capital
  • The main object of the company is not to earn a profit
  • Use the word “guarantee limited”

Unlimited company

  • The liability of shareholders is unlimited
  • The shares of the company can be transferred

Association not for profit

  • The word limited is not used with its name
  • It enjoys all the privileges of a limited company
  • It required the license from the federal government for its formation as a company
  • It is established to promote commerce, art, science or religious activities

(4) Modaraba company

  • This company is formed under Modaraba companies ordinance
  • In this company, one party contributes capital whereas another party participates in his skill and experience
  • It is transferable
  • It may be specific and multipurpose

(5) According to nationality

It includes

Pakistani company

  • It is the company which is formed and registered in Pakistan
  • It may be public or private
  • The people of Pakistan have the right to receive all the benefits of the company

Foreign company

  • It is a company which is formed and registered outside Pakistan
  • The company’s registered office is outside Pakistan whereas its branches are situated in our country
  • The foreign owners of the company receive all the profits of the company
  • It is essential for the company to submit its accounts and reports to Pakistani registrar

 

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