Kinds of Company

Kinds of Companies

The idea of a joint stock company was developed during fourteen century in Italy. In the early period the companies were set up to do foreign trade. Due to industrial revolution the formation of companies become a fashion all over the world in various fields of production, distribution, marketing, finance and so on. The classification of various companies is stated as under.

1. Incorporation basis
2. Liability basis
3. Ownership basis
4. Nationality basis
5. Others

Incorporation basis

• Chartered Companies: These companies were formed under a special charter in England and other European countries in the 16″ century to start foreign trade. The Chartered Bank of England is an example.
• Statutory Companies: The statuary companies are formed by parliament. The purpose of such companies is the welfare of the public. The State Bank of Pakistan is an example of statutory company.
• Registered Companies: The registered companies are formed under the Companies Ordinance 1984. The law provides rules tor the creation, management and winding up of such companies. The public and private limited companies are called registered companies.

Liability basis

• Limited by Shares: The public companies may be registered with limited liability. The amount invested in shares by the shareholders can be used to pay business debts.
• Limited by Guarantee: These are the companies in which the liability of its members is limited by guarantor. The members may undertake to contribute amount in the event of winding up. The mutual insurance, trade association, chamber of commerce and stock exchange are example.
• Unlimited Companies: These are the companies which do not have any limit on the liability of their members. Every member is liable to the full extent of his personal assets for all the debts of the company.

 Ownership basis

• Private Companies: A private companies by its articles (a) restricts the right transfer its shares, (b) limits the number of its member of fifty and (c) prohibits invitation to public to subscribe for shares or debentures.
• Public Companies: A public company is formed under the Companies ordinance 1984. The minimum number of members may be seven and maximum numbers may be up to the number of shares issued.
• Government companies: The government companies are formed and owned by the Federal, Provincial government. Such company may be registered as public or private limited company.
• Holding Companies: A holding company can control the policies of other company through ownership or control over board of directors. A big company can buy more than fifty percent shares of other company.
• Subsidiary Companies: A company is subsidiary company when big company owns or holds more than fifty percent shares or has power to elect more than fifty percent of its directors.

Nationality basis

• Foreign companies: A foreign company is formed and registered outside companies is set up in their home countries. A branch office may be opened in our country.
• Pakistani Companies: A company formed and registered in Pakistan is called a Pakistani company. The registered office of the company may be situated in any province of the country.

Others

• One Man Company: One man company is formed under the Companies Ordinance 1984. It is a kind of private limited company that is owned and managed by single member. Therefore the word single member company (SMC) is added at the end of its name. The name of such company may be stated as ABC Private Limited (SMC). A single member company shall have a secretary possessing such qualification as may be prescribed.
• Associated Company: Associated companies are two or more companies interconnected with each other. (1) Through common director or holding or controlling at least 20 percent shares in both companies: or (2) common management or control or one is the subsidiary of another; or (3) if the undertaking is a modaraba managed by the company.
• Modaraba Company: Modaraba Company means company engaged in the business of floating and managing modaraba. Modaraba means a business in which a person participates with his money and another with his efforts of skill or both his efforts and skill and includes Unit Trusts.
• Venture capital Company: Venture Capital Company means a company which is engaged in financing any venture project through equity or other instruments whether convertible into equity or not and provides managerial or technical expertise to a management company for venture projects, or acts as management of venture capital fund.