Under the Companies Act, 2013, companies are grouped according to how many members they have.
The Micro, Small and Medium Enterprises (MSME) Act further divides businesses into micro, small, and medium categories so they can get MSME benefits.
Companies can also be grouped by other factors, such as how much liability their owners have, who owns the company, and whether it is listed on the stock exchange.

Below are the different types of companies explained by these categories.

Types of Companies Under the Companies Act, 2013

In India, entrepreneurs can register different kinds of companies under the Companies Act, 2013. This law gives a legal structure to run a business. The main types are:

1. One Person Company (OPC)
This type of company can have only one member, who can also be the director. An OPC must have one member but can appoint up to 15 directors.

2. Private Limited Company
A private limited company needs at least two members and can have up to 200. Shares cannot be freely transferred to others. It must have at least two directors and can have up to 15. This is a common choice for small and medium businesses.

3. Public Limited Company
Here, the public can buy shares of the company. There must be at least seven members, but there is no upper limit. A public company needs at least three directors and can have a maximum of 15.

4. Section 8 Company (NGO)
This company is set up for charitable or non-profit purposes such as education, science, art, sports, social welfare, or environmental protection. All income must be used to promote its objectives, and it cannot distribute profits as dividends to members.

Types of Companies by Size

The MSME Act groups companies by their size so they can get government benefits for micro, small, and medium enterprises (MSMEs). The categories are:

Micro Company

• Spends no more than ₹1 crore on plant and machinery.
• Has an annual turnover of up to ₹5 crore.

Small Company

• Spends no more than ₹10 crore on plant and machinery.
• Has an annual turnover of up to ₹50 crore.

Note: Under the Companies Act, 2013, a company is also treated as “small” if its paid-up share capital is below ₹4 crore and its annual turnover is below ₹40 crore.

Medium Company

• Spends no more than ₹50 crore on plant and machinery.
• Has an annual turnover of up to ₹250 crore.

Types of Companies Based on Liability

A company can also be classified by how much its members (owners/shareholders) are responsible for the company’s debts. This responsibility is called liability, and it matters when the company faces losses, bankruptcy, or has to close down. Under the Companies Act, 2013, the main types are:

1. Company Limited by Shares

• Members are only responsible for the unpaid amount on the shares they own.
• Their liability is clearly stated in the company’s Memorandum of Association (MOA).
• The number of shares a person holds shows how much of the company they own.

2. Company Limited by Guarantee

• Members agree to pay a fixed amount (mentioned in the MOA) if the company is closed or in debt.
• Their liability is limited to the amount they guaranteed, not more.
• Ownership is based on how much they promise to contribute.

3. Unlimited Company

• Members have no limit on their liability.
• If the company owes money, members might have to pay from their personal assets.
• Because of the high risk, very few entrepreneurs choose this type of company.

Types of Companies Based on Control

Companies can also be grouped by who owns and controls them:

Holding Company
A holding company is the parent company that owns most of the voting rights in another company, called a subsidiary. It controls the subsidiary’s key policies, assets, and major decisions but does not handle its day-to-day operations.

Subsidiary Company
A subsidiary company is one that is partly or fully owned by a holding company. The holding company either controls more than 50% of its voting rights or decides the makeup of its board of directors. If the holding company owns 100% of the voting rights, the subsidiary is called a Wholly Owned Subsidiary (WOS).

Types of Companies Based on Listing

Companies can be classified as listed or unlisted depending on whether their shares are traded on a stock exchange. All listed companies are public companies, but not all public companies are listed. An unlisted company can be either private or public.

Listed Company

• A listed company is registered on recognised stock exchanges in India or abroad.
• Its shares are freely traded on the stock exchange.
• It must follow the rules and regulations set by the Securities and Exchange Board of India (SEBI).
• To list its shares, a company issues a prospectus inviting the public to buy shares or debentures.
• Shares can be listed through an Initial Public Offer (IPO), and already listed companies can raise more funds through a Further Public Offer (FPO).

Unlisted Company

• An unlisted company is not registered on any recognised stock exchange, so its shares are not freely traded.
• It raises capital privately from sources such as friends, family, financial institutions, or private placements.
• If it wants to become listed, it must first convert into a public company and issue a prospectus for public subscription.