Types of Companies Under Companies Act 2013: Complete 2026 Guide

Confused about the different types of companies under the Companies Act 2013? You are not alone. This single topic appears again and again in JAIIB.

CAIIB, and other banking exams. Yet most students mix up private and public companies. Forget the One Person Company rules, and lose easy marks.

This 2026 guide fixes that for good.

Below, we break down every classification in plain English. You will get clear tables, memory hooks, and exam-focused tips. By the end. You will recognise any company type in seconds - whether in a question paper or a real balance sheet.

Why Understanding Types of Companies Matters

A company is a legal person, separate from its owners. It can own property. Sign contracts, and sue or be sued in its own name. This separate legal identity is the heart of company law.

Knowing the types of companies is essential for three groups. Banking aspirants need it for exam scoring. Entrepreneurs need it to pick the right structure. Bankers need it to assess credit and compliance risk.

The Companies Act 2013 replaced the older 1956 Act. It modernised Indian company law. Introduced new structures like the One Person Company. Let us explore each classification in detail.

Classification of Companies Under the Companies Act 2013

The Act groups companies along four main lines. Each line answers a different question about the company.

• By liability - How much do members owe if the company fails?
• By membership - How many owners can the company have?
• By incorporation - How was the company created?
• By control - Who holds the controlling power?

A single company can sit in multiple categories at once. For example. A firm can be a private company that is also limited by shares. Keep this overlap in mind.

Types of Companies Based on Liability

This is the most tested classification. A company formed under the Companies Act 2013 may be limited by shares. Limited by guarantee, or unlimited.

Company Limited by Shares

Here, member liability is capped at the unpaid amount on their shares. If shares are fully paid, members owe nothing more. This is the most common type in India.

The memorandum states the share capital and its division into fixed-value shares. Each subscriber must take at least one share. Their liability never exceeds the face value of those shares.

Company Limited by Guarantee

Members agree to contribute a fixed amount only if the company is wound up. This guarantee applies while they are members. Or within one year after leaving. Such companies often serve non-profit goals.

The guaranteed amount covers two things. First, the debts and liabilities of the company. Second, the costs and charges of winding up. Members pay nothing during normal operations.

Unlimited Company

In an unlimited company, members carry full personal liability for company debts. There is no cap. This structure is rare because the risk is very high for owners.

Types of Companies Based on Membership

This classification decides how many owners a company can have. It also shapes daily compliance and governance. The three forms are private, public, and OPC.

Private Company

A private limited company has a minimum of 1 member. A maximum of 200. Employees who are members are not counted in this maximum. A private company restricts the transfer of its shares.

Under the new Act, the minimum dropped from 2 to 1 member. The maximum rose from 50 to 200. Always confirm capital thresholds on the latest official IIBF notification.

Public Company

A public limited company needs at least 7 members. There is no upper limit on membership. It can have as many members as the number of shares it issues.

Public companies can invite the public to buy shares. They face stricter disclosure and governance rules. The last word in their name is simply "Limited".

One Person Company (OPC)

The One Person Company is a major innovation of the 2013 Act. It allows a single person to own and run a company. The OPC has only one member and can have just one director.

The 1956 Act required at least two shareholders and two directors. The OPC removes that barrier for solo founders. A nominee must be named to take over if the sole member dies.

Private vs Public Company: Comparison Table

This is the most frequent comparison in exams. Study the table below until you can reproduce it from memory.

Note the director counts. A private company needs 2 directors. A public company needs 3, and an OPC needs only 1. The overall maximum is fifteen directors for most companies.

Directors and Board Requirements

Every company must have a Board of Directors made of individuals. The Act sets clear minimum and maximum numbers for the board.

• Public company - minimum 3 directors.
• Private company - minimum 2 directors.
• One Person Company - minimum 1 director.
• Maximum - 15 directors for all of the above.

A company may appoint more than fifteen directors by passing a special resolution. Certain prescribed companies must also have at least one woman director. Every listed public company needs at least one-third of its board as independent directors.

Statutory Companies and Memorandum Basics

A statutory company is created by a special Act of the Central or State legislature. It draws its powers directly from that Act. Because of this. A statutory company does not need a Memorandum of Association.

For other companies, the memorandum is the foundation document. It must state the company name. The state of its registered office, and its objects. It also declares whether member liability is limited or unlimited.

The memorandum of an OPC carries one extra clause. It names the nominee who becomes a member if the original subscriber dies. This nominee rule is unique to the OPC structure.

Registered Office and Member Rights

Every company must have a registered office from the fifteenth day of incorporation. This office receives all official communications and notices. It must remain valid at all times after that.

Members also hold a right to key documents. On request. The company must send copies within seven days, subject to prescribed fees. These documents include the memorandum, the articles, and certain resolutions and agreements.

Holding and Subsidiary Companies

Control creates another classification. A holding company controls one or more subsidiary companies. Control may come through board composition or share ownership.

The Act protects this structure with a strict rule. A subsidiary cannot hold shares in its own holding company. Any such allotment or transfer of shares to a subsidiary is treated as void.

How to Study Types of Companies for Exams

Theory alone will not lock these rules into memory. Use a smart, active approach instead. Here is a proven study method for this topic.

1. Build the master table. Redraw the private vs public table from memory daily.
2. Use number anchors. Remember 1-200 for private, 7-unlimited for public, 1 for OPC.
3. Link each number to a director count. Members and directors are tested together.
4. Practise application questions. Solve scenario-based MCQs, not just definitions.
5. Revise with mock tests. Attempt our free mock tests to test recall under time pressure.

For deeper revision, explore our free guides on company law and other JAIIB subjects. Consistent practice beats last-minute cramming every time.

Common Mistakes to Avoid

Examiners love to trap students on small details. Watch out for these frequent errors.

• Mixing member limits. Many write 50 for private; the new limit is 200.
• Wrong minimum members. A private company now needs 1 member, not 2.
• Confusing director counts. Private needs 2, public needs 3, OPC needs 1.
• Forgetting the OPC nominee. The nominee clause is compulsory in the OPC memorandum.
• Ignoring statutory companies. They need no memorandum because an Act creates them.
• Quoting old capital figures. Always confirm on the latest official IIBF notification.

Frequently Asked Questions

What are the main types of companies under the Companies Act 2013?

The main types of companies are classified by liability. Membership, incorporation, and control. By liability they are limited by shares, limited by guarantee, or unlimited. By membership they are private, public, or One Person Company.

What is the minimum number of members for a private and public company?

A private company needs a minimum of one member. A maximum of 200. A public company needs a minimum of seven members with no upper limit. Employees who are members are excluded from the private company maximum.

What is a One Person Company (OPC)?

A One Person Company is a private company owned by a single member. It can have just one director. The 2013 Act introduced it to support solo entrepreneurs. And it requires a nominee in its memorandum.

What is the difference between a company limited by shares and by guarantee?

In a company limited by shares. Liability is capped at the unpaid value of shares. In a company limited by guarantee. Members pay a fixed promised amount only at winding up. Guarantee companies often serve non-profit purposes.

How many directors can a company have?

A public company needs at least 3 directors. A private company needs 2, and an OPC needs 1. The maximum is 15 for all. A company can exceed 15 by passing a special resolution.

Conclusion: Master the Types of Companies

The types of companies under the Companies Act 2013 form the backbone of Indian company law. Once you internalise the liability and membership rules. This topic becomes a scoring goldmine. The number anchors and tables above are your fastest path there.

Now turn knowledge into marks. Revise the master table, drill the number anchors, and attempt timed practice. With steady effort, you will answer any company-law question with confidence. Your banking-exam success starts with one focused revision today.

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