Information about companies

Private and public corporations are largely classified as such under the Companies Act of 1956, which also establishes a legal framework based on this categorization. The structures of corporate organisations, however, continue to evolve as a result of the booming economy and rising complexity of commercial operations.

There is a need for the law to consider the needs of many company types that may arise and work to create universal principles to which all company types may resort when developing their corporate governance structures. The risk-taking ideas of businesses are hampered by rigid structures, pointless restrictions, and laws.

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Private and small businesses that often rely on internal or personal resources rather than public issues or deposits for their funding needs demand low-cost flexibility, freedom of operation, and compliance. Equally important, public enterprises that use public funds must be subject to a stricter corporate governance structure. The Company Law should provide diverse company classifications to offer a complete framework for various corporate organisation types. It should also make it possible for businesses to transition seamlessly from one kind to another.

Classification of Companies

In order to adapt to the environment effectively, the corporate structure might assume many different forms. There should be numerous categories of corporations recognised under company law. Although the Committee acknowledges that such categorization can never be thorough, it does identify the criteria for classification based on the forms now identifiable.

(1) In accordance with the size

    (a) Small companies

    (b) Other companies

(2) Based on the number of members

    (a) One-person company

    (b) Private companies

    (c) Public companies

(3) In the context of control

    (a) Holding companies

    (b) Subsidiary companies

    (c) Associate Companies

(4) In the context of liability

    (a) Limited 

        (i) by Shares 

        (ii) by Assurance (with or without share capital)

    (b) Unlimited

(5) In consideration of the mode of obtaining capital

    (a) Listed companies

    (b) Un-listed companies

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