Companies Are Classified in the Following Basis

By Joshua Nyamache

See all Articles by Joshua NyamacheSee Joshua Nyamache's Expert PageGet Updates on Corporate TrainingGet Updates on Joshua Nyamache

There are many categories of companies which are classified on the following basis.

1. On the Basis of Liability

Limited by shares-Is the one where the liability of members is limited to the face value of shares that the members have in the Co.

Limited by guarantee-Is the one where the liability of members is limited to a fixed amount which they have guaranteed. This is where members have agreed to contribute their assets to pay the outstanding liabilities of the company in the event of winding up.

Unlimited companies-This one is where the liability of members is unlimited. They have to pay the liabilities of the Co from their personal assets.

2. On the Basis of Members

Private Co-It is defined as one with a minimum of twenty members but with a maximum of fifty.

Public Co-Is defined as one with a minimum of seven members but with no maximum number of members.

3. On the Basis of Incorporation or Registration

Chartered Co-They come into existence under a special charter that is only issued by a monarch or a crown.

Statutory Co-This one is incorporated under a special or separate act of legislature.

Registered Co-Their existence come about by registration with the registrar of companies under the companies act.

4. On the Basis of Ownership

Government Co-Is the one which the central government or state governments or the central government together with one or more state governments partly owns not less than 51% of the share capital of the company.

Non government Co-Is owned and managed by private investors.

5. On the Basis of Nationality

Domestic Co-Is incorporated in the country.

Foreign Co-Is incorporated in a foreign country but has a place of business in a foreign country.

6. On the Basis of Control

Holding Co-Is the one that owns more than 50% of nominal value of equity share capital of another Co or is controlling the composition of the board of directors of another Co. This means that it is a company that is controlling subsidiary Co.

Subsidiary Company-Is one that is controlled by a holding Co since it owns less than 50% nominal value of equity share capital or is not controlling the composition of the board of directors of another Co.