On the basis of the liability of the members, a company can be classified in
· Limited Companies
· Unlimited Companies
Limited Companies
Companies may be limited or unlimited companies. Company may be limited by shares or limited by guarantee.
a. Company limited by shares In this case, the liability of members is limited to the amount of uncalled share capital. No member of company limited by the shares can be called upon to pay more than the face value of shares or so much of it as is remaining unpaid. Members have no liability in case of fully paid up shares.
b. Company limited by the guarantee A company limited by guarantee is a registered company having the liability of its members limited by its memorandum of association to such amount as the members may respectively thereby undertake to pay if necessary on liquidation of the company. The liability of the members to pay the guaranteed amount arises only when the company has gone into liquidation and not when it is a going concern. A guarantee company may be a company with share capital or without share capital.
Unlimited Company: The liability of members of an unlimited company is unlimited. Therefore their liability is similar to that of the liability of the partners of a partnership firm. It may or may not have a share capital.
Under the Companies Act, 1956, the name of a public limited company must end with the word ‘Limited’ and the name of a private limited company must end with the word ‘Private Limited’. However, under Section 25, the Central Government may allow companies to remove the word “Limited / Private Limited” from the name if the following conditions are satisfied :-1. The company is formed for promoting commerce, science, art, religion, charity or other socially useful objects
2. The company does not intend to pay dividend to its members but apply its profits and other income in promotion of its objects.
· Limited Companies
· Unlimited Companies
Limited Companies
Companies may be limited or unlimited companies. Company may be limited by shares or limited by guarantee.
a. Company limited by shares In this case, the liability of members is limited to the amount of uncalled share capital. No member of company limited by the shares can be called upon to pay more than the face value of shares or so much of it as is remaining unpaid. Members have no liability in case of fully paid up shares.
b. Company limited by the guarantee A company limited by guarantee is a registered company having the liability of its members limited by its memorandum of association to such amount as the members may respectively thereby undertake to pay if necessary on liquidation of the company. The liability of the members to pay the guaranteed amount arises only when the company has gone into liquidation and not when it is a going concern. A guarantee company may be a company with share capital or without share capital.
Unlimited Company: The liability of members of an unlimited company is unlimited. Therefore their liability is similar to that of the liability of the partners of a partnership firm. It may or may not have a share capital.
Under the Companies Act, 1956, the name of a public limited company must end with the word ‘Limited’ and the name of a private limited company must end with the word ‘Private Limited’. However, under Section 25, the Central Government may allow companies to remove the word “Limited / Private Limited” from the name if the following conditions are satisfied :-1. The company is formed for promoting commerce, science, art, religion, charity or other socially useful objects
2. The company does not intend to pay dividend to its members but apply its profits and other income in promotion of its objects.
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