There are four different types of companies under our laws, viz:
Types of Company
1. Holding Company:
When a company has control over another company, it is known as a holding company and the company so controlled is regarded as a subsidiary company. A company shall be deemed to be a subsidiary company where:
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i. One company controls the composition of the Board of Directors of another; the latter becomes a subsidiary of the former.
ii. One company holds a majority of the shares in another company; the latter becomes a subsidiary of the former.
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iii. One company is a subsidiary of another, which is itself a subsidiary of some other company, the first mentioned company shall also become the subsidiary of the last mentioned company.
2. Government Company:
This is a new concept introduced for the first time in the Companies Act, 1956. Although the number of Government companies is very small in comparison with the number of non-government companies, they account for nearly 3/4ths of the paid-up capital of all companies operating in India.
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The Companies Act defines a Government company as a company in which not less than 51 per cent of the paid-up capital is held by the Central Government, a State Government or Governments or partly by Central Government and partly by one or more State Governments, is called a government company.
A government company is subject to a regular system of special audit under the direction of the Comptroller & Auditor General in addition to the normal statutory audit. Section 620 of the Companies Act empowers the Central Government to exempt the government companies from many of the provisions of the Act. As at the end of March, 1990, there were 1,160 government companies in India.
3. Foreign Companies:
Indian Company Law contains certain special provisions for the foreign companies (Sections 591 to 603).
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A foreign company is defined as one which is incorporated outside India and which has established a place of business in India. The 1974 amendment of the Companies Act has extended the provisions of the Act to all foreign companies.
4. Investment Company:
An investment company is a company whose major business is the acquisition of shares and debentures. The Sachar Committee has recommended a modification of the definition in such a way as to exclude private companies and include only public companies dealing with shares, debentures and other securities.