All About Different Types of Companies in Indian Company Law 2025

Starting a business is an exciting journey, but one of the most critical decisions you’ll make is choosing the right type of business organization. The structure you select impacts compliance, liability, ownership, and future scalability.

Under the Companies Act, 2013, businesses in India fall under several categories, each offering unique advantages. This guide will help you understand the different types of companies in Company Law so you can make an informed decision. To better understand these classifications, let’s explore the various types of company in company law in India.

Types of Companies Based on Number of Members

Before proceeding with the company registration process, selecting the right types of company type is crucial. The number of members directly influences the business organization, shaping ownership distribution, operational flexibility, and compliance requirements.

1. One Person Company (OPC)

A One Person Company (OPC), established under the Companies Act, 2013, allows solo entrepreneurs to run a corporate entity with a single member, who can also serve as the sole director. Despite having only one shareholder, an OPC can appoint up to 15 directors. With limited liability protection, the owner’s personal assets remain safeguarded, making it an excellent choice for small businesses or individuals seeking corporate advantages without requiring partners.

2. Private Limited Company (Pvt Ltd)

A Private Limited Company (PLC) is a popular business structure in India that offers limited liability and controlled ownership. It requires at least two members and can have up to 200, with a minimum of two and a maximum of 15 directors. Unlike public companies, its shares cannot be freely transferred, making it ideal for startups and private businesses seeking structured ownership.

 Learn more about Private Limited Companies here.

3. Public Limited Company

A Public Limited Company (PLC) allows public investment through shares, making it ideal for large businesses seeking expansion. It requires at least seven members, with no limit on shareholders, and must have three to 15 directors. PLCs raise capital by issuing shares on the stock exchange, enabling broader investor participation.

Types of Companies Based on Size

Under the MSME Act, companies are categorized based on their size to establish eligibility for government benefits provided to Micro, Small, and Medium Enterprises (MSMEs). This classification is another dimension of understanding the types of business organizations within India.

1. Micro Companies

Businesses with investments in plant and machinery up to ₹1 crore and an annual turnover not exceeding ₹5 crores.

2. Small Companies

Entities with investment limits of ₹10 crore and a maximum annual turnover of ₹50 crore.

Additionally, under the Companies Act, 2013, companies with paid-up share capital below ₹4 crore and annual turnover under ₹40 crore also qualify as small companies, granting them extra benefits.

3. Medium Companies

Organizations with investments up to ₹50 crore and annual turnover capped at ₹250 crore.

Types of Company Based on Liability

Choosing the right business organization involves understanding liability, which defines financial responsibility. The Companies Act, 2013, classifies companies into three core types of company in company law:

1. Company Limited by Shares

A company limited by shares is one of the most common types of companies in company law. The members’ liability is limited to the unpaid amount on their shares, as defined in the MOA. Ownership is based on the equity shares held. It’s a widely preferred type of business organization for both private and public companies.

2. Company Limited by Guarantee

A company limited by guarantee is a unique type of business organization in company law, where a member’s liability is limited to the amount they promise to contribute to the company’s assets. This guaranteed amount is only payable if the company is wound up, and the liability is clearly defined in the MOA.

3. Unlimited Company

An unlimited company is a type of business where members have no limit on their liability and may be personally responsible for the company’s debts. Because of the high financial risk, it is the least preferred type of company under company law.

Different Types of Companies Based on Ownership and Control

In company law, businesses are categorized by ownership and governance. These types of company structures shape investment access and regulatory obligations. Recognizing different types of companies is essential for long-term success.

1. Holding Company

A holding company, also known as a parent company or umbrella company, controls one or more subsidiary companies by holding the majority of their shares. It influences their financial and strategic decisions while maintaining oversight without direct operational involvement.

2. Subsidiary Company

A subsidiary company is one where another company (holding) controls more than 50% of its voting power or influences its Board of Directors. If the holding company owns 100% of the shares, the subsidiary is considered a wholly owned subsidiary. Discover detailed insights about our subsidiary company here.

3. Associate Company

An associate company is similar to a subsidiary but with a key distinction—the parent company holds only a minority stake rather than a controlling majority. While it influences decisions, it does not exert full control over operations.

4. Government Company

A government company is an entity where at least 51% of ownership belongs to the central or state government. These companies function under government regulations while maintaining commercial operations, ensuring public-sector participation in industries.

5. Statutory Corporation

A statutory corporation is a government-established organization formed through legislation. It operates autonomously with legal backing from an Act of Parliament. For example, the Life Insurance Corporation of India (LIC) was created under the Life Insurance Corporation Act, 1956.

Types of Companies Based on Listing Status

In company law, businesses are categorized into types of companies according to their access to capital markets, which impacts investment potential and regulatory obligations. Recognizing these distinctions is crucial when choosing the most suitable business structure.

1. Listed Company

A publicly traded entity listed on recognized stock exchanges, providing shares to investors while complying with SEBI regulations to ensure transparency and corporate governance.

2. Unlisted Company

A privately held entity not traded on stock exchanges, securing capital through sources like venture capital, institutional investors, or private placements instead of public offerings.

Other Types of Companies in India

Apart from standard classifications, company law recognizes several different types of companies based on purpose, ownership, and financial structure. Understanding these variations helps in selecting the most suitable business organization.

1. Foreign Company

A foreign company is incorporated in India but owned by foreign nationals, holding more than 50% shareholding. With rising global investments, foreign company registration is gaining traction as India’s economy continues to attract international businesses.

2. Section 8 Company

A Section 8 company, as defined under the Companies Act, 2013, is registered not for profit but for charitable purposes, including social welfare, education, and environmental protection. All NGOs in India operate under this category, requiring prior approvals for registration.

3. Producer Company

Designed for farmers, a producer company focuses on activities like producing, harvesting, selling, and exporting agricultural goods. This business organization provides farmers with a structured legal identity, enabling collective operations and better market access.

4. Dormant Companies

A dormant company is formed primarily to hold assets, intellectual property, or future projects but remains inactive in operations. It exists under company law for strategic purposes, such as safeguarding trademarks or preparing for future ventures.

5. Nidhi Companies

A Nidhi company is a member-driven financial entity focused on lending and borrowing money within its community. It functions as a treasury-like structure, ensuring financial assistance among members while operating under defined legal frameworks.

Summary

To help you quickly compare and decide, here’s a concise summary of key details—like the number of directors, member requirements, liability structure, and capital norms—for each type of company covered above.

Type of Company	Min. Members	Min. Directors	Capital Requirement	Liability	Ideal For
One Person Company (OPC)	1 (Only individual)	1	No minimum prescribed	Limited	Solo entrepreneurs, consultants
Private Limited Company	2	2	₹1 lakh (no mandatory minimum)	Limited to shares	Startups, small to medium businesses
Public Limited Company	7	3	₹5 lakh (no mandatory minimum)	Limited to shares	Large businesses seeking public investment
Section 8 Company	2	2	No minimum prescribed	Limited	Non-profits, NGOs, charitable organizations
Producer Company	10 producers or 2 institutions	3	₹5 lakh (minimum of ₹1 lakh)	Limited	Farmer cooperatives
Foreign Company	As per the structure	As per the structure	Depends on business model	Limited	Foreign-controlled businesses in India
Holding Company	Varies	Varies	Depends on structure	Limited or unlimited	Managing subsidiaries
Subsidiary Company	Varies	Varies	Depends on the parent company	Limited or unlimited	Units under a holding company
Associate Company	Varies	Varies	Depends on shareholding	Limited	Strategic investments with minority control
Government Company	7	3	Varies	Limited	Public sector undertakings (PSUs)
Statutory Corporation	Created by Act	Appointed per Act	Funded by govt or revenue	Varies as per statute	LIC, RBI, etc.
Micro Company	Varies	Varies	Investment ≤ ₹1 Cr, Turnover ≤ ₹5 Cr	Limited	Very small businesses
Small Company	Varies	Varies	Capital ≤ ₹10 Cr, Turnover ≤ ₹50 Cr	Limited	Small enterprises
Medium Company	Varies	Varies	Investment ≤ ₹50 Cr, Turnover ≤ ₹250 Cr	Limited	Medium-scale enterprises
Nidhi Company	200 members within 1 year	3	₹10 lakh minimum	Limited	Community-based lending and borrowing
Unlimited Company	2 or more	2 or more	No minimum	Unlimited	High-risk ventures (rarely used)
Dormant Company	1 or more	1 or more	No minimum	Limited	Future projects or IP holding

Conclusion

Choosing the right types of company structure isn’t just a legal requirement—it lays the foundation for financial security, operational flexibility, and long-term success. Whether it’s ownership, liability, or industry-specific needs, understanding the different types of companies helps in making informed decisions. With LegalWiz, businesses can navigate complexities effortlessly, ensuring compliance while focusing on growth.

LegalWiz offers comprehensive support for business registration and legal compliance, ensuring seamless management from start to scale. Here’s how LegalWiz can help:

• Company Registration: End-to-end assistance for Private Limited, Public Limited, One Person Company, Section 8, Producer, and Nidhi Companies.
• Subsidiary Setup: Expertise in Indian subsidiary registration, ensuring compliance with corporate governance.
• Legal Compliance: Ongoing regulatory support, including tax filings, annual returns, and statutory documentation.
• Trademark & IP Protection: Safeguard brand identity through trademark registration and intellectual property compliance.
• Business Structuring Guidance: Advisory on selecting the right company type based on liability, ownership, and scalability.
• Domain & Name Availability Checks: Ensure unique company identity with domain search and name registration assistance.
• Licensing & Industry-Specific Regulations: Navigate industry-specific legal requirements with expert-backed licensing solutions.
• Conversion & Restructuring: Assistance in converting sole proprietorships or partnerships into private limited companies.
• Financial & Tax Compliance: Comprehensive support in GST registration, tax planning, and audit readiness.
• Ongoing Business Support: Strategic insights on governance, expansion, and operational efficiency.

LegalWiz ensures businesses meet regulatory standards while maintaining agility for growth. With expert-backed solutions and seamless execution, entrepreneurs and enterprises can focus on scaling while LegalWiz handles legal complexities. Let LegalWiz guide you through every step of your business journey.

Get started today! Register your company now Or consult our experts to find the best business structure for your needs!