COMPANY

Definition:
It is defined as: A legal entity, allowed by legislation, which permits a group of people, as shareholders, to apply to the government for an independent organization to be created, which can then focus on pursuing set objectives, and empowered with legal rights which are usually only reserved for individuals, such as to sue and be sued, own property, hire employees or loan and borrow money. It is also defined as: An institution created to conduct business.

Types of Company:
Following are some types of companies. Charted Company Statutory Company Registered Company Unlimited Company Company Limited by Guarantee Company Limited by Shares Holding & Subsidiary Company Non Profit Company Insurance Company

Charted Company:

A company, which is incorporated by royal order, is known as charted company. A charter is issued at the time of information. All power and functions of the company are governed under the charter. This type of company is not formed now days. Some examples are East India Company, Charted Bank of
Statutory Company:

England.

This type of company is formed by the special order of Prime Minister, President or governor general of the country. This company is formed for the performance of some tasks of national interest. Example is state bank of Pakistan.
Registered Company:

This company is formed according to the company's ordinance 1984. There are three types of registered companies.
Unlimited company:

Liability of the shareholders of unlimited company is unlimited like partnership. Liability of the share holders is unlimited. Its management is called board of directors. It has separate legal entity from its owners. Its shares are transferable.
Company Limited by Guarantee:

Every number of this company provides a guarantee to pay a specific sum of money at the time of its winding up. Liability of its member's id limited to their guarantee. This type of company is formed to promote social, cultural and scientific activities. Example is chamber of commerce.
Company limited by shares:

A company in which liability of the shareholders is limited to the nominal value of shares held by them is called company limited by shares. Holding & Subsidiary Company: A corporation that owns a large number of shares normally 50% in other companies. Holding companies use the voting rights that come with their shares to exert influence over the companies under them and the company whose shares are purchased by the holding company is called subsidiary company.

Non Profit Company:

A non-profit company is an organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals.[2] Examples of NPOs include charities (i.e. charitable organizations), trade unions, and public arts organizations. Most governments and government agencies meet this definition, but in most countries they are considered a separate type of organization and not counted as NPOs. They are in most countries exempt from income and property.
Insurance Company:

A company that an individual or

offers insurance through

policies to

the public, as

either

by selling directly

to An

another source such

an employee's benefit plan.

insurance company is usually comprised of multiple insurance. An insurance company can specialize in one type of insurance, such as life insurance, health insurance, or auto insurance, or offer multiple types of insurance.

Difference between Private and Public Limited Company:

Basis of Difference Definition Public Limited Company Private Limited Company

It is a company whose shares Private limited companies are smallare capable of being offered to to medium-sized businesses that are general public. often run by a family or small group of owners. It cannot start its business It can start its business immediately before fulfilling its after its incorporation. requirements. It is legally required to hold statutory meeting and file the statutory report to the registrar of the company. It is not legally required to hold statutory meeting and file the statutory report to the registrar of the company.

Commencement of Business Requirement of Meeting

Transfer of shares Who Purchase Shares Minimum Members

Transfer of shares is allowed in Transfer of shares is not allowed in public limited company. private limited company. Public is invited to purchase the Public is not invited to purchase the shares. shares. Minimum seven members are Minimum two members are required required to incorporate the to incorporate the private company. public company. Single person can also incorporate private limited company. It has no limit of maximum Maximum 50 members are allowed numbers. to incorporate private limited company. It cannot allot shares unless it It can allot shares immediately after fulfills its legal requirements. its incorporation.

Maximum Members

Allotment of Shares

Balance sheet & Balance sheet and profit & loss Balance sheet and profit & loss Profit & Loss Account account must be submitted to account are not necessarily registrar of company. submitted to registrar of company.

Difference between Memorandums of Association & Article of Association:

Memorandum of Association:

It is along with the application of starting of a company. I think it confines & defines the objective of a company. MOA is also called Charter of a Company. The main aim of MOA is to let the investors know where their money is invested. It has 2 objectives; Main Objective & Subsidiary Objectives. MOA has 6 clauses: The Name Clause The Registered Office Clause The Object Clause The capital Clause The Liability Clause
The Association Clause. Article of Association:

Articles of Association are the document containing the rules which governs the INTERNAL organization of a limited company. This must be filed with the Registrar of Companies together with the Memorandum of Association. The Articles of Association reflects the following: Organization and control Voting rights Conduct of directors meeting Conduct of shareholders annual general meeting Directors power Rights attached to the different classes of shares

Difference between Partnership and Company: Company

Business is likely to be highly profitable, and much of the profit will need to be left in the business to provide working capital for expansion. Business faces a high risk of knockout legal claims. Business will have investors who are not in day-to-day control of operations, or the profit share is unequal. Blue chip customers who would expect to be dealing with a limited company. Company ordinance 1984 governs it. Company will exist after death of any shareholder. Company is incorporated on the basis of company law. Prospectus is prepared in case of company.

Partnership
Business profitability expected to be low or virtually all profits to be taken out as remuneration. Business is at low risk of legal claims. Management is the only investors in the business. Privacy of accounting information is critical to the owners. Partnership Act 1932 governs it. Partnership will dissolve after death of any partner. Partnership is incorporated on the basis of agreement. Prospectus is not prepared in case f partnership firm.