Different Types of Companies in India

Companies can be grouped in different ways based on who owns them, what they do and how big they are. This classification helps in setting rules for how they operate, protects those involved and supports the country’s economic progress.
 
Each type of company comes with its own rules, benefits and responsibilities, depending on what the business aims to achieve and how it runs.

Companies are mainly divided into two types: private and public. This guide explains what each type means, how they are structured, their benefits and the rules they must follow. 

Understanding these details can help business owners make smart choices when starting or changing their businesses.

The various types of companies based on different parameters are covered below in this article.

The Companies Act 2013

The Companies Act, 2013 classifies companies based on the number of members. The MSME Act groups them into micro, small, and medium categories to provide specific benefits. 

Companies can also be categorized by member liability, ownership type, and whether they are listed on the stock exchange. Below are the different types of companies based on these factors.

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India's corporate landscape is wide and diverse, reflecting the varied needs of businesses, industries and investors. 

A company’s legal structure determines its liability, ownership, taxes and regulatory responsibilities—factors that significantly influence how the business operates and grows.

Private Limited Company (Pvt. Ltd.)

A Private Limited Company is the most popular business structure in India. It offers flexibility and protects shareholders from personal liability to make it a preferred choice for many entrepreneurs.

Key Features

• Ownership: Privately held by a small group of individuals; shares are not available to the public.
• Minimum Requirement: Needs at least two shareholders and two directors.
• Liability: The risk of Shareholders is limited to the amount they invested.
• Compliance: Must follow annual reporting and audit requirements.

Advantages

• Limited liability makes it easier to attract investors.
• Owners keep full control without public interference.

Disadvantages

• Has more compliance rules than a sole proprietorship.
• Shares cannot be traded publicly.

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Public Limited Company (PLC)

A Public Limited Company is a business whose shares are traded openly on the stock exchange, allowing anyone from the public to buy them. Large companies that want to raise substantial capital often choose this structure.

Key Features

• Ownership: Shares are publicly traded and can be bought by anyone.
• Minimum Requirements: Needs at least seven shareholders and three directors.
• Liability: The liability of shareholders is limited to their investment.
• Compliance: Must follow SEBI rules and corporate governance norms.

Advantages

• It can raise large amounts of capital from the public.
• Shares are easy to buy and sell, offering liquidity to shareholders.

Disadvantages

• Faces strict regulations and heavy compliance requirements.
• Share prices can fluctuate due to market conditions, affecting investor confidence.

One-Person Company (OPC)

A One Person Company allows a single entrepreneur to start a company with limited liability. Introduced under the Companies Act 2013, OPC is ideal for sole proprietors who want the benefits of a company without needing partners.

Key Features

• Ownership: Owned by a single individual.
• Minimum Requirements: Only one director is required.
• Liability: The risk of owner is limited to their investment.
• Compliance: Has simpler reporting requirements than Private or Public Limited Companies.

Advantages

• Perfect for solo entrepreneurs seeking limited liability.
• Easier to manage than a Private Limited Company.

Disadvantages:

• Not suitable for large-scale businesses, though it can be converted later.
• Limited access to funding compared to Private Limited Companies.

Limited Liability Partnership (LLP)

LLPs are a partnership as well as a limited liability company. They are pretty much in vogue among professional services providers because of flexibility and liability protection.

Partnership Firm

A partnership firm is one of the firms owned by two or more individuals who share profits and responsibilities as well as liability as stipulated in their partnership agreement.

Section 8 Company (NGO)

A group of individuals can register a company under Section 8 of the Companies Act for charitable or non-profit purposes. These companies work to promote areas like commerce, science, art, education, sports, research, religion, social welfare, charity, environmental protection, and other similar causes.

They must use their profits and income only to support their objectives and are not allowed to distribute dividends to members.

Joint Venture (JV)

A Joint Venture (JV) is a temporary partnership between two or more organizations formed for a specific project or business goal—commonly used for research, product development or entering new markets.

Key Features

• Ownership: Shared based on the terms of the agreement.
• Minimum Requirements: Defined by the contract between partners.
• Liability: Depends on the terms outlined in the JV agreement.
• Compliance: Varies based on how the venture is structured (company, partnership, etc.).

Advantages

• Combines resources, expertise, and market access.
• Shares both risk and investment between partners.

Disadvantages

• Control is limited by the agreement and partner involvement.
• Conflicts may arise due to differing management styles or goals.

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Foreign Company

A Foreign company is one that is incorporated outside India but operates in the country through branches, liaison offices or subsidiaries. These companies enter the indian market to expand their global presence.

Key Features

• Ownership: Controlled by a foreign parent company.
• Minimum Requirement: Must be registered with the Registrar of Companies (RoC) in india.
• Liability: Limited to the operations within india.
• Compliance: Regulated under the Foreign Exchange Management Act (FEMA).

Advantages

• Provides access to the Indian market.
• Can leverage local talent and infrastructure.

Disadvantages

• Faces complex and multiple regulatory obligations.
• High compliance costs due to cross-border operations.

Types of Companies Based on Size

The MSME Act classifies companies based on their size to provide government benefits and support tailored to Micro, Small, and Medium Enterprises (MSMEs). This classification helps businesses access easier credit, tax benefits, and other schemes.

Micro Companies

• Investment: Up to ₹1 crore in plant and machinery.
• Turnover: Up to ₹5 crore per year.

Small Companies

• Investment: Up to ₹10 crore.
• Turnover: Up to ₹50 crore.

Note: Under the Companies Act, 2013, a small company is also defined as one with:

• Paid-up capital: Less than ₹4 crore.
• Turnover: Less than ₹40 crore.

This provides additional compliance relaxations and benefits.

Medium Companies

• Investment: Up to ₹50 crore.
• Turnover: Up to ₹250 crore.

These size-based categories help businesses qualify for various MSME benefits offered by the government.

Types of Company Based on Listing

Companies can also be classified as listed or unlisted based on how they raise capital.

Listed Company

A listed companyis one that is registered on a recognized stock exchange in India or abroad. Its shares are freely traded in the open market. These companies must follow strict rules set by the Securities and Exchange Board of India (SEBI).

To become listed, a company must issue a prospectus and offer shares to the public through an Initial Public Offer (IPO). Already listed companies can raise more funds through a Further Public Offer (FPO).

Unlisted Company

An unlisted company is not registered on any stock exchange, so its shares cannot be traded publicly. These companies raise capital through private means—such as friends, family, private investors, or financial institutions.

If an unlisted company wants to go public, it must first convert into a public company and then issue a prospectus to list its shares on the stock exchange.

Note: All listed companies are public companies, but not all public companies are listed.

Conclusion 

India offers a range of company structures to suit different business needs. From sole proprietorships for small individual ventures to LLPs and private limited companies for growing startups and Section 8 companies for non-profits—each type has unique features, compliance requirements, and benefits.

Choosing the right structure depends on factors like ownership, liability, capital needs, and long-term goals. Understanding these types helps entrepreneurs make informed decisions and build a strong foundation for their business journey.