Types of Companies on the Basis of Ownership

A company is a form of business organization, which is created by law. It refers to an association of persons, created to undertake business activities, having a separate legal existence, perpetual succession, and a common seal.

Types of Companies on the Basis of Ownership –

(a) Government Companies

A Government company means any company in which not less than 51 percent of the paid-up share capital is held by the Central Government, or by any State Government or Government, or partly by Central Government and partly by one or more State Governments and includes a company which is subsidiary of the Government company. Simply, a government company is a company in which at least 51% of the paid-up capital has been subscribed by the government. A Government Company’s annual reports have to be tabled in both the Houses of Parliament and state legislature, depending on the nature of ownership.

Some of the examples of Government companies in India are: Coal Mines Authority Ltd., Steel Authority of India Limited and National Aluminum Company Ltd., etc. An entrepreneur has no scope for this type of company.

 (b) Non-government Companies

If the government does not subscribe to a minimum of 51% of the paid-up capital, the company will be a non-government company. It is a company that holds the majority of shares of another company. Such a company exercises control over the composition of the Board of Directors of the other company and is in a position to influence the formulation of policy.

(c) Multinational Company:

These types of companies have production and marketing facilities in different nations. Their ownership, control, and management are spread in more than one country.

A multinational company uses the following mediums for carrying out its business operations on a global level: Branches, Franchisees, Turnkey projects, Joint ventures, etc.

Coca-Cola, Domino’s Pizza, Bata, and Nestle are a few examples of prominent multinational companies.

(d) Subsidiary companies

A company is known as a subsidiary company when –

(a) the composition of its Board of Directors is controlled by another company; or

(b) the other company holds the majority of its equity shares; or

(c) the other company controls more than half of its voting rights; or

(d) it is a subsidiary of another subsidiary company.