# Classification of Companies

The Companies Act, 2013 classifies companies based on listing status, size, membership and ownership. The classifications below frequently appear in MCQs and descriptive questions.

## 1. Listed Company

A company any of whose securities are listed on a Recognized Stock Exchange.

> Tip: Even one listed security (equity, debt, etc.) is enough. However, by way of exception, certain companies listing only specified debt securities are treated as unlisted under the Rules.

## 2. Small Company [Sec 2(85)]

A company is a Small Company if all of the following are satisfied:

It is not a Public Company;
Paid-up share capital does not exceed ₹4 Crores (or higher prescribed amount, cap ₹10 Cr); and
Turnover as per its last P&L does not exceed ₹40 Crores (or higher prescribed amount, cap ₹100 Cr).

Exclusions — the following can NEVER be a Small Company:

Holding company or Subsidiary company
Non-Profit Organisation (Section 8 company)
Company governed under any Special Act

## 3. Private Company [Sec 2(68)]

A Private Company must have a prescribed minimum paid-up capital and its Articles of Association (AOA) must:

Restriction	Prohibition
Restrict the right to transfer its shares	Prohibit any invitation to the public to subscribe to its securities
Limit number of members to 200 (excluding present & past employee-members)	—

Joint shareholders are treated as a single member.

## 4. Public Company [Sec 2(71)]

Is not a private company (no restrictions/prohibitions in AOA);
Has the prescribed minimum paid-up capital;
A private company that is a subsidiary of a public company is deemed a Public Company.

## 5. One Person Company (OPC) [Sec 2(62)]

Formed by one person subscribing his name to the MOA;
That sole member must appoint a Nominee;
Eligibility (member & nominee): Natural person, Indian citizen, resident in India, not a minor;
One person = one OPC; can be nominee in only one OPC;
On death/incapacity of the member, the Nominee becomes the member; ROC is intimated in the prescribed form;
Prior written consent of the nominee is mandatory; nominee details must be furnished in the prescribed form.

## Quick Comparison

Feature	OPC	Private	Public
Min Members	1	2	7
Max Members	1	200	Unlimited
Min Directors	1	2	3
Public Subscription	No	No	Yes

Worked example

### Example 1

Example 1 — Small Company test: XYZ Pvt Ltd has paid-up capital ₹3 Cr and turnover ₹35 Cr. It is a wholly-owned subsidiary of ABC Ltd. Is it a Small Company?

Answer: No. Although capital (<₹4 Cr) and turnover (<₹40 Cr) limits are met, a subsidiary is expressly excluded from the definition of Small Company.

### Example 2

Example 2 — OPC Nomination: Mr. A, an Indian citizen resident in India, wants to form an OPC and proposes his 16-year-old son as nominee. Is this valid?

Answer: No. A minor cannot be a nominee/member of an OPC. Mr. A must nominate another natural person who is an Indian citizen, resident in India, and not a minor.

### Example 3

Example 3 — Private Company members: PQR Pvt Ltd has 195 members, of whom 30 are current employee-shareholders and 20 are ex-employees (became members during their employment). Does it breach the 200-member cap?

Answer: No. Present and past employee-members are excluded. Effective count = 195 − 30 − 20 = 145, which is within the limit.

⚠️ Common exam mistakes

Treating any company with low capital as a Small Company — forgetting that holding/subsidiary/NPO/special Act companies are excluded.
Counting joint shareholders as separate members for the 200-member private company limit (they count as one).
Forgetting that a Pvt Co. subsidiary of a Public Co. is deemed Public.
Saying nominee of OPC can be an NRI or minor — must be a natural person, Indian citizen, resident in India, not a minor.
Confusing the paid-up capital cap (₹4 Cr) with the ceiling the Government can prescribe (₹10 Cr).

Bare-Act text Section 2(85), 2(68), 2(71), 2(62) · Companies Act, 2013 · click to expand

Section 2(85) — "Small Company" means a company, other than a public company, — (i) paid-up share capital of which does not exceed four crore rupees or such higher amount as may be prescribed which shall not be more than ten crore rupees; and (ii) turnover of which as per profit and loss account for the immediately preceding financial year does not exceed forty crore rupees or such higher amount as may be prescribed which shall not be more than one hundred crore rupees: Provided that nothing in this clause shall apply to — (A) a holding company or a subsidiary company; (B) a company registered under section 8; or (C) a company or body corporate governed by any special Act.

Now that you've read this — what's next?

Move from understanding → mastery in 3 clicks. Each option below picks up from this lesson's topic.

🔥 Drill 5 Qs on this → ✍️ Adaptive practice →

Classification of Companies: Listed, Small, Private, Public, OPC

Worked example

⚠️ Common exam mistakes