# Classes of Companies Based on Members

## 1. One Person Company (OPC)

An OPC is a company that has only one person as its member.

## 2. Private Company — Sec. 2(68)

A private company is one that:

(a) Minimum Paid-up Share Capital (PUSC): As may be prescribed.

(b) By its Articles of Association (AOA), it:

1. Restricts the right to transfer its shares.

2. Limits the number of members to 200 (except OPC, which has only 1 member).

3. Prohibits any invitation to the public to subscribe for its securities.

### Special Rules on Counting Members

Joint holders of shares are treated as a single member.
Employees and former employees who were members of the company while in employment and continued as members after their employment ceased — are NOT included in the member count of 200.

### Exemption for Sec. 8 Companies

A Section 8 company is exempt from the minimum capital requirement, provided it has not defaulted in:

Filing of Financial Statements under Sec. 137, and
Filing of Annual Return under Sec. 92.

## 3. Public Company — Sec. 2(71)

A public company is one that:

(a) Is not a private company, and

(b) Has a minimum PUSC as may be prescribed.

### Deeming Fiction

A private company that is a subsidiary of a public company is deemed to be a public company for the purposes of the Act, even though its articles continue with private-company restrictions.

Worked example

### Example 1

Example: XYZ Pvt. Ltd. has 195 shareholders, of whom 40 are former employees who acquired shares while in employment and continue to hold them. Has XYZ exceeded the 200-member cap?

Answer: No. The 40 former employees are excluded from the member count. Effective members for the cap = 195 − 40 = 155 members, which is well within the 200 limit.

### Example 2

Example: A Pvt. Ltd. has 150 members. Mr. X and Mr. Y are joint holders of 1,000 shares. How are they counted?

Answer: Joint holders are treated as a single member. So Mr. X and Mr. Y together count as 1 member, not 2.

### Example 3

Example: ABC Pvt. Ltd. is a wholly-owned subsidiary of XYZ Ltd. (a public company). Status of ABC?

Answer: ABC Pvt. Ltd. is deemed to be a public company even though its AOA contains private-company restrictions.

⚠️ Common exam mistakes

Counting joint holders as separate members — they are treated as a single member.
Including former employees in the 200-member cap — they are excluded if they became members during employment and continued thereafter.
Forgetting that a private subsidiary of a public company is deemed a public company.
Confusing OPC's 1-member limit with the general 200-member limit for private companies.

Bare-Act text Sec. 2(68) & Sec. 2(71) · Companies Act, 2013 · click to expand

Section 2(68): 'Private company' means a company having a minimum paid-up share capital as may be prescribed, and which by its articles— (i) restricts the right to transfer its shares; (ii) except in case of OPC, limits the number of its members to two hundred; (iii) prohibits any invitation to the public to subscribe for any securities of the company. Section 2(71): 'Public company' means a company which— (a) is not a private company; (b) has a minimum paid-up share capital, as may be prescribed.

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Classes of Companies based on Members — OPC, Private and Public Company

Worked example

⚠️ Common exam mistakes