'Public Company' or a 'Private Company'

its profit, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members. While granting the licence, the Central Governtnent may impose such conditions and regulation's as it' thinks fit and may direct the company to incorporate the same in its memorandum or articles.(iii) Unlimited Companies. An unlimited company is one in which tle liability of the members is unlimited i.e. the members are also personally liable for the payment of companies' liabilities. Thus, if in the event of winding up of a company the assets of the company are not sufficient to pay The majority of companies in India belong to this category. Registered companies can further be classified in two ways: 1. On the basis of Liability of
members and 2. On the basis of number of members.Registered Companies on the basis of Liabilities. On the basis of liability of members, the Companies Act makes provision for registration of three types of companies, namely:(i) Companies Limited by shares, or
(ii) Companies Limited by guarantee, or
(iji) Unlimited Companies, Each of these types may be a 'Public Company' or a 'PrivateCompany'.
(i) Companies limited by sh\res. A company in which the liability of each member is limited to the nominal or face value of the shares held by him, is known as a company limited by shares. If a member has paid the full amount of shares, then his liability shall be nil. In case the shares are partly paid up, then the company can call up the remaining amount at 3liy time. But a shareholder cannot be called upon to pay more than the amount remaining unpaid
on his shares at any time and during: the lifetime and during the winding up of the company. His personal assets cannot be called upon for the paymenf of liabilities of the company. Most of the companies in India are of this type and we, in this text, are concerned with this type of cnies.Companies limited by guarantee. Where the liability of the members of a company is limited to such an amount as the members undertake to contribute to the assets of the
company in the event of its winding up. Such companies are generally formed for the promotion of art; science, culture, sports etc. Such a company mayor may not have share capital and, if it is registered with a share capital, it may be a public company or a private Generally, a company limited by guarantee must use the word 'Limited' or the words 'Private Limited' , as the case may be, as the last word or words of its name. However, the Central Government may by a licence exempt such a company from using the word 'Limited' or the words 'Private Limited' in its namc, provided it is proved to the satisfaction of the Central Government that the company is formed for promoting commerce, art, science, religion. charity or any other useful object that it intends to apply its liabilities,private property of the members can also be utilised for the payment of company's liabilities. It may, however, be noted that due to separate legal entity of the company, its creditors cannot file a suit against the members directly. Such companies are rarely formed now-adays. They are not popular as they are lacking in one ofthe characteristic features of joint stock companies, viz, limited liability.