Match List I with List - II. List - I List - II (A) Producer companies (I) Do not necessarily require Memorandum of Association (B) Statutory companies (II) Association not for profit (C) Section 8 company (III) Formed to convert cooperative into a company (D) Small company (IV) Paid up share capital is between 50 lakh-5 crore and turnover is between 2 crore - 20 crore Choose the correct answer from the options given below:
(A) - (III), (B) - (I), (C) - (II), (D) - (IV)
Understanding Different Types of Companies in India
This question asks us to match various types of companies in India with their characteristic features or formation methods as defined under the Companies Act, 2013, or other relevant statutes.
Analyzing the Matches
Let's analyze each option from List I and find its correct match in List II based on common legal definitions and characteristics.
- Producer Companies: These are special types of companies defined under the Companies Act, 2013. They are typically formed by people engaged in primary produce (like agriculture, animal husbandry, etc.) and can often be formed by converting a cooperative society into a company.
- Statutory Companies: These companies are not registered under the Companies Act, 2013, but are instead constituted by a special Act of Parliament or a State Legislature. Examples include the Reserve Bank of India, Life Insurance Corporation of India, etc. Since their powers, objects, and regulations are laid down in the special Act, they do not require a separate Memorandum of Association (MoA) or Articles of Association (AoA) under the Companies Act.
- Section 8 Company: Registered under Section 8 of the Companies Act, 2013 (previously Section 25 under the 1956 Act), these companies are formed for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other useful object. They apply their profits, if any, or other income towards promoting their objects and prohibit the payment of any dividend to their members. Hence, they are considered 'not for profit' associations.
- Small Company: Defined under Section 2(85) of the Companies Act, 2013, a small company is a private company that meets specific criteria regarding its paid-up share capital and turnover. The thresholds are subject to change by rules. The description provided in List II gives a range that aligns with past or possible rule-based expansions of these thresholds (Paid-up share capital and turnover limits).
Matching List I with List II
Based on the analysis above, let's match the items:
- (A) Producer companies: As discussed, they are often related to converting cooperatives into a company structure. This matches (III) "Formed to convert cooperative into a company".
- (B) Statutory companies: These companies are established by a special Act and do not need a separate MoA under the Companies Act. This matches (I) "Do not necessarily require Memorandum of Association".
- (C) Section 8 company: These are explicitly 'not for profit' organizations. This matches (II) "Association not for profit".
- (D) Small company: This is defined by specific thresholds for paid-up share capital and turnover. This matches (IV) "Paid up share capital is between 50 lakh-5 crore and turnover is between 2 crore - 20 crore".
Summary Table of Correct Matches
| List I (Company Type) | List II (Feature/Description) | Match |
|---|---|---|
| (A) Producer companies | (I) Do not necessarily require Memorandum of Association | (A) - (III) |
| (B) Statutory companies | (II) Association not for profit | (B) - (I) |
| (C) Section 8 company | (III) Formed to convert cooperative into a company | (C) - (II) |
| (D) Small company | (IV) Paid up share capital is between 50 lakh-5 crore and turnover is between 2 crore - 20 crore | (D) - (IV) |
Putting it all together, the correct matches are: (A) - (III), (B) - (I), (C) - (II), (D) - (IV).
Detailed Explanation for Each Match
(A) Producer Companies and Conversion of Cooperatives
Producer companies are a hybrid between cooperative societies and private limited companies. A significant way they are formed is by the conversion of existing cooperative societies involved in primary produce into a company structure under Part IXA of the Companies Act, 1956 (which corresponds to the provisions for Producer Companies in the Companies Act, 2013). This structure allows primary producers to organize effectively for mutual benefit, combining the principles of cooperation with the benefits of a company structure.
(B) Statutory Companies and Memorandum of Association
Statutory companies are creatures of specific Acts of Parliament or State Legislatures. The Act that creates them lays down their objectives, powers, and operational framework. Unlike companies registered under the Companies Act, 2013, which derive their foundational powers and objects from their Memorandum of Association (MoA), statutory companies derive these directly from the enabling statute. Therefore, they do not need a separate MoA as typically required for companies registered under the Companies Act.
(C) Section 8 Company as Not for Profit Association
Section 8 companies are specifically registered for charitable or non-profit purposes. Their primary objective is to promote a useful cause, and any income generated must be used solely for furthering that object. The law explicitly prohibits them from distributing dividends to their members. This makes them distinct from other companies that primarily aim to make profits and distribute them among shareholders.
(D) Small Company Definition Criteria
The definition of a 'Small Company' in the Companies Act, 2013, is based on financial criteria, specifically paid-up share capital and turnover. While the exact numerical thresholds have been revised over time, the description in List II provides a range for paid-up capital (50 lakh to 5 crore) and turnover (2 crore to 20 crore) which aligns with the concept and past limits for qualifying as a small company. Meeting these criteria provides certain exemptions and reduced compliances under the Act.
Conclusion on Company Types Match
Based on the specific characteristics and legal definitions of each type of company, the established matches (A)-(III), (B)-(I), (C)-(II), (D)-(IV) are consistent with the provisions of the Companies Act and related laws.
Revision Table: Key Company Types
| Company Type | Key Characteristic |
|---|---|
| Producer Company | Often formed by converting a cooperative; for primary producers. |
| Statutory Company | Created by a special Act; Act defines scope, not MoA under Companies Act. |
| Section 8 Company | Not for profit; profits used for objectives; no dividend distribution. |
| Small Company | Based on paid-up capital and turnover thresholds; enjoys fewer compliances. |
Additional Information on Company Structures
Understanding different types of companies is crucial for comprehending the Indian corporate structure. The Companies Act, 2013, governs the formation, functioning, and winding up of most types of companies. Besides those mentioned, other common types include:
- Private Company: Restricts transfer of shares, limits number of members (except in case of OPC), and prohibits invitation to public to subscribe for securities.
- Public Company: Can freely transfer shares, has no limit on the number of members, and can invite the public to subscribe for securities.
- One Person Company (OPC): A type of private company with only one member.
- Government Company: A company where not less than 51% of the paid-up share capital is held by the Central Government, State Government(s), or partly by the Central Government and partly by one or more State Governments.
- Foreign Company: A company incorporated outside India having a place of business in India.
Each type has specific compliance requirements, governance structures, and legal implications. The definitions and regulations for these company types are detailed in the Companies Act, 2013, and its associated rules.
Important Questions from Company law
Arrange the following as per sections of the Companies Act, 2013 in descending order :
A. Execution of Bills of Exchange, etc.
B. Punishment in case of repeated default
C. Annual reports on Government Companies
D. Petition for winding up
E. Functions of Company Secretary
Choose the correct answer from the options given below:
Red herring prospectus is a prospectus issued:
- The problem of double taxation in international transactions can be reduced by:
i. Market agreement
ii. Multilateral agreement
iii. Bilateral agreement.
iv. Trade agreement - Given below are two statements: one is labelled as Assertion A and the other is labelled as Reason R
Assertion A: Every company having net worth of rupees five hundred crores or more or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee (CSRC).
Reason R: The CSR Committee monitors CSR policy of the company.
In the light of the above statements, choose the most appropriate answer from the options given below - Which of the following is not a type of prospectus under the Companies Act, 2013?
