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Define Company and its types with Introduction

company types

From an economic perspective, a company is defined as an independent entity that mobilizes assets to produce goods and services for the purpose of generating profit. The company can be owned by one person or by several persons. As opposed to individuals who are subject to taxes on their income regardless of how they use it, companies are taxed on their profits. This system works by collecting taxes from companies only when they distribute profit to shareholders.

What is the Meaning & Definition of a Company

A company is a business, which produces commercial goods or provides services. A company can be an incorporated body or unincorporated association or organization that works for the benefit of the members who owns it. It may also be any form of partnership or collective investment scheme etc. The company’s purpose is to take advantage of opportunities in order to make the company profitable. Most companies use a trading name or business name to conduct business, but they can also be named after their founders or owners (i.e., John Smith & Sons). There are different types of Trade businesses.

A company is a legal entity formed either by an act of law (in the UK and in some other jurisdictions) or under company law (in most common law jurisdictions and some civil law jurisdictions) in order to carry on business. A company is a company, corporate or firm that supplies goods and/or services that are available for resale or in other words we can say the company also provide something that is not immediately consumed by the company itself.

 Main 5 Types of the company:

  • Limited company
  • Public company
  • Private company
  • Company limited by guarantee
  • Sole trader company etc.
What is a shareholder?

A shareholder is an owner of company stocks that give the right to receive dividends. According to this definition, anyone who owns stocks in any company can be considered as a shareholder even if these are fractional interests or special types of stocks. A shareholder’s interest in the company is measured by the number of shares she owns, and her dividends are determined not only by how many shares she holds but also by what percentage these shares represent in the total number of outstanding shares of a company.

What are the types of Companies?

Types of companies include Banking and Insurance Company, Commercial company (B.B.) and Agricultural joint-stock company (A.J.S), Industrial joint-stock company (I.J.S), Consulting firm, Information technology and Telecommunications Company (TIC), Maritime transport company, Freight forwarder, Ship management & Agency Company, Supply Chain Management company, Oil Transportation Company, Seaport company e.t.c

Companies Limited by Shares are mainly classified as either public companies or private companies.

A Public Company is a company whose ownership shares are traded on a public stock exchange which facilitates the buying and selling of ownership stakes by many shareholders. Public Companies have an obligation to disclose information about their operations, inner workings, financial situation and ownership structure whereas private companies do not have such obligation.

Example: The securities of a public company are traded on the stock exchange. A bank buys all the shares in ABC Ltd., and now it’s is 100% owner of ABC Ltd.

A Private Company is a company whose ownership shares are not traded in the public stock exchange. They can be owned by one person, a few persons or a family and they may choose to trade their goods/ services within the boundaries of the same state or outside that state without any obligation to disclose information about their activities.

Example: A banker, an attorney and a school teacher form a private limited liability company to provide accounting services for small businesses. All three of them buy shares in the company.

Holding and Subsidiary Companies: An Investment company is a company that invests or holds the stakes of other companies. There are two types of Investment Companies: Holding Company and Subsidiary Company. A holding company is a parent company that owns enough voting shares in one or more other companies to control their policies and management. A subsidiary, on the other hand, is a company that is controlled by another company, known as the holding company. Thus, a holding company may own 100% of the shares in a subsidiary, or it can own less than 100%. Subsidiaries are separate legal entities for taxation purposes.

Associate Companies: An associate company is a company that is related to another company in that one owns part or all of the other or both are owned by the same holding company, individual or group. An Associate Company can be defined as an entity over which an investor has significant influence, but which falls short of full ownership.

Example: A parent owns 60% of the voting power of its subsidiary. Define trade-in business helps for detailed information.

Wholly Owned Subsidiary Company: A Wholly-owned Subsidiary Company (WOS) is a company in which none of the owners holds less than 100% ownership interest, and it has no other owners besides the parent company. A WOS is a type of Subsidiary.

Government Companies: A Government-Owned Company is a company that is owned by a government entity. The government may also be a shareholder in a public company, meaning the government may hold some of the shares of the public company, but not all of them. The term can be used to describe commercial companies which are under partial or complete control of a national or local government.

Example: The government of Zambia owns 51% of the stock in Zamtel, the national telephone company and has a controlling interest.

Joint Venture Company: A Joint Venture Company (JVC) is a company formed by two or more participants usually for specific business purposes such as to carry out a specific activity. A JVC derives its legal existence from the agreement created between the participants and is usually governed by a contractual arrangement that addresses issues such as roles and responsibilities of the partners, the share of profits and losses among other things.

Example: The agreement may provide for 51% ownership to one partner and 49% shareholding to the other partner

Non-Profit Making Company: A Non-Profit making company also known as not for profit organization or NPO is an institution organized and operated exclusively for scientific, cultural, religious, patriotic, educational, charitable or similar purposes. The objectives of the non-profit organization must be achieved without any personal profit to its members.

Example: The organization is registered and operates under the Companies Act of 2008 Part IX -and is taxed accordingly. Communication Process Elements Play a vital role in this.

A foreign company is a business entity registered outside Zambia. This may be an individual, a company, or any other organization of persons incorporated in another country. However, the term is often used to refer to corporations registered outside Zambia that are engaged in trade or business activities within Zambia. A foreign company must have a local representative who is registered with the Registrar of Companies. The company also needs to appoint a company secretary in Zambia. Foreign companies are taxed on their worldwide income at their marginal rate of company tax, however, there is no withholding tax on dividends paid by foreign companies to its shareholders who are resident in Zambia

Example: A company incorporated in South Africa has operations in Zambia providing accounting services in Zambia.

Limited Liability Company: A company in which members are liable for company debts up to the amount unpaid on their shares only. The company’s capital is divided into shares which are usually transferable through sales or gifts. This company has limited liability independent of the personal assets of its owners.

Example: A company in which all shareholders are liable for company debts only to the extent of the unpaid amount on their shares. The company’s capital is divided into shares which are usually transferable through sales or gifts. This company has limited liability independent of the personal assets of its owners.

Charitable Companies: A company that operates to provide a charitable service, or which is formed for the purpose of promoting the public good. A company cannot be set up as an unincorporated charity. The company must have specific objects and apply all profits from its business to its company’s stated objects only. It may not distribute any of its income to members except for reasonable company expenses.

Company Limited by Guarantee: A company limited by guarantee does not have any shares and all the members of the company are liable for company debts up to a certain amount only – usually five times their total subscriptions. The company’s capital is divided into non-transferable shares so each member has their own company share.

Example: An unincorporated company formed by a group of individuals to provide food and clothes to the needy, on a non-profit basis. The company has no shares and all members are liable for company debts up to five times their total subscriptions. The company’s capital is divided into non-transferable shares so each member has their own company share.

Joint Stock Company: A company registered under the Companies Act that must have at least two shareholders who are jointly and severally liable for company debts up to the amount unpaid on their shares only. The company’s capital is divided into transferable shares with a minimum of one hundred, and a maximum of two thousand, company shares.

Example: A company registered under the Companies Act with at least two shareholders who are jointly and severally liable for company debts up to the amount unpaid on their shares only. The company’s capital is divided into transferable shares with a minimum of one hundred company shares.

Unlimited Liability Company: A company in which company members are not liable for company debts up to a certain amount only – usually the company’s assets. This company may have a contract requiring that all of its members be jointly and severally liable for company debts up to an unlimited amount, but this is rare.

Example: A company whose members are not liable for company debts up to a certain amount. This company may have a contract requiring that all of its members be jointly and severally liable for company debts up to an unlimited amount, but this is rare.

 Company Name: A company name should contain the suffix Limited, Incorporated or company limited by guarantee, as well as company types limited by shares or company limited by guarantee.

Notes: The company name should contain the suffix Limited, Incorporated or company limited by guarantee, as well as company types limited by shares or company limited by guarantee. In South Africa a company name ending with “and Company” is regarded as being plural – i.e., it
Dormant Companies: A company that has stopped operating or carrying on a business but has not been struck off the Register of Companies. Dormant companies are sometimes used for company housekeeping – company records, accounts and documents can be stored at a company’s registered office address.

MUTUAL PROPERTY COMPANY? An unregistered company that is used as a company housekeeping company. A company’s registered office address is kept on record for company records, accounts and company documents can be stored at this location.

Notes: The company name should contain the suffix Limited, Incorporated or company limited by guarantee, as well as company types limited by shares or company limited by guarantee. In South Africa company name ending with “and Company” is regarded as being plural – i.e., it

One person company: A company with only one company director company secretary, whose company shares are fully paid up (i.e., the company’s capital is divided into 100 non-transferable shares) and there are no company members; or a company with only two company directors who are also the company’s two shareholders. A one-person company can be incorporated in South Africa as company types are limited by shares or companies limited by guarantee. Here business management should be strong for success.

Notes: A company with only one company director company secretary, whose company shares are fully paid up (i.e., the company’s capital is divided into 100 non-transferable shares) and there are no company members; or a company with only two company directors who are also the company’s two shareholders. A company can be incorporated in South Africa as company types limited by shares or company limited

A close corporation: A company whose company members are not allowed to communicate with other people outside of the company about company affairs, except through the company secretary who must keep all documents pertaining to the company’s company affairs confidential.

Notes: company members are not allowed to communicate with other company affairs, except through the company secretary who must keep all company documents pertaining to company affairs company members are not allowed to communicate with other people outside of the company about company affairs, except through the company secretary who must keep all company documents pertaining to company affairs company members are not allowed to communicate with other people outside of the company about company affairs, except through the company secretary who must keep all company documents pertaining to company affairs.

 a closed corporation: A company whose ownership and management rights are separated. A company’s ownership rights lie with its shareholders, who after receiving company shares in return for company capital, can buy and sell company shares. A company’s management rights lie with the company’s directors who after appointment by the company shareholders, exercise company authority on behalf of the company.

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