Types of Company in Nepal

Statutory Company

A company which is established under a special act passed by the parliament is known as a statutory company. The scope, objectives, power, rights and functions are defined by the act under which it is established. All the activities of the company are governed by the act. Such company is established by the government for promoting a special sector of the economy which is of national importance. It is also known as a public enterprise.

Limited Company

A company which is established in Nepal under 'Nepal Company act, 2053' is known as a limited company. It is also known as a registered company. It is incorporated and operated under the provision of the company act. In a limited company, the liability of the shareholders is limited to the face value of the shares held by them. The private properties of the shareholders cannot be claimed by the creditors of the company to recover their debts. A limited company can be classified into two types:

1. Public limited company: A public limited company is one which requires at least 7 members for its incorporation. There is no limitation for the maximum number of shareholders. It can invite people by issuing a prospectus to subscribe to its shares. Its shares are freely transferable. It requires at least three directors for the management of the company. It has to hold statutory meeting. It has to obtain a certificate of commencement of business to start its business.
2. Private limited company: A private limited company is one which can be established by a single member. Its maximum number is limited to 50. It cannot invite people by issuing a prospectus to subscribe its shares. It restricts the rights of its members to transfer its shares. It does not require to hold statutory meeting.

Differences between Public and Private Limited Companies

Things to remember

• The advantages of Joint Stock Company are huge capital, effective management, limited liability, public faith and perpetual succession.
• Complexity formation, lack of control, double taxation, lack of secrecy, lack of personal interest and credit limitations are the disadvantages of Joint Stock Company.
• There are two types of company in Nepal. They are the statutory company and limited company(public and private limited company).

• It includes every relationship which established among the people.
• There can be more than one community in a society. Community smaller than society.
• It is a network of social relationships which cannot see or touched.
• common interests and common objectives are not necessary for society.

Questions and Answers

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