Difference Between Statutory Company & Registered Company in India

At first glance, a company is just an entity recognized by law, neatly structured, and ready to operate. On paper, many companies even look identical: they have a name, an organizational framework, and legal recognition. The way a company comes into existence often shapes how it governs itself and operates over time. This makes the difference between a statutory company and a registered company important, even though many people frequently misunderstand it.

In the business world, formation is not just a formality. Some companies come into existence through legislation, created to serve a specific public or regulatory purpose. Others are formed by individuals or organizations through a company registration process under corporate law. These different origins shape their governance, level of control, and the rules they must follow.

In this blog, we will explore the key differences between statutory and registered companies, helping you understand their formation, governance, and roles in the business landscape.

What is a Statutory Company?

A statutory company is a business entity created through a specific Act of Parliament or State Legislature. It exists because the law mandates its formation rather than through voluntary registration. These companies primarily serve public, economic, or regulatory purposes. Their powers, functions, and governance are defined by the enabling legislation.

Key features of statutory companies are:

• Operate in critical sectors such as banking, insurance, and public utilities.
  
• Perform essential functions like managing monetary policy, providing public services, and exercising statutory powers.
  
• Management and operations are governed by the enabling Act.
  
• Certain provisions of the Companies Act may apply only if they are not inconsistent with the statute.
  
• Oversight mechanisms ensure accountability and alignment with public objectives.

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In summary, legislation governs statutory companies, ensuring they effectively fulfill their intended public or regulatory roles.

Reserve Bank of India (RBI), Life Insurance Corporation of India (LIC), and Food Corporation of India (FCI) are some prominent statutory companies in India.

What is a Registered Company?

A registered company is an entity incorporated under the Companies Act (e.g., Companies Act, 2013). It comes into existence only after obtaining a Certificate of Incorporation (COI) from the Registrar of Companies (RoC). 

Unlike statutory companies, individuals or organizations create registered companies through a formal registration process. They gain legal existence by complying with corporate registration procedures.

Key features of registered companies are:

• Incorporated and registered under the Companies Act, they gain a separate legal identity from their founders.
  
• Exist voluntarily after fulfilling statutory registration requirements.
  
• Primarily established as private or public for commercial purposes, though non-profit forms also exist.
  
• Can operate as profit-driven businesses or non-profit entities, depending on objectives.
  
• Flexible in nature, engaging in a wide range of commercial, industrial, or service activities.
  
• Governed by Memorandum of Association (MOA) and Articles of Association (AOA).
  
• Required to conduct statutory filings, maintain financial records, and hold meetings.
  
• Directors have defined responsibilities and duties under the Companies Act.

This framework provides registered companies with legal recognition, operational flexibility, and a clear structure for governance and compliance.

Examples range from conglomerates like TCS and Reliance Industries to successful startups like Zomato and Flipkart.

Statutory Company vs Registered Company: Key Differences Explained

Understanding the difference between statutory and registered companies is crucial, as they differ in formation, purpose, governance, and operations. 

The table below highlights these key distinctions:

Feature	Statutory Company	Registered Company
Formation	Created by a special Act of Parliament or State Legislature	Incorporated under the Companies Act (e.g., Companies Act, 2013)
Object / Purpose	Primarily public, economic service, or regulatory functions	Commercial or non-commercial, depending on the type (e.g., Private Ltd, Public Ltd, Section 8)
Legal Personality & Source of Power	Separate legal entity created by law; powers derived from enabling statute	Separate legal entity from the founders upon registration; powers come from the Companies Act
Capital Structure	Defined by statute; may include government funding, equity, or public shareholding	Shareholders or members contribute capital as specified in the MOA
Governance Documents	Enabling Act or statute	MOA and AOA
Defined by the enabling Act, it may have government-appointed members	Applies only if not inconsistent with the enabling statute	Fully governed by the Companies Act
Winding Up & Removal	Special procedures defined in statute or applicable laws	Standard procedures under the Companies Act 2013 and the Insolvency & Bankruptcy Code
Registration Authority	Parliament or State Legislature	Registrar of Companies (ROC)
Ownership & Control	Often government-owned or controlled	Can be private, public, or government-owned, depending on shareholding
Audit & Accountability	Subject to audits as per the enabling Act, accountable to the government	Statutory audit under the Companies Act; accountable to shareholders
Management & Appointment of Directors	Defined by the enabling Act, may have government-appointed members	As per the MOA/AOA and the Companies Act provisions
Operational Flexibility	Limited by statute and regulatory requirements	Flexible within the Companies Act, MOA, and AOA
Profit Distribution	Often reinvested in public purpose; limited or no dividend	Distributed to shareholders according to shares and company type
Examples	RBI, LIC, FCI	TCS, Reliance Industries, Infosys

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Statutory Companies and Registered Companies: Key Similarities

Statutory companies and registered companies serve different purposes, but they often work together to support economic growth and public welfare:

• Policy Implementation & Business Execution: Statutory companies implement government policies and regulatory objectives. Meanwhile, registered companies execute commercial activities that align with these policies.
  
• Public-Private Collaboration: Statutory companies may partner with registered companies for infrastructure projects, technology development, or service delivery.
  
• Resource & Expertise Sharing: Statutory companies provide regulatory oversight and funding support, while registered companies bring operational efficiency, innovation, and market expertise.
  
• Economic Development: Together, both statutory and registered companies promote industrial growth, employment generation, and public welfare initiatives. Hence, they create a balanced ecosystem of public and private enterprise.

This complementary relationship ensures that statutory companies fulfill public mandates while registered companies drive commercial growth and innovation.

How Do Statutory Companies and Registered Companies Get Formed?

The formation of statutory and registered companies follows two very different paths. Knowing these routes helps understand their legal and operational differences clearly.

1. Formation of a Statutory Company

Legislation creates a statutory company, rather than corporate registration. In simple terms, the formation takes place as follows:

• The government identifies the need for a new entity to perform specific public, economic, or regulatory functions.
  
• Lawmakers prepare a draft bill outlining the company’s objectives, powers, and governance framework.
  
• The Bill is introduced in Parliament (or State Legislature), debated, and passed by both houses.
  
• After receiving the President’s or the Governor’s assent, the Bill becomes an Act. 

Once the Act comes into force, the statutory company comes into existence.

2. Formation of a Registered Company

A registered company is created through a formal corporate registration process under the Companies Act, 2013. It involves the following process:

1. Name Approval – Apply for company name reservation via the RUN LLP service or the ROC.
   
2. Preparation of Incorporation Documents – Draft the MOA and AOA.
   
3. Submission to ROC – File incorporation documents online with the ROC.
   
4. COI– ROC issues COI, officially creating the company.
   
5. Director Identification & Registration – Obtain Director Identification Number (DIN) or Designated Partner Identification Number (DPIN) for directors.
   
6. Tax Registrations – Apply for PAN, TAN, and other statutory registrations as required.

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How to Check Whether a Company is Statutory or Registered? 

Knowing whether a company is statutory or registered is essential for compliance, partnerships, and research. You can identify a company as statutory or registered by checking how lawmakers or founders formed it and which law governs it.

Below are some tips on how to identify each type.

• Check the formation law: Parliament or a State Legislature creates statutory companies, whereas individuals or organizations incorporate registered companies under the Companies Act, 2013.
  
• Verify RoC registration: Registered companies appear on the MCA portal and have a Corporate Identification Number (CIN). Statutory companies do not require RoC registration.
  
• Review governing documents: Statutory companies operate under their enabling Act. Registered companies follow the Companies Act, MOA, and AOA.
  
• Examine audit oversight: Statutory companies usually follow audit mechanisms prescribed by law. Meanwhile, registered companies appoint statutory auditors under the Companies Act.
  
• Check management appointments: Statutory laws often govern appointments in statutory companies. Registered companies appoint directors as per the Companies Act.

These checks help you determine a company’s legal status quickly and accurately.

Common Misconceptions & Clarifications About Statutory and Registered Companies

There are several common misunderstandings about statutory and registered companies. These misconceptions often create confusion about their legal status, powers, and ownership. 

1. All Public Sector Bodies Are Statutory Companies: Not all public sector undertakings (PSUs) are statutory companies. Many well-known PSUs such as NTPC, ONGC, IOCL, and SAIL are registered under the Companies Act. They are classified as government companies because the government holds a majority shareholding. Lawmakers consider only entities created directly by a specific Act of Parliament or State Legislature as statutory companies.
   
2. Statutory Companies Cannot Carry Out Profit-Making Activities: This belief is incorrect. Lawmakers mainly set up statutory companies to serve public, developmental, or regulatory purposes. However, the law allows many statutory companies to generate revenue and earn profits through their operations. Profit-making does not change their statutory nature.
   
3. Registered Companies Have Less Authority Than Statutory Companies: Registered companies do not automatically have weaker powers. Their authority comes from the Companies Act, MOA, and AOA. These companies can enter into contracts, own property, and sue or be sued. The law limits their powers only through the law and their constitutional documents.
   
4. Statutory Companies Are Fully Controlled by the Government: Statutory companies are accountable to the government because they are created by law. However, many of them enjoy operational autonomy. They often have independent boards and clearly defined financial and administrative powers under their enabling Acts.
   
5. Registered Companies Cannot Be Government-Owned: Many people misunderstand this. Individuals or organizations can privately own registered companies, or they can be publicly or government-owned. When the government holds at least 51% of the share capital, it treats the company as a government company, even though incorporation occurs under the Companies Act.

These clarifications show that the key difference between a statutory company and a registered company lies in their method of formation and governance. Ownership or profit-making alone does not determine their classification.

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