Difference Between Company and Body Corporate

The difference between a company and a body corporate lies in their legal definitions and scope under the Companies Act, 2013. The act registers a company as a specific legal entity, offering features such as limited liability and a distinct legal identity, like Infosys Ltd. In contrast, a body corporate is a broader term that includes companies, statutory corporations (e.g., RBI), and foreign entities (e.g., Google Inc.). While every company is a body corporate, not all bodies corporate are companies. This distinction is crucial for legal compliance, entity classification, and business operations.

The difference between a company and a body corporate lies in their definitions and scope under Indian law, particularly the Companies Act, 2013. A company is a specific legal entity registered under the act, characterised by features such as limited liability and separate legal identity.

For example, Infosys Ltd. is a public limited company. In contrast, “body corporate” is a broader term that includes companies as well as statutory corporations, foreign entities, and other incorporated organisations, such as the Reserve Bank of India’s (RBI) statutory corporation. 

This article explores the differences between a company and a body corporate, with definitions, examples, and key distinctions based on the Companies Act, 2013.

What Is a Company?

A company is a legal entity formed under the provisions of the Companies Act, 2013 or its predecessor laws. It is an association of persons who come together to carry out a lawful business with the objective of earning profits.

Key Characteristics of a Company

1. Incorporated Entity: A company must be registered under the Companies Act, 2013.
2. Separate Legal Entity: A company is distinct from its shareholders and directors.
3. Limited Liability: Members’ liability is limited to their investment in shares.
4. Types of Companies:
   • Private Limited Company (e.g., startups and family-owned businesses).
   • Public Limited Company (e.g., companies listed on stock exchanges).
   • One Person Company (e.g., solo entrepreneur ventures).

Examples: Infosys Ltd. (Public Limited Company), Ola Electric Technologies Pvt. Ltd. (Private Limited Company).

What Is a Body Corporate?

A body corporate is a broader term that refers to any entity that has been incorporated and is recognised as a single, legal entity. This includes companies but also encompasses other entities like foreign corporations, government organisations, and statutory corporations.

Definition Under the Companies Act, 2013:

As per Section 2(11) of the Companies Act, 2013:

• A “body corporate” includes companies incorporated outside India and statutory corporations.
• It excludes certain entities, such as:
  • Cooperative societies registered under cooperative society laws.
  • Other bodies corporate specified by the Central Government.

Key Characteristics of a Body Corporate

1. Broader Concept: Includes companies as well as entities incorporated under other laws.
2. Separate Legal Entity: Can own assets, sue, and be sued independently of its members.
3. Non-Companies Included: Covers statutory corporations, foreign corporations, and some government organizations.

Examples: Life Insurance Corporation of India (LIC) – a statutory corporation, Reserve Bank of India (RBI) – a central bank incorporated under its own statute, and Toyota Motor Corporation – a foreign body corporate.

Key Differences Between Company and Body Corporate

Aspect	Company	Body Corporate
Definition	A company is an entity registered under the Companies Act, 2013.	A body corporate is a broader term that includes companies and other incorporated entities.
Governing Law	Governed specifically by the Companies Act, 2013.	May be governed by other laws, such as statutory or foreign laws.
Scope	Narrower in scope, restricted to entities registered as companies.	Broader in scope, includes statutory corporations, foreign companies, etc.
Incorporation	Must be registered under the Companies Act, 2013.	Can be incorporated under various laws or statutes.
Examples	Private Limited Companies, Public Limited Companies.	RBI, LIC, foreign corporations like Apple Inc.
Exclusions	All companies are bodies corporate.	Excludes cooperative societies and certain government-notified bodies.

Key Legal Provisions in India

1. Section 2(20) of the Companies Act, 2013: Defines a company as one that is incorporated under the Companies Act, 2013, or any previous company law.
2. Section 2(11) of the Companies Act, 2013: Defines a body corporate as including companies and other incorporated entities, except cooperative societies and government-excluded organizations.
3. Statutory Corporations: Entities like LIC or RBI are incorporated under specific acts of Parliament and fall under the definition of a body corporate but not under “company.”

Practical Implications

1. For Businesses: When starting a business, you must understand whether you need to register as a company (under the Companies Act) or another type of body corporate (e.g., statutory corporation for government-related activities).
2. For Contracts: Third parties entering into agreements with a company or body corporate must verify their legal status and applicable governing laws.
3. For Foreign Entities: Foreign corporations operating in India (e.g., Toyota, Apple) are recognized as bodies corporate, even if they are not companies under Indian law.

Examples for Better Understanding

Example 1: Reliance Industries Ltd.

• Type: Public Limited Company.
• Reason: Incorporated under the Companies Act, 2013.

Example 2: Reserve Bank of India (RBI)

• Type: Body Corporate.
• Reason: Established under the RBI Act, 1934, and not under the Companies Act.

Example 3: Google Inc.

• Type: Foreign Body Corporate.
• Reason: Incorporated outside India but recognised as a legal entity under Indian company law.

Conclusion

While every company is a body corporate, not every body corporate is a company. Understanding this distinction is essential for complying with Indian company law, especially when dealing with entities like statutory corporations or foreign businesses.

• Choose a Company: If your goal is to start a business in India under the Companies Act.
• Recognise a Body Corporate: For entities like foreign corporations, statutory bodies, or government organisations.