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Formation of a Company in India

             


Aditya Varma

A company is a corporate body and a legal person having status and personality distinct and separate from that of the members consulting it.

Section 2 (20) of the Companies Act, 2013 defines a company as a company incorporated under this Act or any previous company law.

Section 3 of the Companies Act, 2013 lays down the formation of a company. A company under the Act may be formed for any lawful purpose by -

  • seven or more persons for a public company

  • two or more for a private company

  • one person for a One Person Company

The person or persons may form a company by subscribing his name or their names to a memorandum and complying with the requirement of this Act in respect of registration.

According to Section 149 of the Companies Act, 2013, a company shall have a board of directors. A public company shall have a minimum number of three directors and at least one-third of the total number of directors shall be independent directors. A private company shall have a minimum of two directors and a one person company shall have one director.

A maximum number of fifteen directors can be appointed. A company may appoint more directors after passing a special resolution. A company shall have at least one women director.

A company formed may be either-

  • A company limited by shares

    Section 2 (22) : A company limited by shares is a company which limits the liability of its members by the memorandum to any amount unpaid on the shares held by them.

  • A company limited by guarantee

    Section 2 (21): A company limited by guarantee is a company which limits the liability of its members by the memorandum to such amount as the members may undertake to contribute to the assets of the company in the event of its being wound up.

  • An unlimited company

    Section 2 (92): An unlimited company is a company not having any limit on the liability of its members.

  • A company with charitable objects

    Section 8: A company may be formed under this section if the Central Government is satisfied that a person or an association of persons propose to register a company with the object of promotion of commerce, social welfare, research, religion, charity, protection of environment or any such other object.

NOTE:

  • The memorandum of One Person Company shall specify the name of the other person who shall become the member of the company in the event of the subscriber's death or his incapacity to contract. A prior written consent of such person, in the prescribed form shall also be filed with the Registrar at the time of incorporation along with its memorandum and articles.

  • The person may withdraw his consent in the prescribed manner.

  • The member of One Person Company may at any time change the name of the other person by giving notice in the prescribed manner.

  • It shall be the duty of the member of One Person Company to intimate the company any changes in the name of the other person nominated by him by specifying it in the memorandum or otherwise within such time and in such manner as may be prescribed. The company shall intimate the Registrar any such change within such time and in such manner as may be prescribed.

  • Any change in the name of the other person shall not be deemed to be an alteration of the memorandum.


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