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Formation of a company

 

A company may be formed in three ways under section 3 of the companies Act, 2013:

  1. Private Company– Section 2(68) of the companies Act gives the definition of private company. A private company is any company which (1) restricts its member’s right to transfer thier shares (2) limits the maximum number of members to two hundred and (3) most importantly prohibits any invitation to the public to subscribe for any of its shares. It can be formed with two or more persons as members.
  2. Public company– Section 2(71) of the Companies Act defines Public company as any company which is not a private company. It can be formed as seven or more persons as members.
  3. One Person Company– Section 2(62) of the Companies Act defines One person company as any company which has only one person as a member. 

The memorandum of association of a company shall contain the following particulars under section 4 of the companies Act, 2013:

  1. Name of the company
  2. State in which registered office of the company is located
  3. Objects for the formation of the company
  4. The liability of all the members of the company
  5. The amount of shares with which the company is to be registered and the names of the members subscribing for the shares of the company
  6. In case of one person company, the name of the person, who will become the member of the company in event of death of the subscriber.

The articles of the association of the company shall contain the following particulars under section 5 of the companies Act,2013:

  1. Regulations for the management of the company
  2. Provision for entrenchment to the effect that the certain provisions of the articles may be altered only when conditions and procedures as restrictive as special resolutions are complied with
  3. The provision for entrenchment may be added either at the time of formation of the company or by a special resolution in case of a public company and an amendment in the articles agreed to by all the members, in case of a private company.

In order to form a new company, the promotor shall furnish the following documents with the Registrar of Companies within whose jurisdiction the registered office of a company.

  1. Memorandum and Articles of Association of the company
  2. A declaration by the director, manager or secretary of the company and from each of  the subscribers to the memorandum that all the requirements of this Act in respect of registration has been complied with and contains information that is correct and complete.
  3. Address for correspondence, particulars of name and other particulars of every subscriber to the memorandum along with proof of identity.

Apart from furnishing the above mentioned documents, the registrar of companies may ask for any other information as may be required by him for satisfying himself with respect to the authenticity of the promotors and the company. 

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Law Wire Team
Law Wire Teamhttps://lawwire.in/
Law Wire Team attempts to delve into pertinent (and sometimes not immediately pertinent) questions regarding socio-politics, Law and their interesting matrix.
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