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3 Formation of company.

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CHAPTER II

Section 3 of Companies Act 2013

Formation of company.

1.     A company may be formed for any lawful purpose by—

a.     seven or more persons, where the company to be formed is to be a public company;

b.    two or more persons, where the company to be formed is to be a private company; or

c.     one person, where the company to be formed is to be One Person Company that is to say, a private company, by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration:

Provided that the memorandum of One Person Company shall indicate the name of the other person, with his prior written consent in the prescribed form, who shall, in the event of the subscriber’s death or his incapacity to contract become the member of the company and the written consent of such person shall also be filed with the Registrar at the time of incorporation of the One Person Company along with its memorandum and articles: Provided further that such other person may withdraw his consent in such manner as may be prescribed:

Provided also that the member of One Person Company may at any time change the name of such other person by giving notice in such manner as may be prescribed:

Provided also that it shall be the duty of the member of One Person Company to intimate the company the change, if any, in the name of the other person nominated by him by indicating in the memorandum or otherwise within such time and in such manner as may be prescribed, and the company shall intimate the Registrar any such change within such time and in such manner as may be prescribed:

Provided also that any such change in the name of the person shall not be deemed to be an alteration of the memorandum.

2.     A company formed under sub-section (1) may be either—

a.     company limited by shares; or

b.    company limited by guarantee; or

c.     an unlimited company.

Click here to see Relevant Rules.


Short Notes:

  • This section came into force from April 1, 2014.
  • It seeks to provide minimum number of persons to form a public (7 persons) or private (2 persons) or one person company (OPC) (1 person) for any lawful purpose, by subscribing their names to the memorandum of Association of the Company.
  • Memorandum of Association of OPC shall indicate the name of the person who shall become member, in the event of death of the single member. However, the other person whose name would reflect in the Memorandum of OPC, shall be required to give prior written consent in this regard. He shall have the right to withdraw his consent.
  • It shall be the duty of the member of the OPC to intimate the Registrar about any change in the name of the person already mentioned in the Memorandum of Association.
  • The companies formed under this section may be limited by shares or limited by guarantee or an unlimited company.

 

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