Formation of company [S. 3]
A company may be formed for any lawful purpose by the following:
- Public company. -any seven or more persons when the company to be formed is a public company.
- Private company. -any two or more persons when the company to be formed is a private company.
- One person company. -any one person, when the company to be formed is “One Person Company”, i.e., a private company with one member.
They have to subscribe their names to the memorandum of the company. The memorandum of “one person company” has to indicate the name of another person, with his prior written consent in the prescribed form. Such person is to become a member of the company in the event of the subscriber’s death or his incapacity to contract. Such person’s written consent has to be filed with the Registrar at the time of incorporation of one person company along with its memorandum and articles.
Such person may withdraw his consent in accordance with the prescribed manner. The member of such company may also change the name of such person by following the prescribed procedure. He has to intimate the change to his nominee by indicating in the memorandum or otherwise. The company has then to notify the Registrar of the change. Such change is not to be taken as an alteration of the memorandum.
A company formed under this section may be either a company limited by shares or a company limited by guarantee or an unlimited company.
Registration of a company is obtained by filing an application with the Registrar of Companies. [S. 7(1)]
The application should be accompanied by the
(1) memorandum of association;
(2) articles of association;
(3) a copy of the agreement, if any, which the company proposes to enter into with any individual for his appointment as managing or whole-time director or manager; and
(4) a declaration that all the requirements of the Act have been complied with.
Section 7 of the 2013 Act introduces certain new requirements. An affidavit has to be filed by each of the subscribers to the memorandum and persons named as the first directors, if any, in the article that he has not been convicted of any offence in connection with the promotion, formation, or management of any company or found guilty of any fraud or misfeasance or of any breach of duty to the company under the Act or preceding company law during the preceding five years and that the documents filed for registration contain correct and complete information and true to the best of his knowledge and belief; the address for correspondence till the company’s registered office is established; the particulars of name, including surname, or family name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identity as may be prescribed.
Where the subscriber is a body corporate, such particulars have to be disclosed as may be prescribed; the particulars of persons mentioned in the articles as the first directors of the company, their names including surnames or family names, Director Identification Number, residential address, nationality and such other particulars including proof of identity as may be prescribed; and the particulars of interests of persons mentioned in the articles as the first directors of the company in other firms or bodies corporate along with their consent to act as directors of the company in such form and manner as may be prescribed. [S. 7(1)]