The Type of Companies, Entrepreneur Should Know about.

1. Private Limited Company – S. 2(68)

“Private company” means a company having a minimum paid-up share capital as may be prescribed, and which by its Articles,

1. Restricts the right to transfer its shares;

2. Except in case of One Person Company, limits the number of its members to two hundred: Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:

3. Prohibits any invitation to the public to subscribe for any securities of the company.

Requirement of minimum paid-up share capital not applicable to section 8 company.

2. Public Company – S. 2(71)

“Public company” means a company which—

1. Is not a private company;

2. Has a minimum paid-up share capital as may be prescribed:

Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its Articles.

Requirement of minimum paid-up share capital not applicable to section 8 company

3. One Person Company – S. 2(62)

“One Person Company” means a company which has only one person as amember;

4. Small Companies – S. 2(86) “ Small companies” means a company other than public company

1. Paid up capital is less than Rs.50 Lakhs or higher amount as may be prescribed which shall not be more than Rs 5 crore; or

2. Turnover of which is less than Rs.2 crore as per its last profit & loss account or higher amount as may be prescribed which shall not be more than Rs.20 crore;

Following companies shall not be small companies: Holding company or a subsidiary company; Company registered under section 8; or

Company or body corporate governed by any special Act.

Incorporation of Company

1. Nos. of persons who can form various types of companies [SECTION 3]:

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

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

   2. Two or more persons, where the company to be formed is to be a private company; or

   3. One person, where the company to be formed is to be a One Person Company that is to say, a private company.

2. Mandatory formation of a company

• No association or partnership consisting of more than 100 persons shall be formed for the purpose of carrying on any business unless it is registered as a company or is formed under any other law

• The above is not applicable to:

An HUF carrying on any business and association; or  Partnership formed by professionals governed by special acts.

2. Process of Incorporation of Company:

• MOA and AOA [SECTIONS 4 & 5]:

An application shall be filed with the concerned Registrar in Form No. INC.2 (for OPC) and in Form No. INC.7 (Other than OPC) [Refer Rule 12]

MOA and AOA, both shall be signed by all Subscribers to the Memorandum in the manner prescribed. [Refer Rule 13] [As per Sec. 7(1)(a)]

• DECLARATION [SECTION 7(1)(b)]:

The Professional involved in the formation of the Company and Director/Manager/Secretary as mentioned in the AOA of the Company have to give a Declaration that all matters precedent or incidental thereto have been complied with. Declaration by the Professional will be in Form No.INC.8 [Refer Rule 14]

• AFFIDAVIT [SEC. 7(1)(c)]:

An affidavit has to be furnished to the ROC stating that Subscribers to the MOA and the First Directors are not convicted of any offence or not been found guilty of any fraud or misfeasance or of any breach of duty to any company. This has to be in Form No.INC.9 [Refer Rule 15]

• ADDRESS FOR CORRESPONDENCE [SEC. 7(1)(d)]:

An address for correspondence required till the Registered Office is established.

• PARTICULARS OF EVERY SUBSCRIBER TO MOA [SEC. 7(1)(e)]:

Proof of Identity, Name, Surname, Residential Address, Nationality of Subscribers to the MOA and other such particulars in Form No.INC.10 [Refer Rule 16]

• PARTICULARS OF FIRST DIRECTORS SEC. 7(1)(f):

Proof of Identity, Name, Surname, Residential Address, DIN, Nationality and other such particulars in Form No. INC.10 [Refer Rule 16]

• PARTICULARS OF INTEREST OF FIRST DIRECTORS [SEC. 7(1)(g)]:

Particulars of interests in other firms or bodies corporate along with their consent to act as directors of the company in Form No.DIR.12. [Refer Rule 17]

ISSUANCE OF CERTIFICATE OF INCORPORATION [SECTION 7(2)]:

The registrar on the basis of documents filed shall register all the documents and information in the register and issue a certificate of incorporation in Form No.INC.11. [Refer Rule 18]

3. Registered Office [SECTION 12]:

• A new company should have a registered office address within 15 days from its incorporation and company already registered under the act shall provide notice of change of the situation of its registered office within 15 days of the change.

• Verification of its registered office should be sent within 30 days of its incorporation.

• Every company shall-

1. Paint or affix its name, and keep the same address of its registered office, and keep the same painted or affixed, on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters, and if the characters employed therefore are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages;

2. Have its name engraved in legible characters on its seal, if any;

3. Get its name, address of its registered office and the Corporate Identity Number along with telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other official publications; and

4. Have its name printed on hundies, promissory notes, bills of exchange and such other documents as may be prescribed:

Note:

If company has changed its name or names during the last two years then along with its current name, the former name or names so changed during the last two years shall also be affixed.

In case of OPC the words ‘‘One Person Company’’ shall be mentioned in brackets after the name of company.