What it takes for Company Incorporation



Incorporation of a Company

As per Companies Act, 2013

“The Formation of company —

  1. A company may be formed for any lawful purpose by —
  • seven or more persons, where the company to be formed is to be a public company;
  • two or more persons, where the company to be formed is to be a private company; or
  • 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.

  1. A company formed under sub – section (1) may be either —
  • a company limited by shares;
  • a company limited by guarantee; or
  • an unlimited company.”

Memorandum of Company should state:

  • name of the company with the last word –
  1. Limited if the company is public limited company
  2. Private Limited if the company is private limited company
  • the state in which the corporation’s registered office is to be located
  • the object behind the incorporation of the company
  • the liability of the corporation’s members whether the company is public or private
  • if the company have share capital
  1. amount of equity as per which the company is to be registered
  2. number of shares every subscriber of memorandum intends to take with his name
  • the name of the person who shall become the member of the company in the case of death of the subscriber in One Person Company

Note: The name of the company stated in the Memorandum of the Company should not:

  • resemble or be identical to any other company’s name registered under this Act
  • should not be offensive or undesirable according to Central Government
  • shall not contain any word or expression which will give the impression that the company is in any way connected with Government or any local authority

Reservation of the proposed company’s name:

  • The person incorporating the company must make an application along with prescribed fee to the Registrar for the reservation of the name of the proposed company or the name that the corporation proposes to change its name.
  • Once the Registrar receives the application, on the basis of the documents and information provided with the application reserves the name for 60 days from the date of application.
  • If after the reservation of the name, it is found that the information provided was incorrect then:
  • in the case where the company has not been incorporated, the name reserved shall be canceled, and penalty will be levied on the person who made the application which extends to1 lakh rupees
  • in the case where the company has been incorporated, the company shall be given the chance to be heard then
  1. direct the person to change the name of the company within the period of 3 months after passing an ordinary resolution
  2. remove the name from the company’s register
  3. make a petition for company’s winding

Remember, When a company is to be incorporated as a

Public Limited Company, it must have minimum seven members and minimum paid-up capital of Rs. 5 lakhs

Private Company, it must have minimum two members and minimum paid-up capital of Rs. 1 lakh

One should be careful while incorporating a company and follow the rules and regulations laid by the government to protect and safeguard itself from any issues in the future.





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