What is Company?
Company is an artificial person which cannot be seen or touched but have presence. The presence of Company is permitted under Companies Act, 2013 (which has been changed from Companies Act, 1956).
Changes occurred between Companies Act, 1956 to Companies Act, 2013 is nothing more than that the renovation of current building to make it modernize to avail the possible facilities.
# Company is a Separate Legal Entity.
What is the Purpose and meaning of Company?
As per the Companies Act, 2013, Company means an artificial person and can do any legal business in the country.
Company is a voluntary association of persons formed for the purpose of doing business having a distinct name and limited liability. It is a juristic person having a separate legal entity distinct from the members who constitute it, capable of rights and duties of its own and endowed with the potential of perpetual succession.
Section 2(20) of Companies Act, 2013, provides that a ‘Company’ means a company incorporated under this Act or under any previous company law.
# Company is not a Citizen (Tata Locomotive Engineering & Locomotive Co. Ltd. v State of Bihar)
Is there any Liability of Directors in case of Loss?
Company is separate legal entity distinct from any other person, shareholder and Directors as such is conferred with rights and is subject to certain duties and obligations.
# Reference Case Law : Salomon v Salomon & Co Ltd (1897)
Under the concept of Limited liability the owners of the company under normal circumstances, are not answerable or responsible for the obligations of the company therefore making the owners/ shareholders liable only for the amount of their unpaid shares and not the obligations of the company.
The principle from the Salamons case firmly established that a company has a separate legal identity to that of its shareholders and has been applied over a wide range of cases.
Who can Incorporate the Company?
As per the requirement of Law minimum two (2) positions needs to be filled while Incorporating a Company. These two positions are written as following
a. Promoter / Shareholder / MOA Subscriber
b. Director
Above said positions may be filled by same persons or by different persons in a company.
Now, Let us understand the concept and difference between Promoter / Shareholder / MOA Subscriber and Directors
In an easy manner to understand Promoter / Shareholder / MOA Subscriber means a person who subscribe the shares while incorporating a Company, buy shares after Incorporation of Company and whose name is written in the annual return of the company
While Director means a person appointed to perform the duties and functions of director of a company in accordance with the provisions of the Companies Act, 2013.
How many numbers of person(s) is required to incorporate the Company?
Minimum 1 person is required to startup the company and there is no limit for maximum numbers.
In case of Directors: Minimum 1, 2 & 3 directors are required for one person Company (OPC), Private Limited and Limited respectively. (Section 149(1))
Maximum Directors: A company can appoint maximum fifteen (15) directors and a company may appoint more than fifteen directors after passing a special resolution in general meeting and approval of Central Government is not required. (Section 149(1))
In case of Shareholders: Minimum 1, 2 & 7 shareholders are required for one person Company (OPC), Private Limited and Limited respectively.
Maximum Shareholders: 1, 200 & Unlimited shareholders may have for one person Company (OPC), Private Limited and Limited respectively.
What is the minimum Capital required to incorporate the company?
Currently there is no minimum limit of Capital to Incorporate the Company (limit has been abolished). Previously Capital Limit was One Lakh (1,00,000.00) or Five Lakhs (5,00,000.00) for Private Limited and Limited Company respectively.
What else is required to Incorporate a Company?
Companies Act, 2013 is governing law in India to incorporate a Company. Following written conditions are mandate to follow for incorporation of company in India.
- Director (who is capable to do contract as per Indian Contract Act, 1872) (One Director shall be an Indian Resident)
- Shareholder (who has attain the age of 18 years)
- Proper address to register the company
- Legal allowed name following by OPC Private Limited, Private Limited or Limited Company as the case may be
- Capital Contribution in term of Shares (Equity or Preference)
- Business Activity.
What is the Process to Incorporate the Company?
Process and forms are predefined to incorporate the Company. Hence it’s not worthful to describe here because this Article is basically for a layman person to understand about the company. A general documents are required which I am telling here as under.
- Copy of PAN of all the persons (self signed)
- Copy of Aadhar Card of all the persons (self signed)
- Address proof for Company Registration in India
- Forms / Annexure required for Company
- DIN for Directors
- DSC for Directors and Shareholders
- Proposed Name(s) for Company
- Capital for Company
- Business Objective / Main Objects
For further any queries or details you may write to us or call us on following written details
Nitin Grover & Co.
Mobile: +91 – 9582009494, 9999840006
Office Landline: 0124 – 421 44 44
Email: nitin.grover@cstaxindia.com
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