Companies Act, 2013

• Company


  A company incorporated under the Companies Act, 2013
• Features of a company


  • Separate legal entity
  • Perpetual succession
  • Limited liability
  • Artificial juridical person
• A company is legally separate from its members
• Change in members of a company does not affect its existence
• Liability of a company is different from the liability of its members
• A company can act through its agents
• A company can own contracts in its name
• Corporate veil


  A legal concept whereby the company is identified separately from its members
• Members of a company are protected from the company's actions
• Lifting of corporate veil

  Means looking behind the company entity and disregarding the corporate facade
• Reasons for lifting the corporate veil

  1. To determine character of company

  2. To protect revenue of government

  3. To avoid legal obligation

  4. To reduce tax liability

  5. To address fraud or improper conduct
• The corporate veil may be lifted by the Court in certain cases
• Companies can be classified on the basis of liability
• Types of companies based on liability

  • Company limited by shares
  • Company limited by guarantee
  • Unlimited company
• Company limited by shares

  Members are liable only for unpaid value of shares
• Company limited by guarantee


  Members accept guarantee and are liable for the amount guaranteed
• Unlimited company


  Liability of members is unlimited
• What is the definition of a One Person Company (OPC)?


  A One Person Company (OPC) is a company with only one person as a member.
• What must the memorandum of an OPC indicate?

  The memorandum of an OPC must indicate the name of the subscriber and the minimum paid-up capital.
• What happens to the membership of an OPC in the event of the subscriber's incapacity or death?

  In the event of the subscriber's incapacity or death, the contract shall become a company, and another person may become a member.
• Who can give consent to become a member of an OPC?

  Only a natural person who is a resident of India can give consent to become a member of an OPC.
• What is the minimum period a natural person must have stayed in India to be eligible to become a member of an OPC?

  A natural person must have stayed in India for at least 120 days during the immediately preceding financial year to be eligible.
• How many OPCs can a person incorporate?

  No person shall be eligible to incorporate more than one OPC.
• What is the maximum number of members allowed in a Private Company?

  The maximum number of members in a Private Company is 200, excluding present and former employees.
• What is the minimum number of members required to form a Private Company?

  The minimum number of members required to form a Private Company is 2.
• What is the paid-up capital requirement for a Private Company?

  A Private Company has no minimum paid-up capital requirement.
• What is the definition of a Public Company?

  A Public Company is not a Private Company and has no minimum paid-up capital requirement.
• What is the minimum number of members required to form a Public Company?

  The minimum number of members required to form a Public Company is 7.
• What is a Holding Company?

  A Holding Company is a company that controls one or more subsidiary companies.
• What defines a Subsidiary Company?

  A Subsidiary Company is a company in which the holding company controls more than half of the voting power.
• What is an Associate Company?

  An Associate Company is a company in which another company has significant influence but is not a subsidiary.
• What percentage of voting power indicates significant influence in an Associate Company?

  Significant influence in an Associate Company is indicated by having at least 20% of the voting power.
• What is a Government Company?

  A Government Company is a company in which at least 51% of the paid-up share capital is held by the Central or State Government.
• What defines a Foreign Company?

  A Foreign Company is any company incorporated outside India that has a place of business in India.
• What is the purpose of a Dormant Company?

  A Dormant Company is registered for a future project and has no significant accounting transactions.
• What is the definition of an Inactive Company?


  An Inactive Company is one that has not carried on any business or made significant transactions during the last financial year.
• What are the key components of the Memorandum of Association (MOA)?

  • Name Clause: Name under which the company is registered
  • Registered Office Clause: State where the registered office is situated
  • Object Clause: Specifies the objects for which the company is formed
  • Liability Clause: Specifies the liability of members
  • Subscription Clause: Details of shares taken by subscribers
• What are the steps for the incorporation of a company?

  1. Reservation of name by filing an application

  2. Drafting and signing of MOA

  3. Submission of documents to the Registrar of Companies

  4. Consent of persons nominated as directors

  5. Payment of fees and other declarations

  6. Obtain certificate of incorporation
• What is the definition of Authorized Capital?

  Authorized Capital is the maximum amount of share capital that a company is authorized to issue.
• What is Issued Capital?

  Issued Capital is the portion of authorized capital that has been issued to shareholders for subscription.