Formation in India
An entrepreneur needs to get his business registered and incorporated
under the Companies Act 1956.The Companies Act requires the new
companies to register themselves with the Registrar of Companies (ROC)
A person has to file an application with the ROC for registration and
incorporation of a company. It must be accompanied by the name of the
company, Memorandum of association (MOA), Articles of association (AOA)
and other documents required. These documents are to be submitted online
through website of Ministry of Company Affairs.
As per the Companies Act 1956, a company can either be registered as a
Private Limited Company or a Public Limited Company.
According to Section 3(1)(iii) a Private Company is one which :
- Has a minimum paid-up capital of one lakh rupees.
- Restricts the right to transfer its shares (any restriction that
enables the directors to maintain minimum limit of two members and
the maximum limit of 50 members, shall serve the purpose).
- Limits the number of its members to 50. This number does not
include employees of the company and the ex-employees of the company
who are still members of the company.
- Prohibits the subscription of shares or debentures from general
- V. Prohibits any invitation or acceptance of deposits from any
person except its members, directors or their relatives.
According to Section 3(1)(iv), a Public Limited Company is a one
- Is not a private company.
- Has a minimum paid-up capital of Rs five lakhs.
- Is a private company which is a subsidiary of a public company.
A public company cannot have less than seven members. There is no
restriction with regard to the maximum number of persons who can acquire
the shares or debentures of a public company. The shares and debentures
may be quoted in stock exchange and are freely transferable.