Section 3 of Companies Act 2013: Formation of Company
Section 3 of Companies Act 2013; read with The Companies (Incorporation) Rules, 2014
Types of Companies:
- Public Company — At least 7 persons
- Private Company — At least 2 persons
- One Person Company – Only one person with a person as Nominee. It will be a private company.
These companies may be limited by Shares, Limited by guarantee or an Unlimited Company.
In case of One Person Company’s Memorandum and Article of Association should indicate the name of the person incorporating the company as well as the name of another person also who will become the member of the company in the event of subscriber’s death or incapacity i.s nominee of the company. The copy of the nominations made in Form INC-2 and the written consent of nominee person should be filled with the registrar in Form INC-3 along with the Memorandum and Article of Association of the Company.
The person nominated by the subscriber can withdraw his consent by giving a notice in writing to the sole member and the company. The sole member shall nominate another person as nominee within 15 days of the receipt of the notice and shall send intimation to the company of such new nomination along with the consent of such new nominee in Form INC-3. The company shall within 30 days of the receipt of such notice of withdrawal of consent by the nominee shall file with the registrar the copy of such notice of withdrawal of consent along with the intimation of the name of another person nominated in Form INC 4 and the written consent of such another person nominated in Form INC-3.
The subscriber can also by intimation in writing to the company change the name of the person nominated by him at any time and nominate another person after obtaining prior consent of the another person nominated on Form INC-3. The company shall within 30 days of receipt of intimation file with the registrar a notice of such change in Form INC-4 along with the written consent of the new nominee in Form INC 3.
In case of death of the subscriber or due to any other reason if the nominee becomes the member of the company, then such new member shall within a period of 15 days nominate another person as nominee in his own place. The company shall with in a period of 30 days of change in the membership file with the registrar INC-4 and INC-3. This change will not be treated as an alteration of the memorandum.
Who can incorporate a One Person Company:
- Natural person who is an Indian Citizen and resident in India
- Resident in India means a person who has stayed in India for a period of not less than 182 days during the immediately preceding calendar year.
- Person should be a major person not minor.
Who can be appointed as a nominee of the One Person Company:
- Natural person who is an Indian Citizen and resident in india
- Person should be a Major Person not Minor
Restriction on the Number of Membership and Nominations:
A person cannot incorporate more than one One Person Company. And also a person cannot act as nominee in more than one , One Person Company However a person can act as member in single One Person Company and at the same time as nominee in some another one person company . However if a person is a member in one One Person Company and acts as nominee in another One Person Company , becomes a member in that another company also then he is required to meet the eligibility criteria with 180 days.
Restrictions on the One Person Company:
- A one person company cannot be incorporated U/S 8 of The Companies Act 2013 (Charitable Objectives)
- A one person company cannot carry out Non-Banking Financial Investment Activities including investment in securities of anybody corporate.
- One Person Company cannot be converted in another form of company before the expiry of two years from the date of incorporation of the company. However if the paid up share capital of such company exceeds Rs. 50 Lakh or its average annual turnover exceeds Rs. 2 Crores , then the company can be converted into another form before the expiry of two years from the date of incorporation of the company.
In case One Person Company or any officer of the company contravenes any of the provisions of this Act or rules made thereunder then the company and the officer of the company shall be punishable with a fine which may extend to Rs. 10000.00 and with a further fine which may extend to Rs. 1000 every day during which the default continues.
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