Article explains Classification of Companies as limited Companies and unlimited Companies, Classification of Companies as Private and Public Companies, Legal Requirements for formation of a Company and also about formation of Public Company, Private Company and One Person Company (OPC).
1. Every Company formed under the Companies Act, 2013 shall be either a limited Company or an unlimited Company.
2. A limited Company may be further classified as follows:-
i. Company limited by shares
ii. Company limited by guarantee having no share capital
iii. Company limited by guarantee and having a share capital
3. An unlimited Company may be further classified as follows:-
i. An unlimited Company having no share capital
ii. An unlimited Company having a share capital
Pursuant to Section 3(1) of the Companies Act, 2013, Every Company formed under the Companies Act, 2013 shall be either a Public Company or Private Company.A Company may be formed under the Act as One Person Company (OPC). OPC is also a private Company
Pursuant to Section 3(2) of the Companies Act, 2013, A Company formed under section 3(1) may be either-
Lawful purpose:- Section 3 states that a Company may be formed for any lawful purpose. Thus, no company shall be formed for carrying on any unlawful objects.
Subscription to Memorandum:-The Person who sign on the memorandum are termed as subscribers. The Provisions relating to subscription of Memorandum are explained as below:-
According to section 2 (71) of the companies Act, 2013“public company” means a company which—
(a) is not a private company;
(b) has a minimum paid-up share capital as may be prescribed:
Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company
According to section 2 (68) of the companies Act, 2013 “private company” means a company having a minimum paid-up share capital as may be prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred:
(iii) prohibits any invitation to the public to subscribe for any securities of the company;
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that—
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased,
shall not be included in the number of members;
According to section 2 (62) of the companies Act, 2013, ‘One Person Company (OPC)’ means a company which has only one person as a member.
The Companies Act, 2013 has introduced new concept of ‘One Person Company’ (herein after referred to as ‘OPC’). Section 3 (1) (c) has been notified vide notification dated 26th March, 2014 and the same has been effective from 01st April, 2014.
It is a new form of business by which company can be incorporated with one person only. It enables the entrepreneur carrying the business in the Sole-Proprietor form of business to enter into a Corporate Framework. One Person Company is a hybrid of Sole-Proprietor and Company form of business, and has been provided with relaxed requirements under the Companies Act, 2013.
Member of OPC
Nominee of OPC
The subscriber to the memorandum of OPC shall nominate a person, after obtaining prior written consent of such person, who shall, in the event of the subscriber’s death or his incapacity to contract, become the member of that OPC (Rule 4 (1)).The name of the person nominated under sub-rule (1) shall be mentioned in the memorandum of One Person Company and shall be filed in Form No. INC-3 with the Registrar at the time of incorporation of the company along with its memorandum and articles.
Explanation – the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty two (182) days during the immediately preceding one calendar year.
Withdrawal of Consent by Nominee
The sole member shall nominate another person as nominee within fifteen (15) days of the receipt of the notice of withdrawal and shall send an intimation of such nomination in writing to the Company, along with the written consent in Form No INC 3 [Rule 4 (3)].
Change the name of Nominee
Note: Any change in the name of the person as Nominee shall not be deemed to be an alteration of the Memorandum
Appointment of Nominee in case of change in Membership
Exception – If paid up share capital exceeds Rs. 50,00,000/- (Rupees Fifty Lakhs) or its average annual turnover during the relevant period exceeds Rs. 2,00,00,000/- (Rupees Two Crores) or if during financial year its balance sheet total exceeds one crore rupees, it would cease to be continue as an OPC. However, such OPC would be mandatorily required to convert itself within a period of six months into a Private or Public Company.