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Company Law in India

Meaning of Company and understanding Company Law

A company is an association of two or more persons in furtherance of a common business objective. A company is a “Separate Legal Entity” having its own identity distinct from its members. As a legal entity, a company can own a property in its own name, can sue and be sued in its own name and also enjoys perpetual succession, among others. However, since a Company, unlike a human being, is an artificial person, it can only act through its agents, namely, the Board of Directors.

The process of legally declaring a corporate entity as a separate legal entity distinct from its members is known as ‘Incorporation of a Company’. An association of persons in order to initiate its business as a company has to get a certificate of incorporation from the Registrar of Companies (ROC).

The law governing companies in India is the Companies Act, 2013, which was enacted for the first time in 1913. Later on, major amendments were introduced in the years 1960, 1962, 1963, 1964, 1965, 1966, 1967, 1969, 1974, 1977, 1985, 1988 and 1991. In 2008 Companies Bill was presented which is now the Companies Act, 2013, which is in force till now.

Registration of Private Limited Company

As per Section 2(68) of the Companies Act, 2013, a Private Limited Company can be registered by having a minimum paid-up share capital of one lakh rupees or such higher paid-up share capital. The minimum number of the member required to incorporate A Private Limited Company is 2 and the maximum no. of members are 200. These companies are prohibited to raise funds through the issue of prospectus. They are of three types:

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

Registration of Public Limited Company

A Public Limited Company (other than a Public Sector Undertaking) There must be at least seven persons to form a public company. It is of the essence of a public company that its articles do not contain provisions restricting the number of its members or excluding generally the transfer of its shares to the public or prohibiting any invitation to the public to subscribe for its shares or debentures. Only the shares of a public company are capable of being dealt in on a stock exchange.

Conversion of one person company into Private Limited Company

As per the Companies (Incorporation) Rules, 2014, One Person Company has to be compulsorily converted into a private limited company within 6 months of the date of which the threshold limit of the paid-up share capital increase INR 50 lakhs or the last date of relevant period during which its average turnover exceeds INR 2 crores.

For more information on Companies Act, please write to us at info@ssrana.com or submit a query.

To know more about incorporation of company in India, Read below

Company Law in India

Company Formation in India



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