Intermediate · Paper 5 – Business Laws & Ethics · Companies Act, 2013 · 2:43
English
Transcript
How many people does it take to start a company? One, two, or seven? Let's see how a company is formed!
Arjun and Fathima want to start a food delivery company in Coimbatore.
Fathima: Arjun, can just the two of us form a company?
Arjun: Let's check Section 3!
Under Section 3, a company may be formed for any lawful purpose: by seven or more persons for a public company, two or more persons for a private company, or one person for a One Person Company. They subscribe their names to a memorandum, and complete the requirements for registration.
Fathima: We are two. So we can form a private company!
The Registrar registers the documents, and issues a certificate of incorporation. From the date on that certificate, the company gets a corporate identity number, or C I N, as its own distinct identity. The company must preserve copies of all the documents it filed, at its registered office, till it is dissolved. And any false statement attracts liability under Section 447.
Before incorporation, the promoters choose a name. Rule 8 lists undesirable names that cannot be used, such as a name identical to an existing company. Rule 9 allows the name to be reserved, by applying in Form I N C 1, with the fee.
Arjun: Then let's reserve Kovai Bites Private Limited!
Note: today, a name is reserved through the R U N web service, or the SPICe Plus form, which replaced Form I N C 1. Check with your faculty.
And if the articles contain entrenchment provisions, the company informs the Registrar in Form I N C 2 or Form I N C 7, at the time of incorporation. An existing company files Form M G T 14, within thirty days.
Exam tip! Seven for a public company, two for a private company, and one for an O P C. And remember the certificate of incorporation, and the C I N.
Let's recap. Section 3: seven, two, or one person, for a lawful purpose. The Registrar issues the certificate of incorporation and the C I N. And Rules 8 and 9 govern the company's name.
Now try the test in the MPA app. In the next video, we will learn about the memorandum of association.