Steps in Formation of a Company under Companies Act 2013

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  • 3 Min Read
  • By Taxmann
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  • Last Updated on 29 November, 2021

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The Companies Act is an Act formed to consolidate and amend the laws related to the companies and it extends to the whole of India. It equally applies to all the companies that are incorporated under this Act and any company which is incorporated before the formation of the Companies Act. It implies to all the insurance companies except for once exempted under the Insurance Act, 1938. It also implies to all the banking companies except ones exempted under the Banking Regulation Act, 1949. It also implies to all the companies which are engaged in generation or supply of electricity except the ones that are inconsistent with its provision under Electricity Act, 2003.
Company Act 2013
 

Company Formation under the Companies Act, 2013

Under this act, a company may be formed for any lawful purpose by seven or more members to incorporate a public company and two or more members for a private company or by a single person as One Person Company. The company must subscribe its names into a memorandum and must comply with all the registration requirements under the Companies Act, 2013.

Memorandum of a Company

The Memorandum of a company should state the name of the company with last word as “limited” in case it is a public limited company and “Private Limited”, in case it’s a private limited company. Then they must mention the state in which the registered office of the company will be situated, the objects of the company, and liability of various members of the company. In case of a company is limited by the shares, then the liability of its members is limited to the unpaid amount or the shares they hold. In case the company is limited by a guarantee, then the amount of each member’s contribution towards the assets of a company, if the company is wound up or he ceases to be a member of the company within one year of formation of the company. Or else each member shall contribute towards the costs, charges, and expenses of winding up or adjustments of rights towards the contributions should be made amongst themselves. The name stated in the memorandum should be unique and should not be identical or resemble very closely to any existing company which is already registered under the Companies Act, 2013. Also, the company cannot be registered with a name that has a word or expression which gives an impression of it being connected in any way to the patronage of Central Government, or State Government or local authority, or any corporation or body which is constituted by it.   The memorandum must be in forms as specified in Tables A, B, C, D, and E of Schedule I as applicable to such company.

Product imageArticle of a Company:

Then a company must also have articles that must contain the regulations for its management and should have provisions to be adjusted later by following the prescribed procedure. It should also define the procedure to adjust these articles. The articles must be presented in forms as specified in Tables F, G, H, I, and J of Schedule I as applicable to such a company. It’s up to the company to opt for some or all the regulations which are contained in the model article which is applicable to that company.  

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