Incorporation of a Company with Common Rules and Nuances.

Incorporation of Company and Matters Incidental Thereto

Incorporation of a company under the three aspects

Incorporation of a company has so many rules to follow. Incorporating is like form into a corporation. The so-called business corporation

  • According to the number of people joined together, the formation of company differs.
  • Seven or more than seven persons form the Public Company.
  • Two or more persons form the Private Company.
  • One Person Company it is very obvious from the name of it. Only one person can be in the company. It is a Private Company.

Companies Act, 1956: Section 12

Section 12 of Companies Act, 1956, it is about the mode of forming a company in India. A minimum number of members required for Private Company is two. Minimum seven members are required for the public company. For the incorporation, one must follow the law which expects you to subscribe their names to the memorandum of association.

Under S 12 of 1956 Act, a company can be,

  • Limited by Shares
  • Limited by Guarantee
  • Unlimited Company

What is Limited by Shares?

A company possesses the liability of its members depends upon the limit by memorandum to the particular amount. If any shares are unpaid it will be held by them. It is called a company with Limited Shares.

What is Limited by Guarantee?

Liability of the company’s members possessed by the limited memorandum to such amount. The In case of winding up the company, members do contribute to the asset of the company.

What is Unlimited Company?

The company does not have any limit on the liability of its member this is termed as the Unlimited company.

Companies Act, 2013: Section 3

In the memorandum of One Person Company should mention the name of another person who shall become a member in case of death of the single member. They have to subscribe.¬† He has to give it in written format in the prescribed form. During the incorporation of One Person Company written consent of the particular person is expected to file with the Registrar along with the companies memorandum and articles. The Person whose name is included has the right to withdraw his consent. The other person’s name can be changed at any time by giving the notice.

Any changes that take place in one person company must be indicated and make the changes that are there according to the Law. The changes like a name of the other person must be indicated in the memorandum.

The change in name of the other person cannot be considered to be an alteration of the memorandum.

A company can be formed under these clauses

  • A company limited by shares
  • A company limited by guarantee
  • An unlimited company


The J.J. Irani Committee, constituted by the Ministry of Corporate Affairs. New Company Law has discussed the Classification of companies in the context of changing the economic and business environment locally and Globally.

 Common rules and nuances to the incorporation of a company.

One Person Company

A business need not be always a group of people joined together and invest. A single person can do well without the help of anyone. All the matters that associate with the business can well handle by one single person. So many developments have taken place in technology. Many have changed. In this case, the single person no needs anyone than their own assistance. To facilitate such kind of people who want to be independent, the Committee recommend the Law to recognize the formation of a company by a single person. It is named as ‘One Person Company.

The following characteristics were introduced in the Act which was made for ‘One Person Company’


  • OPC can be registered as a Private Limited Company. It may have one member and at least one director.
  • In case of death or disability of the sole person, he should appoint another individual person as Nominee Director. This should have done in prior. In case of death, all the affairs should take care by the other director until the legal actions taken to handover the shares to legal heirs.
  • OPC this should be suffixed with the company’s name. Especially to distinguish from other company.

The scope of section 3 of Companies Act, 2013

A company is considered as a juristic person with individual identity have the right to own property under the name of the company. So it is entirely different from the people who are called as shareholders. The company will be considered as juristic only when it is subscribed in the memorandum and registered in Registrar of Companies. The subscribers are called as ‘promoters’. The law under s. 3 of the 2013Act to form Private Limited and Public Limited Companies are same as it was mentioned in s. 12 of the 1956 Act. Though One Person Company will be a Private Limited Company it can have only one subscriber.

3 of the 2013 Act contains special provisions for One Person Company:

  • Name of the person apart from the owner of an OPC has to be filed with the Registrar. This should be done with the prior consent of the person who shall become a member of the company. This is to manage if the subscriber is dead or unable to run the company.
  • The nominated person can withdraw from this with the proper rules and regulations.
  • The OPC member can change the name of the person by following the procedure.
  • The person has to intimate the company about the change . Then the company has to intimate the Registrar
  • The changes in the name of the person cannot be considered as the alteration take place in the memorandum.