2. Formation of company
• A company may be formed for any lawful purpose by—
• (a) seven or more persons, where the company to be
formed is to be a public company
• (b) two or more persons, where the company to be
formed is to be a private company; or
• (c) one person, where the company to be formed is to be
One Person Company that is to say, a private company
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3. •One Person Company
means a company which
has only one person as a
member
• Public company means a company which—
(a)is not a private company;
(b)has a minimum paid-up share capital as may
be prescribed
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4. •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
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5. Punishment for personation of shareholder
• If any person deceitfully personates as an owner of any security or interest in
a company, or of any share warrant or coupon issued in pursuance of this
Act, and thereby obtains or attempts to obtain any such security or interest
or any such share warrant or coupon, or receives or attempts to receive any
money due to any such owner, he shall be punishable with imprisonment for
a term which shall not be less than one year but which may extend to three
years and with fine which shall not be less than one lakh rupees but which
may extend to five lakh rupees.
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6. Annual general meeting
• (1) Every company other than a One Person Company shall in each year hold in
addition to any other meetings, a general meeting as its annual general meeting and
shall specify the meeting as such in the notices calling it, and not more than fifteen
months shall elapse between the date of one annual general meeting of a company
and that of the next:
• (2) Every annual general meeting shall be called during business hours, that is,
between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be
held either at the registered office of the company or at some other place within the
city, town or village in which the registered office of the company is situate:
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7. Appointment of Auditors
• Every company shall, at the first annual general meeting, appoint an
individual or a firm as an auditor who shall hold office from the conclusion
of that meeting till the conclusion of its sixth annual general meeting and
thereafter till the conclusion of every sixth meeting and the manner and
procedure of selection of auditors by the members of the company at such
meeting shall be such as may be prescribed:
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8. Number of Directorships
• No person, after the commencement of this Act, shall hold office as a
director, including any alternate directorship, in more than twenty companies
at the same time: Provided that the maximum number of public companies
in which a person can be appointed as a director shall not exceed ten.
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9. Duties of Directors
• (1) Subject to the provisions of this Act, a director of a company shall act in
accordance with the articles of the company.
• (2) A director of a company shall act in good faith in order to promote the
objects of the company for the benefit of its members as a whole, and in the
best interests of the company, its employees, the shareholders, the
community and for the protection of environment.
• (3) A director of a company shall exercise his duties with due and reasonable
care, skill and diligence and shall exercise independent judgment.
• (4) A director of a company shall not involve in a situation in which he may
have a direct or indirect interest that conflicts, or possibly may conflict, with
the interest of the company
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10. • (5) A director of a company shall not achieve or attempt to achieve any undue
gain or advantage either to himself or to his relatives, partners, or associates
and if such director is found guilty of making any undue gain, he shall be
liable to pay an amount equal to that gain to the company.
• (6) A director of a company shall not assign his office and any assignment so
made shall be void.
• (7) If a director of the company contravenes the provisions of this section
such director shall be punishable with fine which shall not be less than one
lakh rupees but which may extend to five lakh rupees. 167.
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