Section 3 - Formation of company
Explains formation of public, private and One Person Companies and the basic subscriber requirements.
Companies Act, 2013: Sections 3 to 20 - Incorporation and Matters Incidental Thereto
Sections 3 to 20 fall in Chapter II of the Companies Act, 2013 and deal with the legal framework for forming and incorporating a company, its memorandum and articles, registered office, alteration and conversion, restrictions involving holding and subsidiary companies, and service of documents.
Current-law note: Section 3A forms part of Chapter II. Section 10A governs commencement of business for the companies to which it applies. Section 11 is omitted from the current text of the Act. Always read the Act together with applicable rules, notifications and amendments.
Section-wise guide
Select a section below for the detailed provision, explanation, procedure and related compliance guidance available on this website.
Section 3A - Members severally liable in certain cases
Deals with personal liability where business continues for more than six months with membership below the statutory minimum and the member knows that fact.
Section 4 - Memorandum
Covers the company's name, State of registered office, objects, liability, capital and other memorandum requirements.
Section 5 - Articles
Covers the regulations for management of the company contained in its articles of association.
Section 6 - Act to override memorandum and articles
Makes the Act prevail over inconsistent provisions in the memorandum, articles, agreements or resolutions.
Section 7 - Incorporation of company
Sets out incorporation documents, declarations and filing requirements, and consequences of furnishing false information.
Section 8 - Companies with charitable objects
Provides for companies formed for specified non-profit objects that apply profits to their objects and prohibit dividend to members.
Sections 9 and 10 - Effect of registration; effect of memorandum and articles
Explains corporate status after registration and the binding effect of the memorandum and articles.
Section 11 - Omitted
Section 11 is omitted from the current Act. Commencement-of-business requirements are now addressed by Section 10A.
Section 12 - Registered office of company
Covers the registered office, verification, display and communication requirements and consequences of default.
Section 13 - Alteration of memorandum
Provides the statutory process for alteration of the memorandum, including changes that require approvals and registration.
Section 14 - Alteration of articles
Provides for alteration of articles by special resolution, subject to the Act and applicable approval requirements.
Section 15 - Alteration to be noted in every copy
Requires alterations of the memorandum or articles to be reflected in every copy issued thereafter.
Section 16 - Rectification of name of company
Deals with rectification where a company's registered name conflicts with an existing name or registered trade mark in circumstances covered by the section.
Section 17 - Copies to be given to members
Requires the company, on a member's request and payment of prescribed fee, to send specified constitutional documents within the statutory period.
Section 18 - Conversion of companies already registered
Permits conversion from one class of company to another by alteration of the memorandum and articles in accordance with the Act.
Section 19 - Subsidiary not to hold shares in holding company
States the general prohibition and statutory exceptions concerning a subsidiary holding shares in its holding company.
Section 20 - Service of documents
Provides recognised modes for service of documents on a company, its officers, the Registrar and members, subject to the Act and rules.
How these provisions work together
Section 3 begins with the formation of a company, while Sections 4 and 5 deal with its memorandum and articles. Section 6 gives the Companies Act overriding effect where constitutional documents or specified arrangements are inconsistent with the Act. Sections 7 to 10 deal with incorporation and its legal consequences, and Section 10A contains the current commencement-of-business provision for companies within its scope.
Sections 12 to 17 address the registered office and changes to, or copies of, constitutional documents. Section 18 permits conversion of an already registered company from one class to another subject to statutory requirements. Section 19 regulates a subsidiary company's holding of shares in its holding company, while Section 20 deals with service of documents.
Disclaimer: This page is a general legal information guide and not a substitute for the text of the Act, applicable rules, notifications, circulars or professional advice for a particular transaction.