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Overview

Companies Act
Companies incorporated or registered in India are governed by the Companies Act 1956.

Private Limited Company
A Private Limited Company is a Company limited by shares in which there can be maximum 50 shareholders, no invitation can be made to the public for subscription of shares or debentures, cannot make or accept deposits from public and there are restriction on the transfer of shares.
The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. The minimum number of shareholders is 2.

Public Limited Company
A Public Limited Company is a Company limited by shares in which there is no restriction on the maximum number of shareholders, transfer of shares and acceptance of public deposits. The liability of each shareholder is limited to the extent of the unpaid amount of the shares face value and the premium thereon in respect of the shares held by him. The minimum number of shareholders is 7.

Shareholders and Directors
There is no need to appoint local director to incorporate a company in India.

Foreign nationals can incorporate company in India and hold foreign equity to the extent of 100%, which is dependent upon sector in which company will operate and is subject to approval from either Reserve Bank of India{RBI}or Foreign Investment Promotion Board (FIPB).

Memorandum & Articles of Association
The Memorandum of Association states the main, ancillary/subsidiary and other object of the proposed company. The Article of Association contains the rules and procedures for the routine conduct of the proposed company. It also states the authorized share capital of the proposed company and the names of its first/permanent directors. After that Memorandum of Association and Article of Association are required to be stamped. Stamp duty is required to be paid on Memorandum of Association and Article of Association. The stamp duty depends on the authorized share capital.

Share Capital
Shares must be expressed in a fixed amount.” No par value"or"bearer"shares are not permitted. Shares to be subscribed must be expressed in Indian rupees.

Accounts & Auditors
Every company is required to appoint an auditor each year at its AGM. An auditor must be qualified by virtue of the Institute of Chartered Accountants of India Act 1949 and completely independent of the company. Audited accounts of the company serve as tool for various stakeholders like creditors, bankers, investors and revenue authorities.

Annual Meetings
An annual general meeting (AGM) must be held once in every financial year and not more than 6 monthly after the end of financial year. However, a company need not hold its first AGM until 18 months of its incorporation.

 
     
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