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CA Intermediate · Corporate and Other Laws · Incorporation of Company and Matters Incidental Thereto

Meera, Rohan and Sunil intend to form a private company, Kaveri Agro Tech Private Limited, with a paid-up capital of Rs 5 lakh. During incorporation, they wish to know the minimum number of members and directors required. Under the Companies Act, 2013, which position is correct for a private company?

A private company requires a minimum of 2 members and a minimum of 2 directors. The higher thresholds of 7 members and 3 directors apply only to public companies, so they do not govern Kaveri Agro Tech Private Limited, which is being formed as a private company.

  1. AMinimum 2 members and minimum 2 directorsCorrect
  2. BMinimum 2 members and minimum 3 directors
  3. CMinimum 3 members and minimum 2 directors
  4. DMinimum 7 members and minimum 3 directors

Explanation

A private company needs at least 2 members and at least 2 directors, and at least one director must be a resident in India. The figure of 7 members and 3 directors applies to a public company, so that option is wrong. Having 3 members is not required.

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