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

Meera, Sunil and Arjun, three friends in Pune, wish to form a private company limited by shares to run a cloud kitchen. Meera asks what the minimum number of members and directors required at incorporation would be. Which statement correctly reflects the position under the Companies Act, 2013?

A private company must have at least two members and at least two directors. The one-director concession applies only to a One Person Company, while seven members is the minimum for a public company, so two members and two directors is correct.

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

Explanation

A private company needs at least 2 members and at least 2 directors at incorporation. (A One Person Company is the exception, with 1 member and 1 director.) Option 2 confuses the private company with an OPC's single director rule; 7 members is the public company minimum.

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