Section 3. Formation of company. | Companies Act Integrated Ready Reckoner|Companies Act 2013|CAIRR
   valid as on 29/04/2025

Section 3.Formation of company.
Effective from 01-04-2014 and font in blue from 09-02-2018

(1) 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, by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration:

Provided that the memorandum of One Person Company shall indicate the name of the other person, with his prior written consent in the prescribed form , who shall, in the event of the subscriber’s death or his incapacity to contract become the member of the company and the written consent of such person shall also be filed with the Registrar at the time of incorporation of the One Person Company along with its memorandum and articles:

Provided further that such other person may withdraw his consent in such manner as may be prescribed :

Provided also that the member of One Person Company may at any time change the name of such other person by giving notice in such manner as may be prescribed :

Provided also that it shall be the duty of the member of One Person Company to intimate the company the change, if any, in the name of the other person nominated by him by indicating in the memorandum or otherwise within such time and in such manner as may be prescribed, and the company shall intimate the Registrar any such change within such time and in such manner as may be prescribed :

Provided also that any such change in the name of the person shall not be deemed to be an alteration  of the memorandum.

(2) A company formed under sub-section (1) may be either—

(a) a company limited by shares; or
(b) a company limited by guarantee ; or
(c) an unlimited company .

Provided that a Specified IFSC public company shall be formed only as a company limited by shares.

Provided that a Specified IFSC private company shall be formed only as a company limited by shares

Sec. 3A Members severally liable in certain cases

If at any time the number of members of a company is reduced, in the case of a public company, below seven, in the case of a private company, below two, and the company carries on business for more than six months while the number of members is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognisant of the fact that it is carrying on business with less than seven members or two members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued therefor.

2.1.3-Companies (Incorporation) Rules,2014

3. One Person Company.-

(1) Only a natural person who is an Indian citizen and whether resident in India or otherwise resident in India

(a) shall be eligible to incorporate a One Person Company;

(b) shall be a nominee for the sole member of a One Person Company.

Explanation I. “ – For the purposes of this rule, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and twenty days one hundred and eighty two days during the immediately preceding financial year.

Explanation II.- For the purposes of this rule, while counting the number of days of stay of a director in India for the financial year 2018-2019, any period of stay between 01.01.2018 till the date of notification of this rule shall also be counted”;

Explanation.- For the purposes of this rule, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one calendar year.

(2) No person shall be eligible to incorporate more than a One Person Company or become nominee in more than one such company.  A natural person shall not be member of more than a One Person Company at any point of time and the said person shall not be a nominee of more than a One Person Company

(3) Where a natural person, being member in One Person Company in accordance with this rule becomes a member in another such Company by virtue of his being a nominee in that One Person Company, such person shall meet the eligibility criteria specified in sub rule (2) within a period of one hundred and eighty days.

(4) No minor shall become member or nominee of the One Person Company or can hold share with beneficial interest.

(5) Such Company cannot be incorporated or converted into a company under section 8 of the Act.

(6) Such Company cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporates.

(7) No such company can convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except threshold limit (paid up share capital) is increased beyond fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees.


2.1.4-Companies (Incorporation) Rules,2014

4. Nomination by the subscriber or member of One Person Company.-

For the purposes of first proviso to sub-section (1) of section 3-

(1) The subscriber to the memorandum of a One Person Company shall nominate a person, after obtaining prior written consent of such person, who shall, in the event of the subscriber’s death or his incapacity to contract, become the member of that One Person Company.

(2) The name of the person nominated under sub-rule (1) shall be mentioned in the memorandum of One Person Company and such nomination details along with consent of such nominee shall be filled in Form No. INC-32 (SPICe+) as a declaration and the said Form alongwith fee as provided in the Companies (Registration offices and fees) Rules, 2014 shall be filed with the Registrar at the time of incorporation of the company along with its e-memorandum and e-articles.

(2) The name of the person nominated under sub-rule (1) shall be mentioned in the memorandum of One Person Company and such nomination in Form No INC.2 along with consent of such nominee obtained in Form No INC.3 such nomination in Form No. INC-32 (SPICe) along with consent of such nominee obtained in Form No.INC-3 and fee as provided in the Companies (Registration offices and fees) Rules, 2014 shall be filed with the Registrar at the time of incorporation of the company along with its memorandum and articles.

(3) The person nominated by the subscriber or member of a One Person Company may, withdraw his consent by giving a notice in writing to such sole member and to the One Person Company:

Provided that the sole member shall nominate another person as nominee within fifteen days of the receipt of the notice of withdrawal and shall send an intimation of such nomination in writing to the Company, along with the written consent of such other person so nominated which shall be filed in form of a declaration in Form no. INC.4. in Form No INC.3


(4) The company shall within thirty days of receipt of the notice of withdrawal of consent under sub-rule (3) file with the Registrar, a notice of such withdrawal of consent and the intimation of the name of another person nominated by the sole member in Form No INC.4 along with fee as provided in the Companies (Registration offices and fees) Rules, 2014 and the written consent of such another person so nominated in form of a declaration in Form No. INC-4 in Form No INC.3

(5) The subscriber or member of a One Person Company may, by intimation in writing to the company, change the name of the person nominated by him at any time for any reason including in case of death or incapacity to contract of nominee and nominate another person after obtaining the consent of such another person and his declaration shall be filed in Form No. INC-4 prior consent of such another person in Form No INC.3

Provided that the company shall, on the receipt of such intimation, file with the Registrar, a notice of such change in Form No INC.4 along with fee as provided in the Companies (Registration offices and fees) Rules, 2014 and with the particulars of consent of new nominee in form of a declaration in Form No. INC-4. written consent of the new nominee in Form No INC.3 within thirty days of receipt of intimation of the change.

(6) Where the sole member of One Person Company ceases to be the member in the event of death or incapacity to contract and his nominee becomes the member of such One Person Company, such new member shall nominate within fifteen days of becoming member, a person who shall in the event of his death or his incapacity to contract become the member of such company, and the company shall file with the Registrar an intimation of such cessation and nomination in Form No INC.4

along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 within thirty days of the change in membership and with the particulars of consent of the person so nominated in form of declaration in Form No. INC-4. prior written consent of the person so nominated in Form No INC.3


2.1.5- Companies (Incorporation) Rules,2014

5. Penalty.-

If One Person Company or any officer of such company contravenes the provisions of these rules, One Person Company or any officer of the One Person Company shall be punishable with fine which may extend to ten thousand rupees and with a further fine which may extend to one thousand rupees for every day after the first during which such contravention continues.


Commencement Notification dated 09.02.2018


Companies (Incorporation) Amendment Rules, 2015 [GSR 349(E)] dated 01/05/2015


Companies (Incorporation) Second Amendment Rules, 2021 dated 01.02.2021 w.e.f. 01.04.2021


Companies (Incorporation) Third Amendment Rules, [GSR 743(E)] dated 27/07/2016


Enforcement Notification S.O. 902(E) dated 26/03/2014


Exemption to Specified IFSC Private company [GSR 09(E)] dated 04/01/2017


Exemption to Specified IFSC Public company [GSR 08(E)] dated 04/01/2017


MCA Notification dated 19.01.2023 regarding Companies (Incorporation) Amendment Rules, 2023


The Companies (Amendment) Act, 2017 (Effective from 03.01.2018)


Form INC-4 – Substituted vide MCA Notification dated 19.01.2023


FORM NO INC-6 substituted vide notification dated 01.02.2021 w.e.f. 01.04.2021


FORM NO. INC.2 One Person Company- Application for Incorporation (Omitted w.e.f 01.01.2017)


FORM NO. INC.3 One Person Company – Nominee Consent Form


FORM NO. INC.4 One Person Company – Change in Member/ Nominee


Form RUN (Reserve Unique Name) – Substituted vide MCA Notification dated 19.01.2023


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