Minimum paid-up capital

All private and public companies are required to have a minimum paid-up capital of INR 100,000 and INR 500,000 respectively. Incase certain key words like manufacturing, India, etc, are to be used, then there are additional minimum paid-up capital requirements.

Two kinds of share capital

The share capital of a company may be of two types, namely, equity share capital and preference share capital. The equity share capital may be issued with voting rights or with differential rights as to dividend, voting or otherwise in accordance with the rules and subject to such conditions prescribed by the Companies (Issue of shares with Differential Voting Rights) Rules, 2001. The preference share capital enjoys a preferential right in the payment of dividends during the lifetime of the company and repayment of capital when the company is wound up.

Directors

• Every public company is required to have at least three directors and every private company to have at least two directors, subject to a maximum of 12 directors.

  A listed public company in India is required to comply with the corporate governance requirements. Accordingly, such a company is mandatorily required to have not less than 50% of the total strength of the board of directors comprising non-executive directors. Depending on whether or not the Chairman is executive or non-executive, the total number of independent directors that it shall appoint will vary between half or one third respectively. Independent directors have been defined to mean directors, who apart from receiving director’s remuneration, do not have any other material pecuniary relationship or transaction with the company, its promoters, its management or its subsidiaries which in the judgment of the board, may affect the independence of judgment of the director.

• (No person can hold office of director in more than 15 companies at a time. This number excludes directorship in private companies and alternate directorship.
• A director of a public company which has failed to file annual accounts or annual returns for a period of three consecutive financial years commencing on or after 1 April 1999 or has failed to repay its deposits or interest thereon on due date or redeem its debentures on due date or pay dividend and such failure continues for one year or more, will not be eligible to be appointed as a director of a public company for a period of five years.
• The board of directors are required to meet at least once in three months and at least four such meetings shall be held in a year. No such meetings need be held compulsory in India and can be held anywhere in the world.
  For a listed public company, in accordance with the provisions ensuring corporate governance, the board of directors are required to meet at least four times a year, with a maximum time gap of four months between any two meetings.

Statutory accounts

At every annual general meeting of a company, the company is required to lay a balance sheet and a profit and loss account. The profit and loss account shall relate to the financial year of the company and the balance sheet, as at the end of the financial year. The financial year cannot exceed 15 months. However, it can be extended to 18 months with the special permission of the ROC.