Question

Under the Companies Act every person subscribing to the Memorandum of a company must take at least

• A. 100 shares
• B. 20 shares
• C. 10 shares
• D. 1 share

Hint:

Remember the basic numerical requirements for company formation under the Companies Act, 2013: \[\begin{array}{rl} \bullet & \text{Minimum members: 7 (Public), 2 (Private), 1 (OPC).} \\ \bullet & \text{Minimum directors: 3 (Public), 2 (Private), 1 (OPC).} \\ \bullet & \text{Minimum shares per subscriber: 1.} \\ \end{array}\] These are very common questions in competitive exams.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
The question concerns a fundamental requirement for the incorporation of a company under the Companies Act. The subscribers to the Memorandum of Association are the first members of the company. The law specifies a minimum number of shares they must agree to take.

Step 2: Detailed Explanation:
The Memorandum of Association (MoA) is the charter document of a company. Persons who sign this document at the time of incorporation are called subscribers.
\[\begin{array}{rl} \bullet & \text{Section 7 of the Companies Act, 2013, outlines the procedure for incorporation. It requires the filing of the MoA and Articles of Association (AoA). } \\ \bullet & \text{The MoA must state the authorized share capital of the company and its division into shares of a fixed amount. } \\ \bullet & \text{A crucial part of the MoA is the subscription clause, where the subscribers declare their intention to form a company and agree to take a certain number of shares. } \\ \bullet & \text{The legal requirement, as established since the inception of company law and reflected in the prescribed forms for the Memorandum, is that each subscriber must agree to take at least one share. They must write the number of shares they agree to take opposite their name in the subscription clause. There is no legal provision mandating a higher minimum. } \\ \end{array}\]

Step 3: Final Answer:
The correct answer is (D) because the minimum number of shares that a subscriber to the Memorandum of Association must agree to take is one.