As we understand to incorporate Public Company minimum number of 7 member(s) are required.I wanted to know whether Is it legally possible that 1 shareholder serves as trustee for the other 6 shareholders in the Public Company.
04 October 2007
A minimum of Seven Subscribers are required to form a Public Company. These subscribers are required to enter and sign in their own handwriting the subscription details. Hence one shareholder cannot serve as a trustee for all others for signing and authenticating the subscription clause. However, if the subscribers are companies, the signatory can be one under the seal of each of the company.
04 October 2007
AS RIGHTLY SAID BY MR. KEDARNATH, 7 SUBSCRIBERS NEDED TO AFFIX THEIR SGNATURES TO FLOAT A COMPANY. BUT IN DAY TO DAY MATTERS, A SINGLE SHAREHOLDER CAN BE GIVEN A POWER OF ATTOTRNEY TO DEAL,SIGN AND UNDERTAKE ON BEHALF OF THE REMAINING SHAREHOLDERS. BY THE WORD TRUST IF YOU MEAN IN YOUR QUESTION THAT A SINGLE SHAREHOLDER ACTS IN TRUST FOR AND ON BEHALF OF ALL THE REMAINING SHAREHOLDERS YOU ARE RIGHT. YES A SINGLE SHAREHOLDER CAN BE A CONFIDENT MAN OR BE A TRUSTEE TO TAKE CARE OF DEALING WITH THE MANAGEMENT OF A COMPANY FOR AND ON BEHALF OF ALL THE OTHER SHAREHOLDERS. THIS HAPPENS IN SEVERAL INSTANCE LIKE WHEN A COMPANY HOLDS AN AGM OR EXTRAORDINARY GEN. MEETING ,A SINGLE SHAREHOLDER MAY BE GIVEN A PROXY BY ALL OTHER SHAREHOLDERS TO MAKE HIM REPRESENT ALL OTHER SHAREHOLDERS. THIS IS OK IF IT IS A CLOSELY HELD PUBLIC LTD. COMPANY. BUT IN A WIDELY HELD AND OR PUBLIC LISTED COMPANIES WHERE SHARE HOLDERS ARE SPREAD OVER THE ENTIRE COUNTRY, THIS IS NOT FEASIBLE IN PRACTICE. R.V.RAO
04 October 2007
Since trust is not a person and as per Section any 7 or more persons may by subscribing their names to a Memorandum of association can incorporate a Company.
Seven persons means seven natural or Juristic persons. Hence trustee cannot sign as trustee for seven beneficial holders for subscribing to MoA for incorporation.
CAclubindia
