Requirement under Companies Act

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This query is : Resolved

CA Ysil Karunai (Querist)

22 February 2011 Dear Experts:
Please consider the following situation

Two Persons Mr.A & Mr.B holding 50% each equally in Share Capital of the Public limited company, and their relatives are members to make satisfaction of minimum 7 members. They are not holding single shares of the said company.
The Mr. A & Mr.B are also Directors and one of them is relative Director (who is appointed as Director, for the purpose of minimum Directorship in Public ltd company is to 3)
Query:
1. Whether there is any voilation in this above situation regard to Companies Act 1956?
2. If yes, Please provide explanation? and also, Please give any suggestion to compliance with companies Act!

Jayashree S Iyer

Jayashree S Iyer (Expert)

25 February 2011 It is alright if Mr.A and Mr. B hold 100% shareholding in a company. But ensure that the other 5 members are alloted atleast 1 share each so that there are total 7 members in all. They can hold these shares for the beneficial interest of Mr.A of Mr.B as the case may be.

Appointing a relative as director of the company to meet the minimum requirement of directors is alright. Being a public limited company ensure that the consent to act as director is obtained from all the directors.

CA Ysil Karunai

CA Ysil Karunai (Querist)

25 February 2011 Thanks a lot.. Can you brief why other 5 members should obtain each atleast 1 share?
Whether Members compulsorily hold any shares in a company according to companies Act?

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