Shareholders in India
Updated on Monday 05th March 2018
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The rights and the obligations of the shareholders (who are the founders of the company or the persons who invested shares in the respective business) are prescribed in India by the Companies Act 2013. When starting a company in India, it will be necessary to appoint a specific number of shareholders, depending on the legal entity that was chosen for incorporation.
For example, in the case of a private limited company, the legal entity can be set up with minimum two shareholders. Our team of specialists in company formation in India can advise foreign businessmen on the rights and obligations of the Indian shareholders, as well as on the rights prescribed for minority shareholders.
Mimum number of shareholders in India
As mentioned above, the number of shareholders of a company can vary depending on the business form registered in India.
Investors interested in how to form a company in India will need to comply with the regulations of the Companies Act on this matter, as follows:
• one shareholder – one person company;
• two shareholders – private limited company;
• seven shareholders – public limited company.
It is important to know that in the case of the one person company the shareholder can only be represented by a natural person who must be a resident in India. Our team of representatives in company registration in India can further advise on the minimum requirements imposed to the shareholders of the above mentioned business forms.
The rights of the Indian shareholders
In India, shareholders are divided into two main categories:
• general shareholders;
• minority shareholders.
These types of shareholders have different rights in running a company in India. For example, a general shareholder can appoint company’s directors or vote in the general meetings. The general shareholder can also request the company’s financial statements or can start the winding up procedure.
An important aspect provided by the Indian legislation refers to the fact that the shareholders, as well as the company’s directors, may attend board meetings through video conferences.
Businessmen interested in investing in this country can request further information on the legislation referring to the Indian shareholders from our team of consultants in company formation in India.