Minimum Capital for Company Incorporation

The capital requirement for an Unlisted Company in India is briefly discussed in this article. There is no minimum capital requirement as per the provisions of the Companies Act, 2013 which governs the incorporation and regulation of Companies in India. The Capital required for incorporating companies in India is solely the discretion of the Promoter. This is worth to be noted here that a Company may be incorporated without share capital. Here are the key points regarding minimum capital requirements for incorporation of a Company limited by shares in India.

1. Share Structure

The Companies Act, 2013 does not specify minimum shares or share capital for a Company. However, it may be said that minimum number of shares in a Private Company, Public Company and One Person Company should be 2, 7 and 1 respectively due to the reason that the Act requires minimum number of Subscribers as 2, 7 and 1 respectively for incorporation of the Companies mentioned hereinbefore. As per general parlance, the minimum price of 1 share should be Re. 1. Thus, we can state that the requirement of minimum capital for a Private Limited Company is Rs. 2 divided into 2 shares of Re. 1 each.

For Example:

A Company name XYZ Private Limited is incorporated with Authorized Capital of Rs. 2 divided into 2 shares of Re. 1 each with two Subscribers subscribing 1 share each in the Company priced at Re. 1 per share. The paid-up Capital of the Company would be Rs. 2 divided into 2 shares of Re. 1 each.

Note: The Authorized Capital may be more than the Paid-up Capital of the Company.

2. Face Value

The face value of a share, as per the practices followed, should be minimum of Re. 1. The shares cannot be issued on discount however, they can be issued on premium whenever Company issues share capital to increase its paid-up capital. The value of share capital of a Company should be shown in the Balance sheet as per the face value of the shares.

3. Controlling Power

The shareholders have the ultimate power to take decisions in a Company by voting for the resolutions passed by the Company. Thus, the shareholder who has the maximum number of shares can take the decisions with voting power that whether the resolution should be passed or not depending upon the type of Resolution being passed. For exercising the decision making power, it is advisable for the Subscribers to keep the paid-up Capital at higher amount in a way that number of shares are also increased so that they can vote for resolutions with maximum shares.

Note:

Ordinary Resolution requires 51% votes in favour and Special Resolution requires 75% votes in favour.

Conclusion:

We can say that there is no minimum capital requirement for an unlisted Company having share capital. But, in general parlance it is seen that the minimum capital of a Company should be at least in multiples of 100 which is still not mandatory.

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