Question

Companies Act, 2013 allows the formation of

• A. Two persons company only
• B. Seven persons company only
• C. Two or more persons company only
• D. One person company also.

Hint:

Remember the key innovations of the Companies Act, 2013. The introduction of the One Person Company (OPC) is a very important one that encourages entrepreneurship by providing the benefit of a corporate structure to a single individual.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
The question asks about the types of companies that can be formed under the Companies Act, 2013, highlighting a significant new type introduced by this Act.
Step 2: Detailed Explanation:
The Companies Act, 2013, continues to allow the formation of traditional companies:
- Private Company: Requires a minimum of two members.
- Public Company: Requires a minimum of seven members.
However, a major innovation of the 2013 Act was the introduction of the concept of a One Person Company (OPC).
- Section 2(62) of the Act defines "one person company" as a company which has only one person as a member.
This new structure allows a single entrepreneur to form a company with the benefit of limited liability, which was not possible under the 1956 Act (which required at least two people even for a private company). Therefore, the 2013 Act allows for the formation of a "One person company also," in addition to the other types.
Step 3: Final Answer:
The Companies Act, 2013 allows the formation of a One person company also.

Answer 2

The question asks what new type of company formation the Companies Act, 2013 permits, beyond what was already allowed under the earlier law. Each option should be checked against the actual membership thresholds fixed by the Act.

1. Two persons company only: A private company under the 2013 Act does need a minimum of two members, but describing this as the only kind of company the Act allows ignores public companies and, more importantly, the single-member company the Act newly introduced. The word "only" makes this option incomplete and therefore incorrect.
2. Seven persons company only: A public company requires a minimum of seven members, but again limiting the Act's scope to this one structure ignores private companies and the One Person Company, so this option is also incomplete.
3. Two or more persons company only: This describes the traditional private/public company format generally, but the word "only" wrongly excludes the single-member company that the 2013 Act specifically introduced as a new category.
4. One person company also: Section 2(62) of the Companies Act, 2013 defines a "one person company" as a company having only one person as its member, a structure that did not exist under the 1956 Act. The Act permits this in addition to private and public companies, which is exactly what "also" signals.

Since three of the four options wrongly restrict company formation to a single fixed headcount, only the option acknowledging the newly added single-member structure captures what the 2013 Act actually allows.

Therefore, the correct answer is One person company also.