Number of Members falling below statutory minimum : Consequences
Minimum Number of Members Required in a Company
Section 3 of the
Companies Act 2013 clearly specifies and requires a Registered / Incorporated
Company, be it a company limited by shares, or a company
limited by guarantee, or an unlimited company, to have atleast Seven
members in the case of a public company and atleast Two members in the case of
a private company.
Consequences of Reduction
in the number of members below minimum
Earlier as per Section 45 of the Companies Act 1956, it was prescribed that if at any time the number
of members of a company falls below the minimum number as mentioned above, and
the Company carries on business for more than 6 months with members below m, then in such a situation every member of the company who is well aware of the fact that the Company is carrying on business with members fewer than the required
minimum limit shall be :
(1) liable for the payment
of the whole debts of the company contracted during that time, and
(2) may be severally sued.
Note: The Burden of Proof will be on the Member who claims to have no
knowledge of such reduction in the number of members
Under the new companies act 2013, there is no specific provision as to the consequences as mentioned above in case the number of members falls below required numbers.