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Can a company be incorporated without share capital?

Can a company be incorporated without share capital

In India, a company is a legal entity formed under the provisions of the Companies Act, 2013, or its predecessor, the Companies Act, 1956. It is an association of individuals, known as shareholders or members, who pool their resources and capital to conduct a business or engage in a specific activity.

There are different types of companies recognized under Indian law, including private limited companies, public limited companies, one-person companies, and Section 8 companies, among others. The type of company chosen depends on factors such as the nature of the business, the number of members, and the requirements and objectives of the promoters.

Company incorporation without share capital

In India, a company can have company incorporation in Chennai without share capital under certain circumstances. This type of company is known as a “Section 8 Company” and is governed by the Companies Act, 2013. In this article, we will explore the concept of a Section 8 Company, its features, requirements, and the process of incorporation in India.

A Section 8 Company is a non-profit organization formed for the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, or any other useful object.

The primary objective of such a company is to apply its profits, if any, or other income solely for the promotion of its objects. The company is prohibited from paying any dividend to its members.


One of the key features of a Section 8 Company is that it can be incorporated without any share capital. Instead of having shareholders, it typically has members or subscribers who contribute to the company’s objectives. The subscribers are usually individuals or organizations interested in furthering the company’s goals.

To have Section 8 company incorporation in Chennai without share capital, certain requirements must be fulfilled. Firstly, the proposed name of the company must include the words “Section 8” or “Section eight.” Additionally, the company’s objects must fall within the purview of those defined by the Companies Act, 2013.

The process of incorporating a Section 8 Company without share capital involves several steps. Here is a brief overview of the process:

Obtain Digital Signature Certificate (DSC):

The proposed directors of the company need to obtain DSCs from government-approved agencies. The DSC is required for filing electronic forms during the process of Section 8 company incorporation in Chennai.

Obtain Director Identification Number (DIN):

The directors must apply for DINs from the Ministry of Corporate Affairs (MCA). DIN is a unique identification number allotted to individuals who wish to be appointed as directors of a company.

Name Reservation:

An application for name reservation must be filed with the Registrar of Companies (ROC). The proposed name should comply with the guidelines provided by the MCA. Once approved, the name is reserved for a period of 20 days.

Memorandum and Articles of Association:

The next step involves drafting the Memorandum of Association (MoA) and Articles of Association (AoA) of the company incorporation in Chennai. These documents define the company’s objectives, rules, and regulations.

Incorporation Application:

The incorporation application, along with the necessary documents, is filed with the ROC. The application should include details of the proposed directors, subscribers, registered office address, and the prescribed fees.

Declaration and Affidavit:

The directors and subscribers must submit a declaration and affidavit stating their eligibility, compliance with the Companies Act, and intention for Section 8 company incorporation in Chennai without share capital.

Obtaining Certificate of Incorporation:

If the ROC is satisfied with the application and the accompanying documents, a Certificate of Incorporation is issued. This certificate signifies the creation of the Section 8 Company.

Post-Incorporation Compliances:

After company incorporation in Chennai, the Section 8 Company must fulfil various post-incorporation compliances, such as obtaining a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN), opening a bank account, and obtaining registrations under applicable laws.

Minimum share capital for One Person Company

As per the Companies (Incorporation) Rules, 2014, the minimum share capital requirement for a one person company (OPC) in India is INR 1 lakh (one hundred thousand rupees). This means that an OPC must have an authorized share capital of at least INR 1 lakh at the time of incorporation.

It is important to note that share capital represents the ownership of the company and is divided into shares, which are issued to the shareholders. In the case of an OPC, there is only one shareholder, who is also the director of the company.

The shareholder/director contributes to the share capital of the company and is responsible for the management and operations of the company.

The share capital of an OPC can be increased at any time by following the procedures specified under the Companies Act, 2013.

However, the share capital cannot be reduced below the prescribed minimum limit of INR 1 lakh.

It is worth mentioning that the share capital requirement for an OPC is lower than that of a private limited company, which must have a minimum authorized share capital of INR 1 lakh and a minimum of two shareholders.

This makes the OPC an attractive option for small businesses and entrepreneurs who want to start a company with limited liability and the benefits of a corporate structure.

At what conditions OPC can be converted to private limited company?

Here are the conditions and requirements for converting an OPC that has OPC incorporation in Chennai to a Private Limited Company:

Elapsed Time:

An OPC can be converted into a Private Limited Company only after two years from the date of its incorporation. This means that the conversion is not permitted during the first two years of the OPC’s existence.

Paid-up Capital and Turnover:

The paid-up share capital and average annual turnover of the OPC should exceed the thresholds specified in the Companies Act, 2013. As of my knowledge cut-off in September 2021, the Act states that if the paid-up share capital of the OPC exceeds INR 50 lakhs (Rs. 5 million) or if its average annual turnover during the relevant period exceeds INR 2 cores (Rs. 20 million), it is mandatory to convert the OPC into a Private Limited Company.

Voluntary Conversion:

The conversion from an OPC to a Private Limited Company must be voluntary. The decision should be made by the sole shareholder and director of the OPC, and the process should be carried out with the consent and approval of the shareholder.


The OPC should be compliant with all statutory requirements, such as filing of annual financial statements, filing of income tax returns, and maintaining regular books of accounts.


Whether it is OPC or, Pvt ltd Company or Section 8 or it may any type of company, we Solubilis have a strong team to assist in the incorporation process.