The association clause of a public company has to be signed by:

Question

Accepted Answer

The correct option is 3:
The correct answer is **7 persons**. According to the fundamental legal framework governing the incorporation of companies, specifically the Companies Act (such as the Indian Companies Act, 2013, and similar laws globally for public entities), a Public Limited Company must have a minimum of seven persons subscribe to its Memorandum of Association (MOA). The "association clause" is the final, crucial part of the MOA where the founders declare their intention to form the company and agree to take the shares specified against their names. This requirement of seven subscribers is a key differentiating factor from a Private Limited Company (which requires a minimum of two persons) and ensures a substantial and diverse initial base for an entity that will eventually approach the public for capital.

The incorrect option is 1:
The figure of **10 persons** is not the minimum statutory requirement for signing the association clause of a public company. While a public company can certainly be formed with ten or more persons, this number is not the legally mandated threshold set by the Companies Act. The law specifies the minimum number, and any number exceeding this minimum is acceptable, but 10 itself holds no unique legal significance as a required minimum for a public company's formation.

The incorrect option is 2:
The number **12 persons** is incorrect for the same reason that 10 persons is incorrect. The minimum number of subscribers required to legally incorporate a Public Limited Company remains seven. There are no provisions in standard company legislation that mandate a minimum of 12 members for this type of entity. This option simply represents a number that is greater than the necessary legal minimum, but it is not the correct statutory answer to the question.

The incorrect option is 4:
The option of **5 persons** is incorrect because it falls short of the statutory minimum required for a Public Limited Company. This number is sometimes relevant in company law, as it is the minimum required to form a Producer Company under the Companies Act, 2013, or a different class of organization. However, a public company, which has the privilege of attracting capital from the general public, is held to a higher standard and must have a more extensive base of founding members, explicitly set at seven, to ensure proper governance and a broad foundation.