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Incorporation of Companies

To form a company, the following steps must be taken: incorporation, which involves at least 7 people signing a memorandum of association to create a legal entity; registration with the registrar to obtain a certificate of incorporation, which legally forms the company; and commencement of business, which requires an additional certificate for public companies. The certificate of incorporation is legally conclusive evidence of the company's valid formation.

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Akkul Dhand
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108 views

Incorporation of Companies

To form a company, the following steps must be taken: incorporation, which involves at least 7 people signing a memorandum of association to create a legal entity; registration with the registrar to obtain a certificate of incorporation, which legally forms the company; and commencement of business, which requires an additional certificate for public companies. The certificate of incorporation is legally conclusive evidence of the company's valid formation.

Uploaded by

Akkul Dhand
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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AMITY GLOBAL

BUSINESS SCHOOL Chandigarh

FORMATION OF A COMPANY
• Formation of company requires the
following:
• Incorporation of a company
• Certificate of incorporation
• Commencement of business
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Incorporation of a company
• A company comes into existence when a number of persons
come together with a view to exploit some business opportunity. These
persons are called promoters.

Under section 12, seven or more persons in case of public company (2


or more in case of private company) may form an incorporated
company for a lawful purpose by subscribing their names to the
memorandum of association and complying with their requirements in
respect of registration. Such an incorporated company may be a
company

• (a) limited by shares


• (b) limited by guarantee or
• (c) an unlimited company.

.
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

• The expression ‘subscribing’ their names to


memorandum of association means putting their
signatures to the memorandum. It means an
agreement between the persons concerned to
associate themselves into a body corporate. A
person becomes a subscriber by signing the
memorandum.

• The application for registration of a company


should be presented to the Registrar of the state
with the required documents in which the
business office of the company is to be situate
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Certificate of Incorporation:

• On registration, the registrar will issue a


certificate of incorporation whereby he certifies
that the company is incorporated and in the case
of limited company, that the company is limited
Sec. 34(1). From the date of incorporation, the
company gets the legal effects of separate legal
identity, perpetual succession, and common seal
etc.
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Conclusiveness of the certificate of


incorporation
• The certificate of incorporation is
conclusive evidence that the requirement of the
Act have been complied with and prevents the
reopening of matters prior and incidental thereto,
and it places the existence of the company as a
legal person beyond doubt. (Section 35)

• Case: (Moosa Goolam Ariff v. Ebrahim Goolam


Ariff, 1913
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

• In the case of Moosa Goolam Arif v. Ebrahim Goolam Ariff ILR


(1913) 40 Cal 1 PC, only two adult persons signed the
memorandum and one of them signed as a guardian of the other
five members who were all minors at the time. Lord Macnaghten in
the Privy Council said: “Their Lordships will assume that the
conditions of registration prescribed by the Indian Companies Act
were not duly complied with; that there were no seven subscribers
to the memorandum and that the Registrar ought not to have
granted the certificate. But the certificate is conclusive for all
purposes.”
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Commencement of Business:
• A private company may commence its business
immediately on incorporation but a public company cannot
commence business immediately after incorporation unless it has
obtained a certificate of commencement from the Registrar. On
fulfilling some of the important requirements, the Registrar shall
certify that the company is entitled to commence business. This
certificate is a conclusive evidence that the company is so entitled
(Section 149 (3).

• Contract made by the company before obtaining the certificate of


commencement will be provisional and does not bind the
company (section 149(4))
• Company is bound to commence business with in a year of its
incorporation or it is liable to wind up by court (section 433 c)

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