Incorporation of A Company

Incorporation of A Company

“Priya intends to start her own business under the name of Priya Eco-green Solutions. She wants Arjun to be her Business partner and proposes her plan of action to him. Arjun agrees to it and tells his friend Mr. Lexi about it”
Mr. Lexi advises Arjun to begin the process for Incorporation of a company for the business.
Mr. Lexi explains about the process for the “Incorporation of a Company”.

Name the Legislation that governs the Incorporation of the company?

The legislation that governs the incorporation of a company is The Companies Act, 2013.

What is the objective of the Companies Act 2013?

The objective of the Companies Act, 2013 is to govern the creation, continuation, and the winding-up of companies. It also governs the relationships between the shareholders, the company, the public and the government.

What does “Incorporation of a company mean?

Incorporation means forming a company by following the procedures required under Section 3 of the Companies Act, 2013.

What is a Company?

A company is a legal entity which is formed by different individuals to generate profit through their commercial activities

For what purposes can a Company be formed?

As per Section 3(1) a company must be formed only for lawful purposes.

What is the minimum number of persons required for incorporating a company?

Section 3(1)(a)-Minimum 7 persons or more for a Public company
Section 3(1)(b)-Minimum 2 persons or more for a Private company
Section 3(1)(c)-1 person for a One Person company (Private company)

Who is a Promoter?

A promoter is a person who proposes the idea of incorporating a company, by making a thorough study on the feasibility of business and techniques for its implementation.

How do you form the company?

The persons have to subscribe their names on a “Memorandum of Association” and comply with the “Registration” requirements

What is the procedure to comply with the “Registration” requirements?

As per Section 7(1),
Step 1 – To identify the jurisdiction of the Registrar of Companies within which the company gets incorporated.
Step 2 -To prepare the necessary documents for filing with the Registrar.
Step 3 -Obtaining “Certificate of Incorporation” from the Registrar.
Step 4 -The Company has officially come into existence.

What are the documents necessary for filing with the Registrar of Companies?

a)Memorandum of association (signed by all the subscribers of the company)
b)Articles of association (signed by all the subscribers of the company)
c)Declaration that all the requirements have been complied with (Issued by a Practicing Advocate or a CA or a CS or a Cost accountant and by the Director/Manager/Secretary of the company)
d)Affidavit from all subscribers that they are not convicted of any offense regarding the Formation of this company (or) have not been convicted of any offence regarding any company for the last 5
e)Address for correspondence
f)Personal details like Name, Address, Nationality etc of all subscribers with proof of the same
g)Interest of the subscribers in other firms along with their consent to act as Directors in the company.

What is the Memorandum of Association?

The Memorandum of Association is the predominant document required for incorporation. It contains the true objectives of a company.

What should be included in the Memorandum of Association?

a)Name of a company (Name Clause)
b)Place of the Registered Office (Registered Office Clause)
c)Objectives behind the formation of a company (Objective clause)
d)Liabilities of a company (Liability Clause)
e)Investment made for Incorporation (Capital Clause)
f)Details of subscribers (Subscription Clause)
g)To appoint nominees for One Person Company(Nominee Clause)

What is the Article of Association?

It is an essential document next to Memorandum of Association for incorporating a private company. It contains the rules and regulations required for managing the internal affairs of the company.

What if someone furnishes wrong information?

He shall be liable for action under Section 447

Please note: This information has been made available to you for your benefit on an ‘as is’ basis, and is only for your information. It does not constitute legal advice and cannot substitute professional legal advice. Our disclaimer policy can be viewed here ( Disclaimer)

In A Nutshell

●A Company must get a Certificate of Incorporation to commence its business.
●The Promoter plays an important role in the incorporation of a company.
●Person applying for the process is called Subscriber & Member.
●The process of formation is called Incorporation.
●The Memorandum of Association and Articles of Association are the primary documents for incorporation.
●Articles of Association contain 32 subject matters as its objectives.
●The company Certificate of Incorporation is a conclusive evidence for a company to run its business.

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