Incorporation is the second stage of the company’s formation, which is done by getting the company registered with the Registrar of Companies. The required fee for registration is paid and the certificate of Registration is obtained from the Registrar of Companies. The company becomes an entity only after it is registered. It is. therefore. said that ‘ floatation is the conception of a company whereas its incorporation is its birth when it takes on the form of an artificial person ‘. So long as a company is not incorporated, it cannot be called a ‘ company ‘ from the legal viewpoint and it has not entity as such. After completing the promotional work and before getting the company registered. the preparatory steps can be listed as under :
(i) To decide where the registered office of the company will be located: The promoters. as a first step. must decide in which state will the headquarters of the company be located. It is necessary to do so because the company must be registered with the Registrar of Companies of the state where it has its head office.
(ii) To decide the name of the company: Before it is given a name. it is necessary to ascertain from the Registrar of Companies whether the proposed name of the company is available or not, and whether the name is acceptable. Although a company can be given any name, yet it must conform to the provisions of the Indian Companies Act – i.e. the company’s name should not be similar to that of an existing company and should be appropriate as per the directives of the Central Government. The word ‘Limited must be used at the end of the company’s name. For the acceptance of the company’s name, the promoters need to make an application, through the Registrar of Companies, to Company Department of the Central Government. For the availability of name, it is mandatory to send at least three names for approval of any one of them.
(iii) To make appointments: It is also required to appoint underwriters, brokers, bankers, solicitors, auditors and signatories on the memorandum of the company.
(iv) To get the important documents prepared: The preliminary activities include preparing the memorandum and articles of association of the company and getting them printed.
(v) To send the application to the Registrar: After completing the above -mentioned formalities. the promoter makes an application to the Registrar of Companies of the state in which the company is to established for the registration of the company. The documents that need to be filed with the application are as under described in what follows:
Documents to be filed with the Registrar:
(i) Memorandum of Association: This is a very important document. No company can be incorporated without having a Memorandum of Association. A company s memorandum of association is its charter and, under the provisions of the Act, defines its rights and obligations. The memorandum defines the basic objectives for which the company is allowed to be incorporated. For a public company, a minimum of seven, and for a private company, a minimum of two persons need to be signatories. i.e. subscribers to the memorandum of association. Each signatory must give his address, description and occupation etc. and number of shares subscribed by him. The subscribers must sign these documents in the presence of atleast one witness who shall attest the signature. The documents should also bear the date.
(ii) Articles of Association: This document defines the rules that will govern the activities of the company in the attainment of its objectives. The document must be properly stamped. duly signed by the signatories of the memorandum and witnessed. The articles must be printed and in paragraphs. The articles of association are optional in the case of a public limited company with limited liability. which may adopt Table A. the model set of articles. in its entirety. If the company adopts ‘ Table A ’. the fact must be specified by writing ‘ Registered without Articles ‘ on the memorandum.
(iii) Information about the Head Office of the Company: The address and location of the company’s registered office must be communicated to the Registrar of Companies. This information can also be given within 30 days of the registration of the company.
(iv) List of Directors: A list of persons who have agreed to function as the first directors of the company must also be communicated to the Registrar. The list of directors must have their names including surname or family name. Director Identification Number. residential address. nationality. proof of identification etc.
(v) Written Consent of Directors: Not only is a list of the directors’ mandatory. it must also be sent by the secretary of the company along with their written consent to act in that capacity. The written statement must be signed by each director who has agreed to work in that capacity. An affidavit from each of the subscribers to the memorandum and from persons named as the first directors. if any. in the article. that he is not convicted of any offence in connection with the promotion. formation or management of any company ; or has not been found guilty of any fraud or misfeasance or any breach of duty to any company under this Act or any previous company law during the preceding five years and that all information filed in the documents filed with the Registrar for registration of the company is correct and complete and true to the best of his knowledge and belief.
(vi) Statutory Declaration: A declaration in the prescribed form by an advocate. chartered accountant. cost accountant or company secretary in practice. who is engaged in the formation of the company? and by a person named in the articles as director manager or secretary of the company. that all the requirements of this Act and mules made thereunder in respect of registration and matters precedent or incidental thereto have been complied with.
(vii) Payment of Prescribed Fee: A filing fee has also to be deposited along with the aforesaid documents.
Certificate of Incorporation
If the Registrar is completely satisfied that all requirements have been fulfilled by the company that is being incorporated, then he will register the company and issue a certificate of incorporation. As a result, the incorporation certificate provided by the Registrar is definite proof that all requirements of the Act have been met.
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