The document summarizes the key requirements for registering and incorporating a company in India according to the Companies Act of 2013. It outlines the documents that must be filed, including the memorandum of association and articles of association. It also describes the process of obtaining a certificate of incorporation from the registrar and the details that must be included in the memorandum of association such as the company's name, registered office, objectives, liability, and capital.
The Companies Act 2013 is an Act of the Parliament of India on Indian company law which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company.
The Companies Act 2013 is an Act of the Parliament of India on Indian company law which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company.
This is about complete information about registration and incorporation of Companies Act. Easy understanding with keeping good thought in mind and you may not require more to search other sites.
This is about complete information about registration and incorporation of Companies Act. Easy understanding with keeping good thought in mind and you may not require more to search other sites.
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Company law 2_6d9ccdccb32d41354c311b55ea5c72e6.pptx
1. REGISTRATION AND
INCORPORATION OF COMPANIES
• Formation of Company (Sec.3)
Registration of a company is obtained by filing an application with the
Registrar of companies within whose jurisdiction the registered office of
a company is proposed to be situated. (Sec.7(1),2013 Act).
The application should be accompanied with the following documents:
1. Memorandum Of Association
2. Articles of Association
3. A copy of agreement with the company and any individual as
manager or director;
4. A Declaration that all the requirements of the Companies Act have
been complied with.
2. As per 2013 Act, certain new other requirements are:
4. An affidavit from each of the subscribers to the memorandum and from
persons named as first directors, if any in the articles that, he is not
convicted of any offence related with the promotion, formation or
management of any company;
Or that he has not been found guilty of any fraud or misfeasance or any
breach of duty to any company under the company law during the preceding
5 years.
The affidavit shall be submitted by each of the subscribers and first directors
to the memorandum and articles.
5.Full address including nationality and such other particulars of every
subscriber to the memorandum with proof of identity. Like that, the
particulars related with persons who are mentioned in the articles as first
directors should be specified in the affidavit with proof of identity.
3. • The Registrar , on the basis of documents and information filed, shall
register all the documents and information in the register and issue a
Certificate of Incorporation Sec. 7(2)to the effect that the proposed
company is incorporated under the Act. Then , the Registrar has allotted a
Corporate Identity No. which is to be a distinct identity for the company.
• If any person furnishes any false or incorrect particulars of any
information of which he was aware, he is liable for actions under
Sec.447.(Fraud), Companies Act. – stated in Sec.7(5).
Certificate of Incorporation
• SEC. 7, Companies Act, 2013
The certificate of incorporation brings the company into existence as a
legal person. On the basis of issuing of the certificate, a company is born.
The certificate of Incorporation act as a conclusive evidence.
4. • Formation of companies with charitable objects (S.8)
A person or an association of persons proposed to be registered under
the Companies Act as a limited company satisfies the following
requirements of a charitable company, to the satisfaction of the central
govt. as;
a. It has an objective for the promotion of commerce, art, science,
sports, education, research, social welfare, religion, charity, protection
of environment, or any such other object;
b. It intends to apply its profits , or any other income in promoting its
objects;
c. it intends to prohibit payment of any dividend to its members.
The Govt. may give it a licence allowing it to be a registered as a
Limited Co. without using the word ‘limited’ or ‘private limited’ as a
part of its name .
5. • The company will enjoy all the privileges of a limited company although it
is subject to the obligations.
• Default in complying with the requirements of the sec 8, is a punishable
offence. Both the company and its directors are punishable. These types of
companies have been exempted from the requirements of having a
minimum amount of share capital.
• The licence is revocable at the discretion of the central govt., and the
discretion is unrestricted, if it may be exercised only when the fundamental
conditions of licence are contravened.
Removal of the name of the company from the register
By Sec.7(7), if a company has been got incorporated by furnishing any false
or incorrect information or representation or by suppressing any material fact
or information in any of the documents or declaration filed or made for
incorporating such company, the Tribunal may on an application made;
1. Pass an order for the regulation of the management of the company
including changes, if any in the articles and memorandum, in public interest,
or in the interest of the company.
6. 2. Direct that, liability of the members shall be unlimited;
3.Direct removal of the name of the company from the register of
companies;
4.Pass an order for the winding up the company ;
5.Pass such other orders as it may deem fit.
Before making any order, the tribunal shall give to the company a
reasonable opportunity of being heard in the matter.
7. MEMORANDUM OF ASSOCIATION
• An important step in the formation of a company is to prepare a document
called Memorandum of association.
• As per Sec. 2(56), Companies Act,2013 the memorandum of association of
accompany as originally framed or as altered from time to time in pursuance
of any previous company law or the present Act.
• According to Sec.4 ,the importance of the document lies in the fact that, it
contains the following fundamental clauses which have often been described
as the conditions of the company’s incorporation:
a. Name Clause
b. Registered office clause
c. objects clause
d. Liability clause
e. Capital Clause
8. The memorandum is the charter of a company. It is the dominant instrument
and it defines the limits of the company’s powers and objects; Ashbury
Railway Carriage and Iron Co. v. Riche (1857)
any act of the company beyond the limits of its powers and objects as defined
in the memorandum will be ultra vires and void.
1. Name Clause
A company being a legal person, must have a name to establish its identity. The
name of a corporation is the symbol of its personal existence.
The memorandum of a Co. with the last word ‘Limited’ in the case of public
company, or the last word ’Private Limited’ in the case of a private limited
company.
The name stated in the memorandum shall not be-
a) be identical with or too nearly resembles to the name of an existing
company.
b) the name should not be indicate connection with or patronage of Govt.
9. c) the name should not be such that its use by the company will be an
offence under any law.
Sec.4- Resembling names not allowed
Violation of Trade Marks Act, 1999;
Society of Motor Manufactures and Traders Ltd v Motor
Manufacturers and Traders Mutual Insurance Co Ltd (1925) stating
that, by registering a Company’s name under companies Act, gains a
monopoly of the use of that name since no other company can be
registered under a name identical with it, or resembling it. A name of a
company is a part of its business reputation, that would definitely be
injured if a new co. could adopt an allied name.
if a company is registered with a name which resembles the name of
an existing company, the old company can apply to the court for an
injunction to restrain the new company from adopting the identical
name. although, if the names of two companies contain any word
which in common use, its use cannot be restrained.
10. Asiatic Govt. Security Life Insurance Co. Ltd v. New Asiatic
Insurance Co. Ltd.
Change of name Sec. 13(2-3)
It is a right of a company to change its name at any time either by
special resolution or by the approval of the Central Government in
writing.
2.Registerd Office Clause
The second clause of memorandum must specify the state in which the
registered office of the company is to be situate. It determines the
domicile and nationality of the company.
Within 30 days of incorporation or commencement of business,
whichever is earlier, the exact place where the registerd office is to be
located must be decided and the notice of the location must be given to
the registrar.
11. Change of registered office Sec.13(4-6)
Shifting of registered office from one state to another and alteration of
objects may affect not only the company’s shareholders, but also its
creditors, dealers and employees. For this reason, the objects of the
company can be altered by a special resolution and the registered office
can be removed from one state to another by a special resolution and
sanction of the Central Govt.
The registered office of a company may-
a) Change from one place to another place in the same city, town or
village.
b) change from one town to another town in the same state
c) change from one state to another.
12. • In order to change the office as it mentioned above; a verification is to
be given to the registrar within 15 days of change.
• in case of shifting of office from one state to another, a special
resolution is required to be passed at the general meeting of the share
holders.
• in order to effect the alteration, the confirmation of the central govt. is
to be obtained. When the confirmation is given, the central govt, issue
a certified copy of the order confirming the alteration shall be filed
with the Registrars of both the states.
13. 3. OBJECTS CLAUSE
The Memorandum of Association of every company shall clearly state
the objects of the company.
The object clause shall state , the objects for which the company is
proposed to be incorporated.
The statement of objects in the Memorandum has two purpose;
1. It state affirmatively the ambit and extent of vitality and power of
the company
2. it states negatively that nothing shall be done beyond that ambit.
DOCTRINE OF ULTRA VIRES
A company should devote itself only to the objects set out in the
memorandum and to no others. It is the function of the memorandum to
delimit and identify the objects in such plain and unambiguous manner.
14. • and it is the function of the court to see that the company does not moving
beyond from its objective. Then there plays the Doctrine of Ultra Vires . An
action beyond the memorandum is ultra vires the company. The application
of the doctrine was firstly demonstrated in Ashbury Railway Carriage
and Iron Co Ltd v Riche.
• In Attorney General v Great Eastern Railway Co.(1880), it affirmed the
decision of Ashbury and stated that, whatever may be fairly regarded as
incidental to the objects authorised ought not to be held as ultra vires,
unless it is expressly prohibited. Thus a Co. may do an act which is a)
necessary for b) incidental to c)which is otherwise authorised by the Act.
• The companies Act requires now , any matter to be stated in the
memorandum which is considered as necessary for the objects, but it is not
so stated, they would be allowed by the Principle of Reasonable
Construction.
• In India, the doctrine has been affirmed by the Supreme Court in
A Lakshmanaswami Mudaliar v LIC (AIR 1963 SC 1185)
15. • This decision is an authority for two propositions;
1. a company’s funds cannot be diverted to every kind of charity ,
even if there is an unrestricted power to that effect in the company’s
memorandum.
2. that objects must be distinguished from powers.
Consequences of Ultra Vires Transactions
1. Injunction
2. Personal liability of the directors
3. Breach of warranty of authority
4. Property acquired under ultra vires act
5. Ultra vires contracts
16. Change of objects Sec. 13(8)
A company which has raised money from public through prospectus
and has still not utilized the whole of the money is not to change its
objects except with the company’s special resolution. Secondly , the
prescribed details of the resolution have to be published in newspapers
which is in circulation at the place of the company’s registered office.
• It has also placed in the website, if any
• The publication has to indicate justifications for the change.
• The dissenting shareholders have to be given an opportunity to leave
the company, if they desires.
• This opportunity has to be given for the promoters and shareholders
who have control over the company.
• The alteration has to be filed with the registrar. He has to certify the
registration within 30 days from the date of filing.
17. • all documents which are open to public inspection should be regarded
as public documents.
• Rajendra Nath Datta v Shibendra Nath Mukherjee (1982)
• The doctrine of constructive notice operates against outsiders who are
dealing with the company. This doctrine prevents them from alleging
that they have no knowledge that the memorandum and AOA of the
company rendered a particular act Ultra Vires. Although this doctrine
is subject to the limitation contained in the principle of Indoor
Management.
DOCTRINE OF INDOOR MANAGEMENT
The doctrine of indoor management is a limitation on the doctrine of
constructive notice. The indoor management operates to protect
outsiders against the company. This doctrine confined to the external
position of the company and it follows that there is no notice as to how
the company’s internal machinery is handled by its officers.
18. • The rule had its genesis in Royal British Bank v Turquand (1856) 6 E&B
327
• It is also known as Turquand Rule
• This doctrine tries to protect the company against outsiders.
• It is based on public convenience and justice.
EXCEPTIONS
1. Knowledge of irregularity
Howard v Patent Ivory Mfg Co (1888 LR 38 Ch D 156)
2. Suspicion of Irregularity
3. Forgery
4. Representation through Articles
5. Acts outside apparent authority
19. ARTICLES AND MEMORANDUM OF
ASSOCIATION
• Articles have always been held to be subordinate to the memorandum.
• Difference
Meaning
MOA is the constitution or charter or supreme document of the company;
AOA sets out the rules and regulations for company’s management, that’s why
a subsidiary document of the company.
Definition
MOA defines powers, objectives and limits of the company as a whole
AOA defines rights, powers, duties as well as liabilities attached with the
members of such company. Eg: of directors.
20. Types of information contained
MOA contains powers and objects of the company
AOA contains rules of the company
status
MOA – subordinate to the companies Act
AOA- subordinate to MOA
relationship
MOA- it connects outsiders with company
AOA- it connects the members of the organisation with organisation
itself.
Retrospective effect
MOA- can’t be amended
AOA- can be amended
21. Includes
MOA -Total 5 clauses: name, object, liability, capital, subscription
AOA- it includes such rules as per the needs and choices of the company
registration
MOA – mandatory for all types of companies
AOA- a public company limited by shares can adopt ‘Table A’ instead of
Articles.
Compulsory filing during registration
MOA – yes
AOA- no
alteration
MOA- apart from passing special resolution at general meeting, it also
required appropriate approval of central govt. or NCLT, as the case may be.
22. AOA – easy to alter as just requires to pass a special resolution
Ultra Vires Act
MOA- all activities undertaken beyond MOA are ultra vires per se and
can’t be ratified.
AOA- though activities done beyond AOA are void, but the same can be
ratified latter by the members of the company.
status
MOA- it is superior as compared to AOA, and therefore a fundamental
document
AOA- it is a subsidiary document of the company, and that’s why runs
complementary to MOA
Prevail
MOA-If there is a conflict between MOA and AOA, then MOA will
prevail, and that’s why it is not governed by AOA
23. AOA- it won’t prevail over MOA, and rather is governed by MOA.
Powers –
MOA- MOA can’t give or provide such powers to the company that are
in reality not present or prescribe or governed by the provisions of the
companies Act.
AOA- on the other hand, AOA are not only subsidiary to the provisions
of 2013 Act, but also by the rules and bye-laws prescribed under MOA
too.
BINDING FORCE OF MOAAND AOA
Sec.10
The articles of a company do not have the force of a statute held in Hill
Properties Ltd v. Union Bank of India(2014), 1SCC 635
1. Binding on members in their relation to company