A company being an artificial entity comes into existence only after its registration with the Registrar of Companies. A number of formalities have to be compiled before a request is made to the Registrar for its registration. A legal process has to be completed before a company obtains a separate legal entity. After ensuring that all necessary documents are field, the Registrar of companies issues a Certificate of Incorporation. With the Certificate, the company becomes a separate legal entity.
Steps for Incorporating a Company
Before getting a company registered, a number of steps have to be taken up:
1. Application for Approval of Name:
The first step in getting a company incorporated is of obtaining the approval of name from Registrar of the Emblems and Names (Prevention of Improper Use) Act, 1950 and which is not identical with or does not closely resemble the name of a company already registered. The applicant should give a panel of three names in order to avoid delay. The application for the approval of name should be sent to the Registrar of Companies of the state in which the Company is to be situated. The registrar is expected to approve the name within 14 days of the receipt of application. The proposed name must be registered within 3 months from the date of intimation by the Registrar failing which the promoter will have to apply again to the Registrar for the revalidation of the approval.
2. Preparation of Memorandum of Association:
The preparation of Memorandum of Association is the next step in the incorporation of a company. It is the constitution of company which describes its objects and scope and the relation with outside world. The memorandum is to be signed by at least seven persons if it is a public limited company and at least two persons in case of a private limited company. The memorandum should also be properly stamped.
3. Preparation of Articles of Association:
Besides memorandum, the promoters will also prepare Articles of Association. It is a document which contains rules and regulation relating to the internal management of the company. A public limited company may not file its own Articles of Association; it may adopt model clauses prescribed in Table A, Schedule I of the Act. A private limited company is also required to submit its articles duly singed by the signatories.
4. Preparation of other documents:
The promoters are also expected to prepare the following documents at the time of incorporating the company:
- The consent the first directors is acquired and field with the Registrar of Companies
- The promoters should execute a Power of Attorney in favor of one of them or an advocate who is to carry out the formalities required for registration.
- Copies of preliminary agreements, memorandum and Articles of Association must also be prepared and field at the time of registration.
- The company is required to have a registered office and its information is filed with the Registrar within 30 days of its registration or from the date of commencement of business, whichever is earlier.
- Where the company names first directors in its Articles, their particulars are to be submitted with the Registrar within 30 days of its registration or appointment of such directors.
- A statutory declaration that all legal requirements for registration have been complied with is also filed with the Registrar at the time of registration. The declaration must be singed by an advocate of Supreme Court or High Court, or an attorney or pleader of High Court or practicing Charted Accountant.
5. Payment of Fees
At the time of registration, prescribed registration fees and filing fee for each document filed for registration are to be paid at the Registrar’s office. The fee to be paid varies with the amount of Nominal Capital in case of companies with share capital or according to the number of members in case of companies without share capital.
6. Incorporation Certificate:
When all the required documents are filed with the Registrar along with the requisite fees, a scrutiny is made. When all documents are found in order, the Registrar will enter the name of the company in the Register of Companies and issues a Certificate of Incorporation. The date mentioned in the certificate is the date of incorporation of the company.