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Procedure for incorporation or registration of a company in India

Incorporation of a company is the second stage of the company for­mation. It is effected by registration with the Registrar of Companies. After completing the promotional work and before getting the propo­sed company actually registered the promoter takes the following preparatory steps:

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Procedures

  • To ascertain from the Registrar of Companies whether the name by which the new company is to be started is available or not;
  • To get a Letter of Intent (to be converted later on into an Industrial License) under Industries (Development and Regulation) Act, 1951, if the company’s business comes within the purview of the Act;
  • To fix up underwriters, brokers, bankers, solicitors, auditors and signatories to the memorandum;
  • To get Memorandum and Articles of Association prepared and printed.

After taking the above mentioned preliminary steps, the promoter makes and application to the Registrar of Companies of the State, in which the registered office of the company is to be situated, for regis­tration of the company. The application must be accompanied by the following documents:

(1) Memorandum of association duly stamped, signed and witnessed. [Sec. 33 (1)].

(2) Articles of association properly stamped, duly signed by the signatories of the Memorandum and witnessed. The filing of articles is optional in the case of a public company with limited liability, which may adopt Table A, the model set of articles, in its entirety. But where a public limited company adopts Table A, the fact must be specified on the memorandum ‘Registered without articles’ which will mean automatic adoption of Table A. For all other companies filing of separate articles is essential [Sec. 33 (1)].

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(3) A written consent of the directors to act in that capacity, duly signed by each director, along with a written undertaking by them to take the necessary qualification shares, if any, as provided in the articles [Sec. 266 (1)]. The document is, however, not to be filed in the case of; (i) a company without share capital; (ii) a private company; and (iii) a company which was a private company prior to its becom­ing a public company [Sec. 266 (5)].

(4) The notice of address of the registered office of the company.” It may, however, be filed within 30 days of incorporation (Sec. 146).

(5) A statutory declaration stating that all the legal requirements of the Act precedent to incorporation have been complied with. It must be signed by an advocate of the Supreme Court or of a High Court, or by an attorney or a pleader entitled to appear before a High Court, or by a chartered accountant practicing in India, who is engag­ed in the formation of the company, or by a person named in the articles as a director, managing director, manager or secretary of the company. [Sec. 33 (2)].

Along with the above documents necessary filing fees and registra­tion fees at the prescribed rates are also to be paid.

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The Registrar will scrutinize these documents and if they are in order, he will register the company and will issue a certificate of incorporation (the company’s “birth” certificate). On obtaining this certi­ficate the company becomes a body corporate, with perpetual succes­sion and a common seal [Sec. 34 (2)].

Conclusiveness of certificate of incorporation :

Section 35 states that the certificate, once issued, is conclusive evidence of the fact that the company has been duly registered. In other words, once a certificate of incorporation has been granted no one can question the regularity of the incorporation. In the famous Peel’s case Lord Cairns observed ” when once the certificate of incorporation is given nothing is to be inquired into as to the regularity of the prior proceedings.”

Accordingly, even though the conditions of registration prescribed by the Act might not have been duly complied with prior to registration e.g., the signatories to the memorandum be all infants or the signatures to the memorandum come out to be forged or the memo­randum be found to be materially altered after signatures or there were not seven subscribers to the memorandum, once the certificate of incorporation is issued, the court cannot go behind it and the exis­tence of the company cannot be questioned. The logic of the provi­sion is that once the company is held out to world as a company ready to contract engagements, then it would be most disastrous if, years after, any person was allowed to show that it was not properly registered.

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It may, however, be noted that if a company having illegal objects has been registered, the illegal objects do not become legal by the issue of the Certificate. But the Certificate would be all the same conclusive and the legal personality of the company cannot be extin­guished by cancellation of the certificate of incorporation (Bowman vs. Secular Society Ltd.). The remedy, in such a case, would be ‘to wind up’ the company.

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