Question

Explain the steps in the incorporation stage.

Answer 1

Incorporation or Registration of a Company

After Promotion, the second stage in the formation of a company is the registration; or incorporation. The promoter of a company should perform the following functions for getting the company registered under the Companies Act.

A. Approval of the Proposed Name of the Company.

Before the company is registered, it is essential to obtain the approval of the Registrar to its proposed name. There is a specific application form for this purpose. The promoter generally selects a few suitable names in order of preference and apply to the National Company Law Tribunal through the Registrar of the State in which the company is to be registered in Form No. 1A along with a fee of Rs. 100. On hearing about the available name, the promoter has to decide the name for the company.

B. Documents to be Filed with the Registrar during registration.

The promoter should then prepare and file the following documents with the Registrar of Joint Stock Companies. He should also pay the necessary filing and registration fees.

1. Memorandum of Association

The Memorandum should be printed and at least seven persons each agreeing to take at least one share must subscribe their names to Memorandum.

2. The Articles of Association

The Articles must also be signed by at least seven members. If a public company doesn't prepare and file Articles, then it is deemed to have adopted Table A in Schedule I of the Indian Companies Act.

3. List of Directors

A complete list of directors, their addresses and occupations and age. If not separate list is filed, the subscribers to the Memorandum are deemed to be the first directors.

4. Consent of the Directors.

When Directors of a Company are appointed by the Articles of Association or named in the prospectus, a written consent to act as directors and also a written undertaking to take up and pay for the qualification shares if any are mandatory in Incorporation of a Company.

5. Statutory Declaration

A statutory declaration by any one of the following persons stating that all the requirements of the Act regarding Registration have been duly complied with: An Advocate of the Supreme Court or High Court.

An Attorney or Pleader who is entitled to appear before a High Court.

A Chartered Accountant who is engaged in formation of the company and also practicing in India.

Any individual who is named in the Articles of Association as the Company’s Director, Manager or Secretary.

6. Notices of the Address of the Registered Office

The notice for the address of the registered office of the company should be given within 30 days after its incorporation or on the date from which the company commences its business whichever is earlier.

7. A Letter of Authority for Making Necessary Corrections in Memorandum and Articles

A letter of authority on a non-judicial stamp paper of the requisite value signed by all the subscribers in favour of one of them or any other person for making necessary corrections, on their behalf, in the Memorandum and Articles and other papers is to be filed with the Registrar of Companies.

8. Letter of Registrar of Companies about the Availability of Name

Notarized original copy of Registrar of Companies stating the availability of the proposed name is mandatory while registering a company name. It should be filed with the Registrar of Companies. However, the requirements as given in points 3 and 4 above shall not apply to private companies.

C. Payment of Necessary Fees

Along with the above-detailed documents, the registration and filing fee as per the rates prescribed in Schedule X to the Companies Act, 1956 are to be paid.

D. Registration of the Company

The Registrar of Companies will then verify the documents submitted for registration. If there are any discrepancies found, concerned person was called to visit the Registrar’s office to rectify the errors in the documents. If the documents for registrations are found in order, the Registrar will register the company and a Registration number is allotted.

The Registrar under his hand and Seal of his office will issue a Certificate of Incorporation. The date given by the Registrar in the certificate will be the date of incorporation of the company. The company will be considered to be a legal entity from this date.