Registration of a company with the registrar of companies
The formalities prior to the company registration is comprising of :
(i) selecting a name (with six alternative names in all in that order of preferences as desired so that in case the suggested first choice is not available the second and so on.
(ii) drafting the Memorandum of Association.
(iii) drafting the Articles of Association.
Form of Memorandum
A specimen and complete Memorandum of a public limited company is given as a practical illustration.
- Company limited by shares
- Guarantee company not having share capital
- Guarantee company having share capital
- Unlimited company
Time limit for the production of documents to registrar for registration
The intimation from the registrar for availability of name is valid for six months from the date of intimation. Hence if a company is proposed to be registered with the said name is also referred above. The promoters shall produce the documents to the registrar for registration with in a period of six months from intimation of availability of name.
Printing of memorandum and articles of a registration company
Pursuant to sections 15 and 30 for the purpose of registration. The memorandum and articles shall be printed. As large-scale modifications after printing is well-nigh impractical. It will be in the interest of all concerned that the draft memorandum and articles prepared with great care.
Computer laser printing acceptable
The department of company affairs has vide its circular no.7/93 dated 22-6-1993. They informed all concerned that the registrars will accept computer laser printed memorandum and articles at the time of registration. In view of the fact, the memorandum and articles printed on computer laser printers may be accepted by the registrars for company registration. It is for purposes sections 15 and 30.
Zerox copies of printed documents not acceptable
The department is of the view as conveyed in its letter No.8/31/15/80-CL.V, dated 30-4-1981. Since there is a specific requirement in our act for getting the Memorandum and Articles printed. There is no justification for watering it down by allowing zerox copies to be filed for the purpose of company registration.
Signature by the subscribers
The memorandum of articles before production to the registrar, shall be signed by each of the subscribers who shall add by his hand his name, address, occupation and description.
Signature by attorney or agent
Where any of the subscribers is bot available, he may constitute an attorney and authorize him to sign the documents on his behalf.
Signing on behalf of a corporate subscriber
A company registered under the act or under an appropriate foreign act can be a subscriber, the latter subject to prior approval of the RBI.
A partnership cannot be a subscriber
The department had stated that a firm, not being a person, cannot be registered as a company member except where the company is licensed under section 25 of the act.
Subscriber Being A Non-Resident Indian
The reserve bank of India had given general permission under section 29(1)(b) of the erstwhile FERA, 1973 to a NRI to subscribe to the memorandum of association of an Indian company and to take shares as a subscriber up to 10,000.
Foreign national whether resident in India or not and foreign company being a subscriber
Where it is proposed to associate a foreign national or foreign company with the registration of an Indian company and allow him or it to be a subscriber to the Memorandum, the prior approval of the RBI shall be taken in terms of the above regulation.
Estimate of registration fees for companies
The fees payable to the registrar of companies at the time of registration depend on the authorized capital of the company as per amended schedule x to the act.
Certificate of Incorporation – Sections 33 and 34
If the registrar is satisfied that all the requirements of section 6 has been compiled with, he shall register the documents and shall certify under his hand that the company is incorporated.
From the date of registration a private limited company can start the business as per its Memorandum and Articles. But a public limited company can start its business or exercise borrowing powers only after filing with the registrar a statement in lieu of prospectus.
Effect of company registration
From the date of registration as mentioned in the incorporation certificate, the subscribers to the memorandum and others, as may from time to time be members of the company.
Distinct personality of company
The significant characteristic of an incorporated company is that it is constituted as a distinct and independent person in law, an artificial person entirely different from the members comprising it. A company as a legal person can either into contracts with others like a natural person and hold property in its name.
It has, however, been held that a company is not a citizen and is not eligible to claim fundamental rights guaranteed to natural citizens by the constitution – state corporation of India limited.
Statutory exceptions to concept of corporate veil
There are certain statutory provisions in the companies act 1956 which specify the circumstances when the corporate veil will be lifted where the individual members or directors are made liable for defaults of the company.
Section 45 : In terms of this section, where a public limited company or private limited company carries on business for more than six months. When the number of persons is reduced to below seven or two respectively. Every such member, who is cognizant of the fact of fewer members in the company. It shall be individually liable for the payment of the whole debts of the company contracted after the said period of six months.
Section 147 : Where a company contravenes sub-section (4) of section 147, every officer of the company who is in default will be personally liable in addition to payment of fine.
Section 542: If, in the course of winding-up of a company, it appears that any of its business has been carried on with intent to defraud its creditors or other persons. The registration of a company may takes place in Chennai.