2. INCORPORATION OR REGISTRATION
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 :
(1) To ascertain from the Registrar of Companies whether the name by which the new company is to be started is available or not.
(2) To obtain a Letter of Intent (to be converted later on into an Industrial Licence) ader Industries (Development and Regulation) Act, 1951, if the company's business comes within the purview of this Act.
(3) To fix up underwriters, brokers, bankers, solicitors, auditors and signatories of the memorandum.
(4) TO get Memorandum and Articles of Association prepared and printed.
After taking the above mentioned preliminary steps, the promoter makes an anplication for registration of the company to the Registrar of Companies.
Section 7 lays down the following provisions relating to "incorporatios company" :
(1) Along with the aforestated application, there shall be filed with the Registrar in th com of Companies of the State, in which the registered office of the company is t situated, the following documents and information for registration :
(a) The memorandum and articles of the company duly signed by all w subscribes to the memorandum in such manner as may be prescribed;
(b) A declaration in the prescribed form by an advocate, a chartered accountr cost accountant or company secretary in practice, who is engaged in the formato of the company, and by a person named in the articles as a director, manager o secretary of the company, that all the requirements of this Act and the rules mada thereunder in respect of registration and matters precedent or incidental theret have been complied with;
(C) A declaration from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that he is not convicted df any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief;
(d) The addressfor correspondence till its registered office is established. Every company must have a registered office to which all communications and notices may be addressed within 30 days of incorporation [Sec. 12(1), as amended by the Companies (Amendment) Act, 2017].
(e) The particulars of name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identify, may be prescribed, and in the case of a subscriber being a body corporate, suc particulars as may be prescribed;
(f) The particulars of the persons mentioned in the articles as the first director of the company, their names, the Director Identification Number (DIN), residere address, nationality and such other particulars including proof of identify as may oge unu incla allo with filec for be- Kue the cla Sec wa nd prescribed;
(g) The particulars of the interests of the persons mentioned in the artide the first directors of the company in other firms or bodies corporate; and
(h) A written consent of the directors of the company to act in that capacit duly signed by each director.
(2)
The Registrar on the basis of documents and information filed unde above sub-section (1) shall register all the documents and information refene in that sub-section in the register and will issue a certificate of incorporation (the any's "birth" certificate) in the prescribed form to the effect that the proposed company is incorporated under this Act.
(3) Allotment of Corporate Identity Number (CIN). As per Section 7(3), e and from the date mentioned in the certificate of incorporation issued under the hove sub-section (2), the Registrar shall allot to the company a corporate identity Rumber, which shall be a distinct identity for the company and which shall also be included in the certificate.
The Ministry of Corporate Affairs permits issuance of Certificate of Incorporation elactronically under digital signature of Registrar of Companies.
(4) The company shall maintain and preserve at its registered office copies of all documents and information as originally filed under the above sub-section (1) with the Registrar for registration purposes, until dissolution.
(5) If any person furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the registration of a company, he shall be liable for action under Section 447 which provides penalty for the person who is found to be guilty of fraud.
(6) Where it is proved that the 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 promoters, the persons named as the first directors of the company and the persons making declaration under clause (b) of the above sub-section (1) shall each be punishable for fraud under Section 447.
(7) In the situation mentioned in the above sub-section (6), the Tribunal may, on an application made to it, on being satisfied that the situation so warrants,-
(a) pass such orders, as it may think fit, for regulation of the management of the company including changes, if any, in its memorandum and articles, in public interest or in the interest of the company and its members and creditors;
(b) direct that liability of the members shall be unlimited; or
(c) direct removal of the name of the company from the register of companies;
(d) pass an order for the winding up of the company; or
(e) pass such other orders as it may deem fit.
Effect of Certificate of Incorporation
According to Section 9, as amended by the Companies (Amendment) Act, 2015, from the date of incorporation mentioned in the certificate of Incorporation, the subscribers to the memorandum become the members of the company. The company shall be a body corporate by the name contained in the memorandum, capable exercising all the functions of an incorporated company and shall have perpetual succession with power to acqulre, hold and dispose of property, to contract, to Sue and be sued, by the sald name.
Conclusiveness of Certificate of Incorporation
The Companies Act, 2013 does not contain any provisions with respect to 'Conclusiveness of Certificate of Incorporation'. However, under judicial Interpretation, it has been recognised that the Certificate of Incorporation 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 Calms observed ".. when once the certificate of incorporation Is given nothing is to be inquired into as to the regularity of the prior proceedings". The decision in Jubilee Cotton Mills Ltd. vs. Lewis is to the same effect. The facts of this case are as :
On 6th January the necessary documents were delivered to the Registrar for registration. Two days later he Issued the certificate of incorporation but dated t 6th January instead of 8th-the day on which the certificate was actually issued. On 6th January some shares were allotted to Lewis.
The question arose whether the allotment made before the certificate was actually issued was void. It was held that the certificate of incorporation is conclusive evidence of all that it contains. Therefore, in law the company was formed on 6th January and allotment of shares was valid.
Accordingly, even though the conditions of registration prescribed by the A might not have been duly complied with prior to registration, e.g, the signatories t the memorandum were all infants or the signatures to the memorandum come to be forged or the memorandum be found to be materially altered after signature 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 logicof this provision is that once the company is held out to the 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 as not properly registered.
Thus, the validity of the certificate of incorporation cannot be disputed on any grounds whatsoever. However, where, at any time, after the incorporation of a company, it is proved that the company has been got incorporated by furnishing any false or incorrect information or by suppressing any material fact in any of the documents filed for incorporating such company, the promoters and the persons named as first directors of the company shall be punishable as per Section 7(5)(6)(7) liable for action under Section 447 which provides, inter alia, imprisonment for a term ranging from 6 months to 10 years and also fine.
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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