Presentation on Registration and Incorporation of companies

PRESENTED BY:-

REHAMAN . M

M B A (STUDENT)

Company registration

Under the ministry of corporate affairs, every company is to be registered by the registrar of companies for the state. This act maintains two types of companies called private and public companies

Stages of incorporation

1. Promotion.

2. Registration / Incorporation.

3. Raising of capital.

4. Commencement of Business.

PromotionThe promoters have to first of all decide upon the proposed form of the company. (Public or private).

Then they have to decide upon the name of the company and check availability. The registrar of companies may raise objection to certain names it they are not desirable in the opinion of the central government. Ex: If it is identical or closely resembles the name of an existing company.

RegistrationAfter the name is made available, application for registration shall be presented to the Registrar. It shall be accompanied by following documents.

Memorandum and Articles of association of company. Agreement. A statement of its nominal capital. A notice of the address of the registered office of the

company. A declaration of an advocate of the Supreme or high

court entitled to appear before High court or a Chartered Accountant practicing in India who is engaged in the formation of a company.

Certificate of registration

If the Registrar is satisfied that all the requirements under the act for purpose of registration of a company have been complied with, he shall register the company and issue a certificate of incorporation under his hand and seal.

Certificate of registration

According to section 35, the certification of incorporation given by the Registrar shall be conclusive evidence that

All the requirements of the Act have been complied with, in respect of registration.

Company is duly registered.Company came into existence on the

date of the certificate.

Raising of capital

A private limited company is prohibited from inviting public to subscribe to its share capital.

A public limited company can subscribe to its capital by issuing a prospectus.

Commencement of business

Every private limited company can commence business immediately on receipt of certificate of incorporation.

A public limited company by shares is debarred from commencing business on borrowing money without the certification of commencement of business.

Advantages of incorporation

Limited liability – The liability of all the members of a limited company is limited to the nominal amount of their share therein.

Transferability of shares – Shares in a company can be transferred to another without the consent of the other members.

Advantages of incorporation

Separate legal entity – A company has separate legal entity from its members and its existence is not affected by insolvency or death of a member.

Control – The control of a company can be secured by the acquisition of the majority of shares which carry the voting power.

Advantages of incorporation

Perpetual succession and common seal – Life of a company is not measured by the life of any of its members. Company has an official seal.

Separate property – A company can own, enjoy and dispose of its property.

Incorporation gives enormous power to the state and law courts to interfere in the affairs of the company.

Disadvantages of incorporation

Incorporation requires expenses.Management of the corporation is

entrusted to a few selected persons.A company though a legal person is not a

citizen. So it can’t claim protection of such fundamental rights.

The company has a separate legal entity. Therefore there is a veil between the company and its members.

Memorandum of Association

Memorandum of Association: It is the document which defines the objects and lays down the fundamental conditions upon which along the company is allowed to be incorporated

Contents of Memorandum

Name clauseRegistered Office ClauseObject ClauseCapital ClauseLiability ClauseSubscription Clause

1. Name clause :- Promoters of the company have to make an application to the registrar of Companies for the availability of name

2. Registered Office:- Clause Memorandum of Association must state the name of the State in which the registered office of the company is to be situated. It will fix up the domicile of the company

3. Object Clause:- This is the most important clause in the memorandum because it not only shows the object or objects for which the company is formed but also determines the extent of the powers which the company can exercise in order to achieve the object or objects.

4. Capital Clause:- In case of a company having a share capital unless the company is an unlimited company, Memorandum shall also state the amount of share capital with which the company is to be registered and division there of into shares of a fixed amount

5. Liability Clause:- In the case of company limited by shares or by guarantee, Memorandum of Association must have a clause to the effect that the liability of the members is limited.

6. Subscription Clause:- the subscribers declare that they desire to be formed into a company and agree to take shares stated against their names. No subscriber will take less than one share.

ARTICLES OF ASSOCIATION

Articles of Association: Articles of association are the rules, regulation and byelaws for governing the internal affairs of the company

Contents ofARTICLES OF ASSOCIATION

1. Different classes of shares and their rights.2. Procedure of making an issue of share capital and

allotment thereof.3. Procedure of issuing share certificates.4. Lien on shares.5. Forfeiture of shares and the procedure of their re-

issue.6. Procedure for transfer and transmission of shares.

7. Board meetings and proceedings thereof.8. Rules as to resolutions.9. Appointment, powers, duties, qualifications, remuneration

etc., of managing director, manager and secretary, if any.10. Arbitration provision, if any.11. Provision for such powers which cannot be exercised

without the authority of articles, for example, the issue of redeemable preference shares; issuing share warrant to bearer; refusing to register the transfer of shares; reducing share capital of the company.

12. Winding up.

13. Borrowing powers of directors.14. Procedure for convening, holding and conducting

different kinds of general meetings.15. Voting rights of members, proxies and polls,16. Payment of dividends and creation of reserves.17. Appointment, powers, duties, qualifications,

remuneration etc., of directors.18. Use of the Common Seal of the company.19. Keeping of books of accounts and their audit.20. Appointment and remuneration etc., of auditors.21. Capitalization of profits.

Regards: Rehaman.MMBA (student )Bapuji B SchoolDavangere , KarnatakaE-mail:- Rehamanm01@gmail.comBlog:- www.rehamanmblogspot.com

Thank You