INTRODUCTION: The term ‘company’ has no technical or legal definition.” A “company” is defined by the Companies Act as “a company founded and registered under” the Companies Act. A company is a “legal person” or “legal entity” in common law, distinct from and capable of existing beyond the lifetimes of its members.“A business, like any other legal person, is a separate legal entity from its members, capable of its own rights and obligations, and endowed with the possibility for perpetual succession.” The “company,” on the other hand, is more than just a legal entity. It is, instead, a legal tool for achieving any social or economic goal, and it is, to a significant part, publicly and socially responsible.
As a result, it is a multi-faceted political, social, economic, and legal entity. As a result, the phrase has been described in a variety of ways. “It is a method of collaborating in the running of a business.” “One type of associated enterprise is a corporate device.” It is a “complex, centralized economic administrative organization operated by skilled administrators who hire capital from the investor.”
In practice, a company is a group of people who have formed a company under the Companies Act. If two or more people want to start a business together, they can organize a corporation or a partnership. A partnership is an appropriate structure for a small firm that can be financed and controlled by a small group of partners who have a personal interest in the company and share mutual trust and confidence. However, if the firm requires a larger amount of cash than a few individuals can contribute, the formation of a corporation would be preferable, as it is the only type of business organization that allows personal liability for corporate obligations to be limited. As a result, the corporation has surpassed all other forms of corporate organization.
The legal process of forming a company or a corporate entity is known as incorporation. In other terms, incorporation refers to the company’s registration with the Registrar of Companies (Known as ROC). The corporation is a legal organization that separates the revenue and firm’s assets from its investors and owners.
The Companies Act of 1956 governs the formation of companies in India as well as foreign corporations. The Firms Act covers all of India’s requirements for establishing rules and regulations for both private and public companies.
STEPS IN INCORPORATION OF A COMPANY: A public corporation can be formed by a group of seven or more people, whereas a private business can be formed by only two people. The following are the steps involved in forming a business:-
1) Ascertaining Availability of Name– The selection of a suitable name is the first stage in the formation of any business. The name that a company registers serves to identify it. The company’s name is indicated in the company’s memorandum of association. If it is a public corporation, the name must finish in “Limited,” and if it is a private firm, it must end in “Private Limited.”
The promoters must make an application to the State’s Registrar of Companies to see if the chosen name is available for adoption. With the application, a fee of 500 rupees is paid. The Registrar then grants the firm permission to use the name if all legal documentation requirements are met within three months.
2) Preparation of Memorandum of Association & Articles of Association– A company’s constitution or rulebook is referred to as its memorandum of association. The memorandum outlines the field in which the firm will operate, as well as the company’s goals and the type of business it intends to pursue. It is further broken down into five clauses:-
1. Name Clause
2. Registered Office Clause
3. Objects Clause
4. Liability Clause
5. Capital Clause
The Articles of Association are essentially a document that lays forth the regulations that the company’s internal management will follow. The article establishes a contractual relationship between the corporation and its employees. The members’ rights, responsibilities, and obligations are discussed in the article. It binds all of the company’s members in the same way.
3) Printing, Signing and Stamping, Vetting of Memorandum and Articles– The Registrar of Companies frequently assists promoters in drafting the memorandum and articles of organization. Above all, with promoters who have never written a memorandum or an essay before.
After the Registrar of Companies has approved them, the memorandum of association and articles of association can be printed. As a result, the memo and articles are broken into paragraphs and organized chronologically.
The articles must be signed individually by each subscriber or their representative in the presence of a witness, or they will be invalid.
4) Power of Attorney– The promoter may then hire an attorney to complete the legal and complex documentation formalities of a company’s incorporation. This attorney will have the authority to act on behalf of the company and its promoters. The attorney will have the authority to amend the memorandum and articles, as well as any other documents filed with the registrar.
5) Other Documents to be Submitted to the Registrar of Companies–
The First- e-Form No.32 – Consent of directors
The Second- e-Form No.18 – Notice of Registered Address
The Third- e-Form No.32. – Particulars of Directors
6) Statutory Declaration in e-Form No. 1– ‘All the requirements of the Companies Act and the rules thereunder have been compiled with respect to all things previous and incidental thereto,’ says the declaration.
7) Payment of Registration Fees– During the incorporation process, a fee must be paid to the Registrar of Companies. It is determined by the nominal capital of corporations with share capital.
8) Certificate of Incorporation– If the Registrar is totally satisfied that the company being incorporated has met all of the conditions, he will register the company and issue a certificate of incorporation. As a result, the Registrar’s certificate of incorporation is irrefutable proof that the Act’s conditions have been met.
ENDNOTES: https://lawtimesjournal.in/incorporation-of-company/
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