Formation of company section 3 of company law, A Company may be formed for any lawful purpose.
- 7 or more persons, where the coMpany to be formed is to be a public company.
- 2 or more persons, where the company to be formed is to be a private company.
- One person, where the company to be formed is to be one person company that is to say, a private company.
“Memorandum of Association is a public document under section 399. “
Formation and Incorporation in Company: Promotion, Incorporation, Capital, Commencement of the Businesses.
According to L.J. Bowen, The term promoter is a term not of law but of businesses usefully summing up in a triangle world.
A number of business operation familiar to commercial world, by which a company is generally brought into existence in the firm promotion.
Such refers to the process by which the idea of forming of a company, takes a definate shape resulting in its incorporation.
Steps of Incorporation of company, Formation of company
- Approval of the Proposed Names : A company can choose any but it should not closely resemble the name of enacting company.
- Filling of Document :
- Memorandum of Association
- Article of Association
- Original Letter of Approval
- List of Director
- Listen Consent as the Director
- Notice of the Address of the Registered office
- Statutory Declaration.
- Issue of Prospectus: A prospectus contains all essential point which would induced the investing public to apply for the share in the company.
- Minimum Subscription: A company can proceed to alot share only if minimum Subscription specified is prospectus has been collected in cash.
- Filing of further document: A further document is filed only when their is a requirement of declaration.
- Certificate of Incorporation: On registration the registrar will issue a certificate of incorporation where by he certifies that the Company is incorporate.
- Certificate of Commencement of Business : A private Company may commence immediately on Incorporation but a public cannot commence business in less it has obtain a COC of the business from the registrar.
Memorandum of Association in company law
Case: Ashbury Railway Carriage Company vis Riche, 1875, In this case memorandum was defined by Lord Cairns. He defines memorandum as the charter of the company which defines the limitation of power of company.
In sec section 2(56) of company act 2013 Memorandum of company as originally framed or as altered from time to time in pursuance of any precious company law.
Importance of memorandum in company
- The main purpose of the memorandum is to unable its shareholders, creditors and all those who deal with the company to know what its powers and what is the range of behaviour.
- No company can be registered without the memorandum, format is given in schedule – I.
Schedule I of company law content & format of association
- Name clause- section 4(1),(2), 12(3)
- Registered clause- section 12(2)
- Object clause- section- 4(1)(c)
- Liability clause
- subscription clause
- capital.
Name clause and restriction section 4(1)(2), 12(3) of company law
- 4(1) Which says that if a company is public company, it has to put liMited after its name. If it is private company the company has to put private limited after its name.
- 4(2) It tells the Restrictions of name in Memorandum,
- 12(3) Labelling of the name, provided that ONE MAN COMPANY shall be mentioned in brackets below the name of such company, wherever it’s name is printed, affixed or engraved.
Judicial significance of registered office clause, format of Memorandum of Association
- To determine the domicile and the nationality of the company,
- A company might have not been a citizenship but it must have a nationality.
- To determine the Jurisdiction of the court governing a company.
- Determined the Registrar of company (ROC) to be reported by the company.
Reason/object/rational of coMpany clause
- Object clause sets the boundary within which the company must operate.
- Company cannot under take any activity which is not specified in its object clause.
Capital clause format of Memorandum of Association
This clause estates the amount of share capital which the company register and it’s modes of its division into shares of their value. Nominal or register, authorised share capital clause.
Nomination clause format of Memorandum of Association
section 4(1)(f) This is a new clause inserted in the company act 2013, this clause is applicable only for ONE PERSON COMPANY.
According to this clause the Memorandum must specific the name of the person who becomes member in the event of the death of subscriber.