Incorporation

After completing the promotion formalities, the promoters apply for the incorporation of the company. The application is filed with the Registrar of Companies of the state in which the registered office is to be established, along with the required documents (already discussed under promotion).

Documents accompanying the application

• 1. Memorandum of Association — duly stamped, signed and witnessed. It must be signed by at least seven members for a public company and two members for a private company. Each signatory also states their address, occupation and the number of shares subscribed.
• 2. Articles of Association — duly stamped and witnessed like the Memorandum. A public company may instead adopt Table A (the model set of articles in the Act); if it does, a statement in lieu of prospectus is filed instead of Articles.
• 3. Written consent of the proposed directors to act as directors, with an undertaking to purchase qualification shares.
• 4. The agreement, if any, with the proposed Managing Director, Manager or whole-time director.
• 5. A copy of the Registrar's letter approving the company's name.
• 6. A statutory declaration affirming that all legal requirements for registration have been complied with, duly signed.
• 7. A notice of the exact address of the registered office — may be filed with these documents, or within 30 days of receiving the certificate of incorporation.
• 8. Documentary evidence of payment of the registration fees.

Role of the Registrar

• The Registrar must be satisfied that the documents are in order and that all statutory requirements for registration have been met.
• However, it is not the Registrar's duty to investigate the authenticity of the facts stated in the documents.
• Once satisfied, the Registrar issues a Certificate of Incorporation, which signifies the birth of the company — it may be called the company's birth certificate.
• With effect from 1 November 2000, the Registrar allots a Corporate Identity Number (CIN) to the company.

Preliminary contracts

• During promotion, promoters enter into certain contracts with third parties on the company's behalf; these are called preliminary (or pre-incorporation) contracts.
• Such contracts are not legally binding on the company. After coming into existence, a company may, if it wishes, enter into fresh contracts on the same terms — but it cannot ratify a preliminary contract and cannot be forced to honour one.
• The promoters remain personally liable to third parties for these contracts.

Effect of the Certificate of Incorporation

• A company is legally born on the date printed on the Certificate of Incorporation, becoming a legal entity with perpetual succession and entitled to enter into valid contracts.
• The certificate is conclusive evidence of the regularity of incorporation. Once issued, the company is a legal entity irrespective of any flaw in its registration — this protects outside parties who deal with the company. Illustrative examples:
  • (a) Registration documents were filed on 6 January and the certificate issued on 8 January, but the certificate bore the date 6 January. The company was held to exist and contracts signed on 6 January were valid.
  • (b) A person forged the signatures of others on the Memorandum; even so, the incorporation was held valid. …