Business law ppt

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.

Promotion
The 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.

Registration
After 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.

 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.

 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 clause
Registered Office Clause
Object Clause
Capital Clause
Liability Clause
Subscription 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 of
ARTICLES 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.M
MBA (student )
Bapuji B School
Davangere , Karnataka
E-mail:- Rehamanm01@gmail.com
Blog:- www.rehamanmblogspot.com

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