24487928 Formation of Company

8/4/2019 24487928 Formation of Company

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Formation ofCompany

ABBAS AN SARI

Lovely Professional University


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Lawful purpose :-

e.g.lottery, philanthropic objective areunlawful

Subscribing their names to the memorandum

signature on memorandum implies an agreementb/w the persons concerned to associatethemselves into a body of corporate.


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Documents to be filed

with the RegistrarIf the proposed name of the company isapproved, following documents duly stamped

together with necessary fees are to be filed :- MOA signed by the subscribers

AOA

Agreement, for appointment for Director


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A list of Directors who have agreed to become firstdirectors of the company & their written consent to act

as Directors & take up qualification shares.

A declaration stating that all formalities have been

complied with. Such declaration must be signed by :-

(i) an Advocate of Supreme Court or High Court

(ii) a Secretary or CA in whole time practice in India(iii) a person named as Director in the Articles


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Within 30 days of Incorporation of the

company, a notice of the situation of theregistered office of the company shall be given

to the registrar, who would record the same.

(Sec 146)


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Certificate of Incorporation After filing of the documents, the Registrar shall

satisfy himself that the statutory requirementsregarding registration have been duly complied

with. If the Registrar is satisfied as to compliance, he

retains & registers the Memorandum, theArticles & other documents & issues aCertificate of Incorporation, i.e. Of theformation of the company


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Conclusiveness of Certificate Once the certificate is issued by Registrar, it

cannot be challenged even in cases :-

(i) where all signatories are minor

(ii) where signatures are forged

(iii) where memorandum is signed by 1 person

for all subscribers


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Moosa Goolam Ariff v. Ebrahim Goolam

Ariff (1913)A company was issued certificate of

incorporation by Registrar on the basis of

Memorandum of Association which was signedby 2 adult persons & by a guardian of 5 minorpersons. Guardian signed separately for all 5minors. The plaintiff contended that thecertificate should be declared void. It was heldthat it is valid.


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Effects of registration Company becomes Distinct separate legal entity

It acquires perpetual succession

Companys property is not shareholdersproperty.


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PROMOTER He is the person who does the necessary preliminary

work incidental to the formation of the company.

FUNCTIONS :-

decides the name of the company & ascertains that itwill be accepted by the Registrar, nomination ofDirectors, Bankers, Auditors, & the registered office ofthe company, printing of the memorandum & articlesetc.


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Fiduciary position of promoter Not to make any profit at the expense of

company

To give benefit of negotiations to the company

To make a full disclosure of interest & profit

Not to make unfair use of position


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Duties as regards prospectus Contains the necessary particulars

Doesn't contain any untrue or misleadingstatements or doesnt omit any material fact


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Remuneration of promoters A promoter has no right to get compensation from

the company for his services, unless there is acontract.

He takes remuneration for his services in one of the

ways:-(i) He may sell his property at profit to the company for

cash or shares(ii) He may be given an option to buy a certain no. of

shares in the company at par(iii) He may take commission on shares sold(iv) He may be paid a lump sum by the company