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Legal framework for company registration


There are three forms of companies which can be registered under section 3(1) of the Companies Act 2013. They are as follows:

1. Public company – If a company is created by seven or more people.

2. Private company – If a company is set up by two or more people.

3. One Persona Company – When a company appears to have only one individual and that individual is the sole shareholder of the company.

There are three types of companies that can be created under this subsection:

  1. A public limited company.
  2. A company limited by guarantee.
  3. Unlimited business.


There are two types of corporations based on their status of incorporation. These are:

1. Statutory Corporations – These are corporations that are created by special Act of Parliament or State Legislatures. They are excluded from the Companies Act 2013. For example – Life Insurance Corporation

2. Registered Companies – These are companies which have been incorporated under the Companies Act 2013 and to which the Act applies. For example – Hindustan Unilever Limited

Incorporation and registration

The ‘company incorporation’ is specified in section 7 of the Companies Act 2013. The terms ‘registration’ and ‘incorporation’ are often interchanged. The main distinction between these two terms is that when a company is incorporated, only certain assets that have been invested are considered, and when a company is registered, all assets are considered, including personal assets, if the company suffers losses.

The procedure for setting up a company

• The company must register with the registrar in its jurisdiction, including the following documentation and registration information:

  1. The memorandum and articles of association must be signed.

• The company must register with the registrar in its jurisdiction, including the following documentation and registration information:

1. All representatives verifying the Memorandum must sign the Memorandum and Articles of Association.

2. The accountant, lawyer, cost accountant or company secretary, or whoever is engaged in the implementation, must make a statement. This declaration document must include the name of a person who may be a director, manager or secretary who confirms that the registration rules are complied with.

3. Once the registered office has been formed, the correspondence address will be indicated.

4. For the promotion, establishment and management of the organization, all members must sign an affidavit.

5. All members, directors and other key stakeholders must include their first and last names, director identification numbers, residential addresses, nationalities and any other required information, in particular proof of identity.

• The Registrar issues a Certificate of Incorporation in the specified form and registers the company under this Act upon receipt of the necessary records and documents.

• The Registrar will assign the company a separate corporate identity as of the date of its Certificate of Incorporation.

• A register of all documents submitted during the incorporation and dissolution of the company must be kept.

• A member who makes misrepresentations in any way informed is liable to fraud under section 447 of the Companies Act 2013.

• In all cases, if it is proven that the incorporated company has presented inaccurate, erroneous or misleading information, the founders, the first directors and the persons making the declaration will be held liable for fraud under Article 447 of the Companies Code, 2013.

• In the event of fraud, a panel will be formed, which may adopt such measures as it deems necessary and appropriate after giving the company a fair opportunity to be heard. The court can make the following orders:

1. Regulatory oversight of company management and members.

2. Responsibility of members

3. Company names are excluded from the company register.

4. Closure of the business.

5. as deemed necessary by the court.

The certificate of incorporation

A certificate of incorporation may be issued under Rule 18 of the Companies (Incorporation) Rules 2014.

The certificate of incorporation is the “birth certificate” of the company, showing its legal name and date of incorporation. All companies that have registered with the Registrar of Companies have it. The certificate verifies the presence of the company along with other essential details such as its date of incorporation, registration number, etc. A company’s certificate of incorporation is important because it allows an individual to sell their shares. This certificate is required even when the company requests loans. India has a mixed economy, with public and private limited companies contributing their money and time to the progress of the nation.

The Companies Act 1956 is a necessary piece of legislation which establishes several standards and regulations for the registration of public and private companies in our country. The limited liability company is the most widely used legal person in India; unlimited societies are rare. A company is established by filing the Memorandum and Articles of Association with the Registrar of Companies in the state where the registered office will be located. Not only Indian companies but also foreign companies doing business in India are allowed to open offices in India specifically for the purpose of performing the following operations:

• Lead parent company in numerous operations in India including acquisition and sale of agents.

• The parent company will carry out several research studies, with the results available to Indian companies.

• Engage in export and import trade.

• Encourage various technological and financial partnerships with Indian companies.

Incorporation of a company

All companies operating in India must follow certain procedures specified in Section 25 of the Companies Act.

The first step in forming a company is to have the name approved by the Registrar of Companies (ROC) of the state where the company will be headquartered. Approval is given under certain conditions, such as the absence of an established company of the same name. For private companies, the name must also end with the words “private limited” or “limited” for public companies.

Step by step procedures to create or incorporate a new business

• Choose a business category

• Choose a name for your new business

• Request an admin ID and digital signature

• Stamping, authentication and electronic filing of relevant documents with the Registrar

• Preparation of the memorandum and statutes of the association

• Obtaining a certificate of incorporation • Preparation and filing of a prospectus/declaration in place of the Prospectus and electronic Form 19/20 to receive approval to initiate the operation.

Articles of Association and Memorandum

The Memorandum and Articles of Association are by far the most crucial elements to have when setting up a company. The constitution of the company can be defined as the memorandum of association. It defines the nature of business activities as well as the association of the business with the external environment. The articles of association, on the other hand, include certain rules and regulations governing the internal activities of the company, including its objects and intention of incorporation. Once the necessary documentation and specified registration fee has been submitted, the ROC will issue the certificate of incorporation, which is measured by the number of shares specified in the company’s memorandum. The public institution will invite the public to contribute to its social capital.

A prospectus should be issued by the company for the purpose of providing information about the company to its stakeholders. To incorporate a company, certain other miscellaneous documents must be filed with the memorandum and articles of association, such as:

• Declaration of conformity, duly stamped

• Notice of the location of the company’s registered office

• Details of directors, managers or secretary

• Authorization signed on non-judicial stamped paper, if applicable.

• A letter from the ROC stating that the company name is available.

As mentioned earlier, Section 25 of the Companies Act includes all provisions relating to the registration and incorporation of a company. The number of registered companies in India has increased, so the Indian government has developed an online system for business registration. Unlike manual registration, this makes the process much simpler, faster, and longer.

The law was last updated in 2013 and included regulations such as the requirement to obtain a digital signature, a directors’ identification number, the authenticity of the name accepted by the ROC, the processing of the memorandum and articles of association, the application for incorporation in the case of a private company, appropriate proof of identity of the directors and other relevant details.


  1. Existence of the business: After incorporation, the organization acquires full legal status as a separate legal entity and can operate independently of its representatives as a legal entity.
  2. Liability: The liability of members is reduced according to the number of shares they have subscribed. In a company limited by guarantee, the liability of a member is limited to the amount insured by him.
  3. Transferability of shares: shares can be easily exchanged without the authorization of other members.
  4. Incorporation ensures the continuity and succession of a business. The life of the company is not affected by the death or insolvency of its founders.
  5. Ability to sue and be sued: As a corporation, a corporation has the ability to sue and be sued in its own name.
  6. The company becomes a legal entity after getting its license, and the only way to end it is through the liquidation process. And if the certificate of incorporation is invalid, the Registrar of Companies cannot revoke it.


The terms “ultra” and “vires” mean “beyond” and “forces” respectively. Therefore, the word “ultra vires” means “beyond the authority of a society”. Only the objectives mentioned in the purpose clause are achievable by the company. It may also take such actions that are incidental or detrimental to clear corporate objectives.

The purpose of this doctrine is to protect the rights of creditors and investors by ensuring that the company does not spend money on activities that are not approved by the company’s creditors or shareholders. The Lakshmana Sami Mudaliyar v. India’s LIC exemplifies this theory.

In recent years, company registration and incorporation have become an inescapable part of business and economic sectors. It may be mentioned that a company will not be able to operate freely unless and until it has been incorporated under the Companies Act and completed all the necessary formalities.

This is because only when a company is licensed and has written evidence can the government look into its affairs. The government can also provide incentives and allowances to companies that have been established so that they can establish their own area of ​​operations by introducing a variety of development plans.