Incorporation Revision Notes
Ch 2: Incorporation of Company
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1. Formation of Company (Sec 3)

  • A company can be formed for any lawful purpose.
  • Public Company: Requires 7 or more persons.
  • Private Company: Requires 2 or more persons.
  • One Person Company (OPC): Requires 1 person.

One Person Company (OPC)

  • Member must be a natural person, an Indian citizen (resident or not).
  • A nominee must be appointed in the MOA for perpetual succession.
  • A person can be a member of only one OPC and nominee in only one OPC.
  • Cannot be a Section 8 company or carry out NBFC activities.
Ch 2: Incorporation of Company
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2. Incorporation Process (Sec 7)

  • Application for registration is filed in form SPICe+.
  • Must be filed with the Registrar of Companies (ROC) of the state where the Registered Office is proposed.

Documents to be Filed

  • Memorandum of Association (MOA) and Articles of Association (AOA), duly signed.
  • A declaration by a professional (CA, CS, etc.) that all requirements are met.
  • A declaration from subscribers and first directors about their eligibility.
  • Address for correspondence until the registered office is established.
  • Particulars of subscribers and first directors.
Ch 2: Incorporation of Company
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3. MOA & AOA

Memorandum (Sec 4)

  • It's the charter or constitution of the company. Defines relationship with outsiders.
  • Contains key clauses: Name, Registered Office (State), Objects, Liability, and Capital.

Articles (Sec 5)

  • Contains the internal rules and regulations for company management.
  • It is subordinate to the MOA and the Companies Act.
  • Entrenchment: A provision making certain articles harder to amend than a special resolution.
Ch 2: Incorporation of Company
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4. Key Legal Doctrines

Doctrine of Ultra Vires

  • Means "beyond the powers". Any act done by the company outside the scope of its MOA's objects clause is void.
  • Such an act cannot be ratified even by unanimous shareholder consent.

Doctrine of Constructive Notice

  • Outsiders dealing with a company are presumed to have read and understood the MOA & AOA (as they are public documents).

Doctrine of Indoor Management

  • An exception to Constructive Notice. Outsiders are entitled to assume that the company's internal procedures have been followed correctly.
Ch 2: Incorporation of Company
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5. Section 8 Companies (NPOs)

  • Formed to promote charity, art, science, sports, education, etc.
  • Must apply its profits to promoting its objects.
  • Is prohibited from paying dividends to members.
  • Licensed by the Central Government (power delegated to ROC).
  • On dissolution, surplus assets must be transferred to another Section 8 company, not distributed to members.
Ch 2: Incorporation of Company
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6. Post-Incorporation Matters

Registered Office (Sec 12)

  • Must have a registered office within 30 days of incorporation.
  • Verification of office must be filed with ROC within 30 days.
  • Company name and address must be displayed outside every office.

Commencement of Business (Sec 10A)

  • A director must file a declaration within 180 days of incorporation stating that subscribers have paid for their shares.
  • Company cannot commence business or borrow money until this is filed.
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