In case of a public company any seven persons and in case of a private company any two persons may join to form an incorporated company. They may form the company with limited or unlimited liability, limited by shares or by guarantee. The following formalities shall be complied with to enable the Registrar of Companies to issue a certificate of incorporation.
Application for availability of name under which the company proposes to be incorporated is to be made to the Registrar of Companies in the prescribed form in the State where the registered office of the company is to be situated.
After the name is made available, Memorandum and Articles of Association of the Company is to be filed with registrar of companies with necessary stamp duty and filing fees according to the authorized capital of the company, along with the agreement if any, which the company proposes to enter into with any individual for appointment as its managing or whole time director or manager. In case of a private company, any two persons and in case of a public company, any seven persons shall subscribe to the Memorandum and Articles of Association of the company.
It is advisable to file with the Registrar along with the Memorandum and Articles of Associations particulars of the situation of the Registered Office of the company and the particulars of first directors of the company. If at this stage these particulars are not filed, then the same have to be filed with the Registrar within 30 days of obtaining the certificate of incorporation.
A declaration by an Advocate of the Supreme Court or of a high court or Attorney or a pleader entitled to appear before a high Court or a Secretary or a Chartered accountant practicing in India who is engaged in the formation of a company, or by a person named in the Articles as director, manager or secretary of the company that all the requirements of the Act have been complied with in respect of registration shall be filed with the Registrar.
If a company intends to participate in an industry included in the Schedule of industries (Development and regulations) act, 1951 license to that affect must be obtained.
In case of a public company, the following further requirements are to be complied with:
1) A list of persons who have consented to act as directors.
2) A written consent of the directors to act in that capacity.
3) An undertaking by the directors to take up and pay for their qualification shares.
If the Registrar is satisfied that all the requirements under the Act for purposes of registration of a company have been complied with he shall register the company and issues a certificate of incorporation under his hand and seal. Once a company is registered the incorporation cannot be challenged even though there may be irregularities prior to registration
Effects of Registration:
From the date of incorporation mentioned in the certificate of incorporation
1) Each of subscribers to the Memorandum and other persons may from time to time be members of the company; shall be a body corporate by name contained in the Memorandum.
2) Shall be capable, forthwith of exercising all the functions of an incorporated company; and
3) Shall have perpetual succession and a common seal;
4) With such liability on the part of the members to contribution to the assets of the company in the event of it being wound up as is mentioned in the memorandum and articles of the company
5) As from the date mentioned in the certificate of incorporation it becomes altogether distinct from its members and obtains a independent corporate and legal status;
6) Acquires perpetual succession;
7) Property belongs to the company and not to individual share holders.
8) Private companies can commerce business immediately on incorporation. A public company has to obtain a certificate of commencement of business before commencing business.
Source: Business Law