PROMOTERS AND INCORPORATION OF A COMPANY

DOCUMENTS TO BE FILED WITH THE REGISTRAR

Before a company is registered, it is desirable to ascertain

from the Registrar of companies (for the State in which the
registered office of the company is to be situated) if the
proposed name of the company is approved. Then the
following documents must be filed with the Registrar:

The Memorandum of Association duly signed by the

subscribers;
The Articles of Association, if any, signed by the subscribes
to the Memorandum of Association;
Note: A public company need not frame its own
Articles of Association. Instead, it may adopt Table A,
i.e., model form of articles.

The agreement, if any, which the company proposes to

enter into with any individual for appointment as its
managing director; or
whole-time director; or
manager.

Note: A public company or a subsidiary of a public

company with paid-up capital of Rs. 5 crores or more
is required to have a managing or whole-time director
or manager.
A list of the directors who have agreed to become the first directors
of the company and their written consent to act as directors and take
up qualification shares;

A declaration stating that all the requirements of the Companies Act

and other formalities relating to registration have been complied
with. Such declaration shall be signed by any of the following
persons, namely:
an advocate of the Supreme Court or of a High Court.

An attorney or a pleader entitled to appear before a High Court;

a secretary or a chartered accountant in whole-time practice in India
who is engaged in the formation of the company; or
a person named in the Articles as a
director;
manager;
secretary;
CONCLUSIVENESS OF CERTIFICATE OF INCORPORATION

The certificate of incorporation issued by the Registrar is

conclusive evidence that all the requirements of the
Companies Act have been complied with in respect of
registration and matters precedent and incidental thereto. It
places the existence of the company as as legal entity
beyond doubt. By issuing certificate of incorporation, the
Registrar certifies under his hand that the company is
incorporated and in the case of a limited company, that the
company is limited.

Once the certificate is issued by the Registrar, nothing is to

be inquired into as to the regularity of the prior proceedings.
The certificate cannot be challenged on an grounds
whatsoever.It cannot be disputed even in cases.
where the Memorandum is signed by only one person for the seven
subscribers;
where all the signatories are minors;
where signatures to the Memorandum are forged.

The certificate of incorporation was held not to be conclusive where

the object of the company is unlawful
[Performing Right Society Ltd. v. London Theatre of Varieties (1922
2 KB 433].

The following cases illustrate the point.

Jubilee Cotton Mills Ltd. v. Lewis, (1924) A.C 958

On 6th January the required documents were delivered

to the Registrar for registration. Two days after, the
Registrar issued the certificate of incorporation but
th th th
dated it 6 January instead of 8 January. On 6
January some shares were allotted to Lewis. The
question arose whether the allotment was valid or
otherwise. Held, the certificate of incorporation is
conclusive evidence relating to registration. The
allotment of share was valid.
Moosa Goolam Ariff v. Ebrahim goolam Ariff, (1913) I.L.R 40
Cal, 1 (P.C)

A certificate of incorporation was issued by the

Registrar on the basis of the Memorandum of
Association which was signed by 2 adult persons and a
guardian of other 5 members who were minors at the
time. The guardian signed separately for all the 5
minors. The certificate was challenged in the Court of
Law. Held, the Registrar ought not to have granted the
certificate. Thus, the certificate prevents anyone
alleging that the company does not exist.
It may be noted that where the object of a company is unlawful, the
certificate of incorporation was held not conclusive for the purpose.

Although the certificate of incorporation is conclusive evidence for the

purpose of incorporation, it does not make an illegal object, a legal one.
But the position is firmly established that if a company is born, the only
method to put an end to it is by winding it up.

PRACTICAL PROBLEM:

XYZ Co. Ltd. Was in the process of incorporation. Promoters of the

company signed an agreement for the purchase of certain furniture for
the company and payment was to be made to the suppliers of furniture by
the company after incorporation. The company was incorporated and the
furniture was used by it. Shortly after incorporation, the company went
into liquidation and the debt could not be paid by the company for the
purchase of above furniture. As a result suppliers sued the promoters of
the company for the recovery of money
Examine whether promoters can be held liable for payment
under the following situations:

When the company has already adopted the contract after

incorporation?

When the company makes a fresh contract with the suppliers in terms
of pre-incorporation contract?