Formation & Incorporation of a Company SIR.ppt

Formation & Incorporation of a Company

2. IMPORTANT CONCEPTS U NEED TO
KNOW
•Promoter (IMP)
•Quasi –Trustee
•On-line registration of a Company (IMP)
•SPICE
+(SHORT-NOTE)
•Conclusiveness of the Certificate of Incorporation
•Statement-“The companies Act is not against the
profits made by the promoter, but its non-
disclosure” (IMP)
•Pre-Incorporation Vs Provisional Contracts

3. IMP. CASES
1.Glucksteinv. Barnes
2. Kelner v. Baxter (1866)
3. Imperial Tea Manufacturing Co. v. Munchershaw
4. JublieeCotton Mills v. Lewis (1924)
5. MoosaGhulamAriffv. EbrahimGoolamArif
(1913)

4. TERMS U SHOULD KNOW
•RUN-Reserve Unique Name.
•DIN-Director Identification Number.
•DSC-Digital Signature Certificate.
•CIN-Corporate Identity Number.
•SRN-Service Request Number.
•PAN-Permanent Account Number.
•TAN-Tax Deduction Account Number.
•SPICE PLUS-Simplified Performa for
Incorporating Company Electronically.

5. CIN

6. STAGES FOR INCORPORATION OF A
COMPANY

7. WHO IS PROMOTER, SEC 2(69)
•Named in Prospectus.
•Identified by Company in Annual Returns.
•Controls the affairs of the Company.
•Give Directions/Instructions to the BOD’s.
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ApromotercanbeIndividual,association,partnershipora
Company.
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HowUwilldecidewhetherPersonisaPromoteror
Not-?

8. LEGAL POSITION OF A PROMOTER
•Quassi-Trustee
•He occupies a Fiduciary Position (i.e. A position of
Trust & Confidence)
•Duty of Making Full Disclosures, including profits
made on behalf of the Company.
•Not to make Unfair use of their position
•Case Law:-Gluckstein v. Barnes
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“The companies Act is not against the profits made
by the promoter, but its non-disclosure”

9. PROMOTERS REMUNERATION
•He should be or Not be remunerated for his
efforts ?–No Rights to be Remunerated.
•Although he is compensated for his efforts in the
following ways
–Buy shares of the Company.
–Lump-Sum Amount.
–Commission.
–Selling his own Property to the Company ( Full
disclosure required)

10. PRELIMINARY OR PRE-INCORPORATION
CONTRACTS
•ThecontractwhicharemadebeforeIncorporation
ofacompany.
•ThepromoterremainsliableforaPre-Incorporation
Contract.(Kelnerv.Baxter(1866)
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Thesituationbefore1963wasthatnopre-
incorporationcontractwasbindingontheCompany,
unlessthecompanyenteredintoitafreshafter
incorporation.Itcouldnotevenadoptapre-
incorporationcontractbyratificationasratification
alsorequirestheexistenceofaprincipal.

11. SPECIFIC RELIEF ACT 1963, (Sec. 15)
•ThisActgaverelieftothepromotersandmade
ratificationofpre-incorporationcontractspossible
subjecttofulfillmentof2condition:-
Itisforthe“purposeoftheCompany”.
Itis“WarrantedbythetermsofIncorporation”.
CaseLaw:-ImperialTeaManufacturingCo.v.
Munchershaw

12. PROVISIONAL CONTRACTS
•TheContractsenteredbyaCompanyafterits
incorporationbutbeforeitisentitledtocommence
business.
•Thewordprovisionalmeansnotbindingonthecompany
untilitreceivesCertificateofCommencementof
Business.
•ContractsbecomebindingassoonitreceivesCertificate
ofCommencementofbusiness,withoutanyratification.
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Therequirementofreceivingthecertificateof
CommencementofBusinessre-introducedbythe
insertionofSection10A-Companies
(Amendment)Ordinance,2018.

13. INCORPORATION OF A COMPANY
Preliminary Steps
1.Availability of a Name of a Company
-Part A of Web Form SPICE+ (INC32)-2 Names
-Part A & B-1 Name
-RUN :-For Change of Name (2 Names)
(For existing Company)
-Availability of Name Instantly Known.( Facility of Auto-
check)
-Registrars reserves the name for 20 days from the date
of approval. ( 60 for existing Company)
2. Preparation of MOA & AOA. ( Get it vetted by the Registrar)
3. Mention 1
st
Directors –DIN-Consent.

14. SPICE (INC 32)-Now Discontinued
•Simplified Performa For Incorporating Company
Electronically .
•To ensure ease of doing business and to reduce the
time frame for incorporating companies , the CG
provided for an integrated process for incorporating
companies by SPICE.
•e-MOA ( Form No. 33)
•e-AOA (Form No. 34)
•DIN (Upto 3 Directors)
•Propose only 1 Name.
•Certificate of Incorporation Issued (FORM no –INC
11)

15. SPICE PLUS (+) (w.e.f 15.2.20)
WEB BASED FROM

17. LINKED FORMS TO SPICE+

18. SPICE VS SPICE+
SPICE SPICE+
Reservation ofa Name Name Reservation
Incorporation of a Company Incorporation
Application forAllotment of DIN DIN Allotment
Mandatory Issue of PAN
TAN
EPFO
ESIC
Profession Tax(Maharashtra)
Opening of Bank Account

19. ON-LINE REGISTRATION OF A COMPANY
All manual filings of documents has been discontinued. Hence, a company can only be
registered On-Line. ( E-Governance -MCA 21)
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Companies (Incorporation) Amendment Rules 2020 (Effective from 23.02.20)
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PROCESS
1.Apply for DIN (Restricted to 3 persons Only) in form SPICE+
2.Propose 1 Name( A+B), 2 (A)
3.Prepare e-MOA( INC33), e-AOA( INC34)
4.Sign Digitally
5.Attach to web Form AGILE –PRO (INC35)
6.Attach to SPICE+ = INC 8 (Dec. by Professionals), INC 9 (Dec. by each
subscriber), Form No. DIR 2 ( Directors Consent) and Declaration by First
Directors.
7.Verification of Registered Office
8.Examination of Form SPICE + by ROC (15+15)
9.CIN if approved. (Form. No. INC 11)
“It is to be noted that now no hard copy of certificate of incorporation is issued . It is only
issued Digitally.”

20. CONCLUSINENESS OF THE CERTIFICATE OF
INCORPORATION ?
•Case Law -JublieeCotton Mills v. Lewis (1924)
MoosaGhulamAriffv. Ebrahim
GoolamArif(1913)
NOonecanquestiontheregularity/validityofacertificate
ofIncorporation,onceitisissued.Thiseffectivelymeans
noonecouldenquireintotheregularityoftheprior
proceedings.(SEC.34&35oftheCompaniesAct1956)
Sec.7oftheCompaniesAct2013hasfinallycorrectedthe
anomalywhichexistedunderSec.34&35ofthe
CompaniesAct,1956andallowstheRegistrartoquestion
thevalidityofproceedingspriortoincorporation.Tribunal
givenpowerstopassanordertoWinduptheCompanyor
removethenamefromtheRegisterofCompanies,if
incorporatedbyfraudulentmeans.

21. THANKS