Incorporating a Company
Approval of Name:
The first step in the formation of a company is the approval of the
name by the Registrar of Companies (ROC) in the State/Union
Territory in which the company will maintain its Registered office.
This approval is provided subject to certain conditions: for
instance, there should not be an existing company by the same name.
Further, the last words in the name are required to be "Private
Ltd." in the case of a private company and "Limited"
in the case of a Public Company.
Memorandum and Articles, etc.
The memorandum of Association and Articles of Association are the
most important document to be submitted to the ROC for the purpose
of incorporation of a company.The Memorandum of Association is a
document that sets out the constitution of the company. It contains,
amongst others, the objects and the scope of activity of the company
and also defines the relationship of the company with the outside
world.
The Articles of Association contain the rules and regulations of
the company for the management of its internal affairs. While the
Memorandum specifies the objects and purposes for which the Company
has been formed, the Articles lay down the rules and regulations for
achieving those objects and purposes.
The ROC will give the certificate of incorporation after the
required documents are presented alongwith the requisite
registration fee, which is scaled according to the share capital of
the company, as stated in its Memorandum. A private company can
commence business on receipt of its certificate of incorporation.
A public company has the option of inviting the public for
subscription to its share capital. Accordingly, the company has to
issue a prospectus, which provides information about the company to
potential investors. The Companies Act specifies the information to
be contained in the prospectus.
The prospectus has to be filed with the ROC before it can be issued
to the public. In case the company decides not to approach the
public for the necessary capital and obtains it privately, it can
file a "Statement in Lieu of Prospectus" with the ROC.
On fulfilment of these requirements, the ROC issues a Certificate
of Commencement of Business to the public company. The company can
commence business immediately after it receives this certificate.
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