A company comes into existence when a number of persons come together with a view to exploit some business opportunity.
According to section 12, for a private company any two persons or more and for a public company any seven persons or more may incorporate a company, by subscribing their names to the Memorandum of Association and complying with other requirements, in respect of registration.
The memorandum for registration of a company should be presented to the registrar of the state in which the business office of the company is to be situated.
Documents to be filed with the registrar:-
- Application for availability of name
- Memorandum of Association
- Articles of Association
- Copy of proposed agreement
- Statement on nominal capital
- Address of the registered office
- List of directors and their consent
- Undertaking to take up qualification shares
- Statutory declaration
When the Registrar of Companies is satisfied by the filed documents, he registers the company and places its name on the register of companies. If there are small defects in the documents, the registrar can get it rectified and then get the company registered. But, if there is a material defect, he may refuse for registration.
Restrictive conditions on the basis of which a company may be incorporated as a private company : The conditions of restriction with which a private company is incorporated under the companies Act, 1956 are as follows:-
- Every private company should have paid up capital of Rs. 1 Lakh or such higher as may be prescribed.
- The right to transfer share is restricted
- The number of members is limited to 50 excluding the past and present employees who are the members of the company.
- Prohibition on inviting public to subscribe to any shares or debentures of the company.
- Prohibition on invitation or acceptance of deposit from person other than its members, directors or their relatives [section 3(i)(iii) of companies Act, 1956].