Mode of incorporation of Company

Mode of incorporation of Company

For incorporation following things are necessary:

1. Memorandum of Association
2. Article of Association
3. Promotion by the promoters
4. Registration of the company

Memorandum of Association

Section 2(56) of the company’s act defines memorandum of association. This section mentions that the memorandum means two things

1. The first Is memorandum of association as what is originally framed. It means that a memorandum of association has been framed at the time of the incorporation of the company.
2. Memorandum, which is being altered from time to time. This will also be a part of the memorandum of association.

Memorandum of association is basically a legal document that contains the purpose behind the formation of a company, the powers of the company and the way the company operates.

It is mandatory for a company to have a memorandum of association that will contain the scope of the company’s operations. The company cannot operate beyond what is mentioned in the article of association.

It is the foundation on which the company is made.

While registering a company  the registrar first asks for the memorandum of association and hence it is an important document.

In the case of a private company, the memorandum should be subscribed by two subscribers.

In case of a public company the memorandum should be subscribe by seven subscribers.

In case of one person company the memorandum should be subscribe by one person only.

Articles of Association

Section 2 (5) of the companies act,2013 mentions about the articles of association. Articles of association contain the rules and regulations regarding the working mechanism of the company.

Objectives of the articles of association:          

1. To provide for rules and regulations for the management and working of the company.
2. To provide the procedures and the rules that must be followed by the company.
3. Article of associations is important because it frames the rules between the members and the company and builds the relationship between members and the company.
4. It also contains the rights and duties of the company’s members, directors, etc.

The articles of association must be signed.

The articles of association must be registered.

The contents of the article of associations must be in the prescribed form and in the prescribed way according to the company’s act.

While the article of association is an important document and contains the rules and regulations for the company, they are bound by the memorandum of association. The article of association cannot go beyond the memorandum of association.

The article of associations acts as a plan to achieve the company’s objective mentioned in the memorandum of the association.

Both the article of association and the memorandum of association, once registered, have a legally binding effect on its members and the directors etc.

Promotion of a company

The promoter helps the company s the parent helps a child and hence he with the investors considers the company for the registration.

The promoter has the legal status. He is responsible for the Memorandum of association and the Articles of association. He found the first director of the company and then the other directors also.

Functions of a promoter:

1. Technical conceivability.
2. Budgetary feasibility
3. Monetary feasibility

The promoter after the idea of the launch will decide the name of the company as whatever he wants.

He will then prepare the necessary documents.

Registration of company

After the promotion the company went through the process of registration.

1. For the registration, the first thing that is required is the name of the company.
2. The memorandum of association.
3. The article of the association.

After filing these documents the registrar will decide that whether the documents are correct or not and after getting satisfied he may issue the certificate for the incorporation.