Incorporation – The formation of a new corporation is called Incorporation. A corporation is a legal entity that separates the assets and income of the firm from its owners and investors. Corporation may be business, nonprofit organization, sports club, or a government of a new town or city.
Incorporation of company
The incorporation of a company means the legal process that is used to form a company or a corporate entity. An incorporated company or a corporate entity is a separate legal entity on its own which is recognized by law. These companies can be identified with the terms like ‘limited’ or ‘Inc’ in the end of their names.
For the formation of a Private company, minimum 2 members and maximum 50 members are needed and for a Public company a group of seven members or more than seven can come together.
Steps in Incorporation of a Company
Steps involved in the incorporation of a company are as given below:-
Ø Ascertaining Availability of Name
The first step in the company incorporation is to select an appropriate name for the company. Any company is identified thought its registered name. The name of the company must end with the ‘limited’ if it is a Public company and ‘Private limited’ if it’s a Private company. The promoters of the company have to write an application to the registrar of companies of the state and paid 500 rupee. After that registrar allows the company to adopt the name given and can fulfill all legal documentation within a period of 3 months.
Ø Making MOA (Memorandum of Association) and AOA (Articles of Association)
The Memorandum of association of any company means its rulebook or constitution. The memorandum states the field of the company in which the company will do business, objectives of the company and type of business of the company plans. There are five clauses in MOA which area as follows:-
· Name Clause
· Registered Office Clause
· Objects Clause
· Liability Clause
· Capital Clause
An article of Association means basically a document that states the rules which the internal management of the company will follow. The AOA creates a contact between the companies the it’s all members.
Ø Printing, Signing and stamping, Vetting of MOA and AOA
The company’s registrar helps the promoters (who have no experience in drafting) to draw up and draft the memorandum and articles of association. When these have been vetted by the Companies Registrar, then memorandum and articles of association can be printed. These are divided into paragraphs and arranged chronologically. The articles have to be signed individually by each representative or subscriber in the presence of a witness.
Ø Power of attorney
After fulfilling all the legal and complex documentation formalities of incorporation of a company, the promoter of the company may then employ an attorney who will have the authority to act on behalf of the company and its promoters. The Power of the attorney of a company will have the power to make changes in the memorandum and articles of association and other documents.
Ø Other Documents to be filed with the Registrar of Companies
First – e-Form No.32 consent of directors
Second – e-Form No.18 Notice of Registered Address
Third – e-Form No.32 Particulars of Directors
Ø Statutory Declaration in e-Form No.1
The Step Statutory declaration in the e-Form No.1 of a company states that All the requirements of the companies act and the rules have been compiled with respect and matters precedent and incident thereto.
Ø Payment of Registration Fees
A prescribed Registration fee is to be paid to the company’s registrar during the course of incorporation. The fee of registration is depending on the nominal capital of the companies which also have share capital.
Ø Certificate of Incorporation
Registrar of a company registers the company and issues a certificate of incorporation when he completely satisfied that all the requirements have been fulfilled by the company that is being incorporated. The certificate of incorporation provided by the registrar of companies is a definite proof that all the requirements of companies Act have been met.