Formation of a Company
1
FORMATION AND INCORPORATION OF
COMPANIES
L Meaning of Company
L Advantages of Certificate of Incorporation
L Characteristics or Essential Features of a Company
L Effect of Certificate of Incorporation
L Floatation of Company
L Types of Companies
• Chartered Companies
L Certificate of Commencement of
Business
• Statutory Companies
L Memorandum of Association
• Registered Companies
L Contents of Memorandum of Association
L Introduction
Companies Limited by Shares
Companies Limited by Guarantee
Unlimited Companies
• Foreign Companies
L Formation of Company
L Promotion of Company
L Incorporation or Registration of Company
L Articles of Association
L Alteration of Memorandum of Association and Articles of Association
L Check Your Understanding
L Pick up the Right Answer
L Discuss Legal Implications
L Descriptive Questions
1.1 INTRODUCTION
The Companies Act of 1956 sets down rules for the establishment of both public and private companies. The most commonly used corporate form is the limited company, unlimited companies being relatively uncommon.
2
Business Legislation
1.2 MEANING OF COMPANY
In common usage, ‘Company’ means an association of persons associated for some common purpose. The common object may be business, charity, research etc. The persons are united for achieving a common objective, normally, for earning profits, which are shared by the investors.
Definition of Company: Section 3 (1) (i) of the Companies Act, 1956 defines a company as:
“A company registered and formed under this Act or an existing company.”
The above definition does not give clear description about the company. The definition provided by Haney gives a better view about the essential elements of a company. According to Haney,
“A company is an incorporated association which is an artificial person created for by law, having a separate entity, with a perpetual succession and a common seal.” The characteristics
FORMATION AND INCORPORATION OF
COMPANIES
L Meaning of Company
L Advantages of Certificate of Incorporation
L Characteristics or Essential Features of a Company
L Effect of Certificate of Incorporation
L Floatation of Company
L Types of Companies
• Chartered Companies
L Certificate of Commencement of
Business
• Statutory Companies
L Memorandum of Association
• Registered Companies
L Contents of Memorandum of Association
L Introduction
Companies Limited by Shares
Companies Limited by Guarantee
Unlimited Companies
• Foreign Companies
L Formation of Company
L Promotion of Company
L Incorporation or Registration of Company
L Articles of Association
L Alteration of Memorandum of Association and Articles of Association
L Check Your Understanding
L Pick up the Right Answer
L Discuss Legal Implications
L Descriptive Questions
1.1 INTRODUCTION
The Companies Act of 1956 sets down rules for the establishment of both public and private companies. The most commonly used corporate form is the limited company, unlimited companies being relatively uncommon.
2
Business Legislation
1.2 MEANING OF COMPANY
In common usage, ‘Company’ means an association of persons associated for some common purpose. The common object may be business, charity, research etc. The persons are united for achieving a common objective, normally, for earning profits, which are shared by the investors.
Definition of Company: Section 3 (1) (i) of the Companies Act, 1956 defines a company as:
“A company registered and formed under this Act or an existing company.”
The above definition does not give clear description about the company. The definition provided by Haney gives a better view about the essential elements of a company. According to Haney,
“A company is an incorporated association which is an artificial person created for by law, having a separate entity, with a perpetual succession and a common seal.” The characteristics