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Guide to Incorporating Limited Companies

An incorporated company is a collection of individuals formed under the Companies Act No. 7 of 2007 that has a separate legal identity from its shareholders. It can raise capital through issuing shares and continues existing even if shareholders die or go bankrupt. While incorporated companies allow large scale businesses through unlimited capital raising and limited liability, registering as one has strict legal requirements and high establishment costs. The process involves registering the company name, submitting documents like application, articles of association, and statements of director and secretary consent.

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Dimu Gunawardana
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83 views5 pages

Guide to Incorporating Limited Companies

An incorporated company is a collection of individuals formed under the Companies Act No. 7 of 2007 that has a separate legal identity from its shareholders. It can raise capital through issuing shares and continues existing even if shareholders die or go bankrupt. While incorporated companies allow large scale businesses through unlimited capital raising and limited liability, registering as one has strict legal requirements and high establishment costs. The process involves registering the company name, submitting documents like application, articles of association, and statements of director and secretary consent.

Uploaded by

Dimu Gunawardana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

INCORPORATED/LIMITED COMPANIES

A collection of individuals incorporated under the companies act No. 7 of 2007 can be introduced as a company.

E.g. – John Keells Holdings PLC 


Commercial Bank of Ceylon PLC
Ceylon Tobacco Company PLC
Brandix Lanka Ltd
Unilever Sri Lanka Limited
CHARACTERISTICS OF INCORPORATED
COMPANIES
• BEING AN INDEPENDENT ENTITY INCORPORATED UNDER THE COMPANY ACT.
• IN ORDER TO COMMENCE AN INCORPORATED COMPANY, IT IS REQUIRED TO BE INCORPORATED
UNDER THE COMPANIES ACT NO. 07 OF 2007.
• HAS A SEPARATE LEGAL IDENTITY
• BECOMING AN INDEPENDENT LEGAL ENTITY THAT IS DISTINCT FROM ITS SHAREHOLDERS.
• CONTINUED EXISTENCE
• THE DEATH OF SHAREHOLDERS OR SHAREHOLDERS BEING BANKRUPT SHALL NOT AFFECT TO THE
CONTINUED EXISTENCE OF ITS BUSINESS
• ABILITY TO REGISTER WITH LIMITED LIABILITY
• THE LIABILITY OF SHAREHOLDERS IS LIMITED TO THE VALUE OF THE SHARES THEY HAVE
PURCHASED
• CAN RAISE CAPITAL BY ISSUING SHARES
• AN INCORPORATED COMPANY CAN RAISE CAPITAL BY ISSUING SHARES.
• THE MANAGEMENT BEING CARRIED OUT BY THE BOARD OF DIRECTORS.
ADVANTAGES AND DISADVANTAGES OF
INCORPORATED COMPANIES
Advantages Disadvantages
• Ability to raise a large amount of capital. • Legal impacts being strict.
• The possibility of beginning large scale businesses. • Procedure of establishment being complicated and
• Ability of recruiting a smart management team to expensive.
carry out its business affairs. • Since the voting power is based on the number of
• Ability to attract new investors because of the shares held by each shareholder (1 vote for 1
limited liability of shareholders. share), minority shareholders are not being strong
• The death or resignation of a shareholder does not enough in influencing management decisions.
have any adverse effect on the business. • Profit is subjected to double taxation because tax is
• Ability to assemble qualified and skillful human levied on the profit of the company as well as on
resources. dividends paid to the shareholders.
• The business having a legality. • Even the procedure of dissolution being
complicated.
HOW TO REGISTER AS A INCORPORATED
COMPANIES?
• THE INCORPORATION OF A COMPANY SHOULD TAKE PLACE ACCORDING TO THE
COMPANIES ACT NO.7 OF 2007 AND REGISTERED WITH COMPANY REGISTRAR
AT THE DEPARTMENT OF COMPANY REGISTRAR.
PROCEDURE SHOULD BE FOLLOWED WHEN
INCORPORATING A COMPANY
• REGISTER THE NAME OF THE COMPANY.
• WHEN IT IS CONFIRMED THAT THE PROPOSED NAME OF THE COMPANY IS NOT SIMILAR
OR IDENTICAL AS THE NAME OF AN EXISTING COMPANY, THE FOLLOWING
DOCUMENTS HAVE TO BE SUBMITTED FOR THE REGISTRATION.
• APPLICATION FOR THE REGISTRATION OF THE COMPANY.
• THE ARTICLES OF ASSOCIATION
• THE STATEMENT CONTAINING THE CONSENT OF EACH FOUNDER TO ACT AS THE DIRECTOR
• THE STATEMENT CONTAINING THE CONSENT OF THE FOUNDER SECRETARY TO ACT IN THAT
COMPANY

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