CHAPTER 2 :- INCORPORATION OF COMPANY AND

MATTERS INCIDENTAL THERETO

OVERVIEW

SECTION NUMBER SECTION NAME

3 Formation of company
3A Members severally liable in certain cases
4 Memorandum (MOA)
5 Article (AOA)
6 Act to override MOA, AOA etc
7 Incorporation of company
8 Formation of company with charitable
objects
9 Effect of registration
10 Effect of MOA, AOA
10A Commencement of business etc.
12 Registered office of company
13 Alteration of MOA
14 Alteration of AOA
15 Alteration to be noted in every copy
16 Rectification of name of company
17 Copy of MOA, AOA, etc to members
18 Conversion of company already registered
19 Subsidiary co. not to hold shares in
holding co.
20 Service of documents
21 Authentication of documents/contracts
22 Execution of bills of exchange

INTRODUCTION TO INCORPORATION OF COMPANIES & PROMOTER

• A company is a separate legal entity from its members.

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 • Prior to incorporation, promotion activities are essential. Promotion signifies a
number of business operations familiar to the commercial world by which a company is
brought into existence.
• Person who undertakes promotion activities in order to incorporate the company are
generally known as promoters.

PROMOTER

• Promoter is the one who undertakes to form a company with reference to a given
project, who takes the necessary steps to accomplish that purpose.
• To be a promoter, one need not necessarily be associated with the initial formation of
the company, one who subsequently helps to arrange floating of its capital will equally
be regarded as a promoter.
• Hence, “promoter” denotes any individual, association, partnership or a company that
takes all the necessary steps to incorporate a company and set it going, in a fiduciary
position.

SECTION 3: FORMATION OF COMPANY

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As per section 3(1), for lawful purpose, by subscribing their name to memorandum and
complying with requirements of this Act,

a. A public company may be formed by seven (7) or more persons

b. A private company may be formed by two (2) or more persons
c. A one person company may be formed by one (1) person

As per section 3(2), company formed as specified above may be incorporated either as,

a. Companies limited by shares, or

b. Companies limited by guarantee, or
c. Unlimited liability companies.

ONE PERSON COMPANY (OPC)

Such a company is described as a private company u/s 3(1)(c).

Certain provisions specifically applicable in case of OPC are listed below:

WHO CAN FORM ONE PERSON COMPANY?

➢ a natural person (other than a minor),

➢ who is an Indian citizen (whether resident in India or otherwise),
➢ shall be eligible to incorporate a OPC.

Resident in India means a person who has stayed in India for a period of not less than 120
days during immediately preceding FY.

NOTE:

• OPC can’t be incorporated or converted into a co. u/s 8 of the act.

• OPC can’t carry out Non-Banking Financial Investment activities incl. investments in
securities of body-corporates.

INDICATE NAME & CONSENT OF NOMINEE

➢ the MoA of OPC shall indicate the name of a person (same conditions as eligibility) as
nominee along with his prior written consent in the Form No. INC-3,
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 ➢ who in the event of subscriber’s death or his incapacity to contract become the
member of the co.
➢ such written consent shall be filed with the RoC.

WITHDRAWAL OF CONSENT BY NOMINEE

➢ nominee may withdraw his consent by giving a notice in writing to such sole member
and to the OPC.
➢ the sole member shall nominate another person as nominee within 15 days of the
receipt of notice of withdrawal.

REPLACING NOMINEE WITH ANOTHER ONE

➢ the member may change the name of nominee for any reason incl. in case of death or
incapacity to contact of nominee and nominate another person after obtaining the
prior consent of such another person.
➢ member may do so by intimation in writing to the co.
➢ any change in the name of the person shall not be deemed to be an alteration of the
MoA.

WHEN NOMINEE BECOME MEMBER

➢ when the nominee becomes new member, then he shall nominate within 15 days of
becoming the member,
➢ nominate a new nominee, who in the event of his death or incapacity to contract,
become the member of such co.

NOTICE OF CHANGE TO REGISTRAR

➢ the co. within 30 days shall file with the notice with the registrar of such withdrawal
of consent, change or cessation and intimate the name of new nominee in Form No.
INC-4 along with fee provided in the Companies (Registration offices and fees) Rules,
2014.

SECTION 3A: MEMBERS SEVERALLY LIABLE IN CERTAIN CASES

1. The no. of members of a co. is reduced below 7 and 2 in case of a public & private co.
respectively, and
2. Such co. carries on business for more than 6 months with reduced no. of members,
and

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 3. Every such person who carries on the business after those 6 months is cognizant
(aware) of the fact that business is carried reduced members,
4. Such members are liable for the payment of the whole debts of the co. contracted
during that time (after lapse of 6 months).

SECTION 4: MEMORANDUM OF ASSOCIATION

Basics of MoA-

• MoA is the fundamental doc for the formation of the co.

• MoA defines the relationship of the co with outsiders.
• It enables all those who deal with the co. to know what its powers are and what
activities it can engage in.

The MoA contains the following clauses: [NR SOLO]

N – Name Clause

R – Registered Office Clause / Situation Clause / Domicile Clause

S – Share Capital Clause (if co. is formed with share capital)

O – Object Clause

L – Liability Clause

O – Association Clause & Nomination Clause (in case of OPC)

NAME CLAUSE

1. Company shall add the word “ltd” in case of Public Limited Co. and “pvt ltd” in case of
Private Limited Co. [ this clause this not applicable for section 8 companies ].
2. A person may make an application in SPICe+ / RUN for –
• for reserving name for proposed company,
• for reserving name for changing name of existing company, respectively.
3. There are certain restrictions regarding names and use of words & expressions of
companies, which are as follows:
• Identical with or resemble too nearly to the name of an existing co.
registered under this act or any previous company law, or
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 • Such, use of which by the co. will constitute an offence under any law for the
time being in force, or
• Such, use of which by the co. is undesirable in the opinion of the CG (power
delegated to RoC) [ unless previous approval has been obtained from the CG],
or
• Contains any word or expression that is likely to give the impression that the
co. is in any way connected with, or having the patronage of the CG, any SG,
any local operation, or
• Includes any word or expression namely – Board, Commission, Authority,
India, Bharat, Govt. authority or resemblance to any govt. scheme, etc.

NOTE: A name is said to “resemble” when difference is only of – {Refer Pg no. 2.31 of ICAI
SM}.

4. The Registrar may on the basis of documents furnished, reserve the name for a
period of 20 days from the date of approval or such other period. [in case of new
co./proposed name].
5. In case of an application for reservation of name by an existing co., the Registrar
may reserve the name for a period of 60 days from the date of approval.
6. If it is found that the name was applied by furnishing wrong or incorrect info then,
• if the company has not been incorporated, the reserved name shall be
cancelled and person who had made such an application shall be liable to a
penalty which may extend to ₹1lakh.
• if the company has been incorporated, the Registrar may, after giving the co.
an opportunity of being heard,
▪ Either direct the co. to change its name within a period of 3 months
after passing on OR,
▪ Take action for striking off the name of the co. from the registrar
of companies, or
▪ Make a petition for winding up of the company.

SITUATION CLAUSE

1. The MoA of a co. shall mention the name of the state, where registered office is
proposed to be situated.
2. A co. shall within 30 days of its incorporation and at all times thereafter, have a
registered office capable of receiving & acknowledging all communications and
notices as may be addressed to it.

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OBJECT CLAUSE

1. The MoA of a co. shall state the objects for which the co. is proposed to be
incorporated and any matter considered necessary in furtherance thereof.

DOCTRINE OF ULTRA VIRES

1. A co. can’t depart away to do anything beyond or outside its objects stated in MoA,
and if any act done beyond that will be ultra vires and void, which can’t be ratified
even by the assent of the whole body of SH.
2. The Doctrine of Ultra Vires is meant to protect shareholders & creditors of the co.
or anyone who deals with the co.
3. It was first enunciated in a classic case, Ashbury Railway Carriage and Iron Co. Ltd v.
Riche.
4. Whenever an ultra vires act has been or is about to be undertaken, any member of
the co. can get an injunction to restrain it from proceeding with it.
5. Neither party (even outsiders) can sue for enforcement or specific performance of
such agreement.

LIABILITY CLAUSE

The MoA of a co. shall state:

a. in case of company limited by shares, the liability of its members is limited to the
amount unpaid, if any, on the shares held by them, and
b. in case of company limited by guarantee, the amount up to which each member
undertakes to contribute-
▪ to the assets of the co. in the event of its being wound-up while he is a
member, and
▪ to the costs, charges and expenses of winding-up and for the adjustment of
the right of the contributories among themselves.

CAPITAL CLAUSE

A co. having a share capital, shall state in its MoA:

a. amount of share capital with which it is to be registered (authorised or nominal

capital), and

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 b. the division thereof into shares of a fixed amount (i.e. face value and no. of shares),
and
c. the no. of shares which the subscribers to the MoA agree to subscribe which shall
not be less than 1 share.

SUBSCRIPTION CLAUSE

1. The MoA of a co. shall state the no. of shares each subscriber to the MoA intends to
take, indicated opp. to his name.

NOMINATION CLAUSE

1. The MoA of a co. shall state the name of the nominee who, in event of death of
subscriber, shall become the member of the co.

FORMS OF MOA

TABLE NAME DETAILS

A MoA of co. limited by shares
B MoA of co. limited by guarantee and not
having share capital
C MoA of co. limited by guarantee and having
share capital
D MoA of an unlimited co. and not having
share capital
E MoA of an unlimited co. and having share
capital

SECTION 5: ARTICLES OF ASSOCIATION (AOA)

Basics of AoA –

• AoA of a co. contains internal rules & regulations of the co.

• It establishes a contract between the co. and the members & between the members
inter se.

Matters to be included:

a. Rules for the management of the co.

b. Such matters as may be prescribed.
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 c. Other additional matters as may be considered necessary by the management.

ENTRENCHMENT

1. We are studying the word entrenchment with the sense of making the process of
alteration in articles more difficult, in order to enhance the protection.
2. In other words, articles may provide that specified provisions contained in it may be
altered only if conditions that are more restrictive and harder than those applicable
in the case of a SR, are met or compiled with.
3. Provisions of entrenchment shall only be made either:
a. On the formation of a co., or
b. By an amendment in the AoA agreed to-
 by all the members in case of a private co.
 by a SR in case of a public co.
4. The co. shall give notice to the Registrar of entrenchment provisions included in
article:
• in the SPICe+ along with prescribed fee at the time of incorporation of the
co.
• in Form No. MGT-14 within 30 days from the date of entrenchment of
articles, along with prescribed fee, in case of existing co.

FORMS OF AOA

TABLE NAME DETAILS

F AoA of co. limited by shares
G AoA of co. limited by guarantee and having
share capital
H AoA of co. limited by guarantee and not
having share capital
I AoA of an unlimited co. and having share
capital
J AoA of an unlimited co. and not having share
capital

1DOCTRINE OF CONSTRUCTIVE NOTICE

1. All those who are dealing with the co. deemed to be aware of what is stated in its
MoA and AoA, in its true perspective, because both this documents are public
documents.

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 2. The doctrine of constructive notice is based on the rule laid down in Ernest v
Nicholls.
3. Absence of notice of MoA & AoA cannot be an excuse to claim relief for outsiders.
4. Even if the party dealing with the co. doesn’t have actual notice of the contents of
these documents, it is presumed that he has an implied (constructive) notice of them.
5. However, this is an unreal doctrine since people know a co. through its officers and
not through its documents.
6. There is an exception to the constructive notice, “Doctrine of Indoor Management”
or “Turquand’s Rule”.

DOCTRINE OF INDOOR MANAGEMENT

1. People who are dealing with co. are entitled to presume that internal proceedings &
requirements has been duly met.
2. This doctrine was laid down in the case of Royal British Bank v Turquand.
3. Outsiders can only presume the intentions of a co., but not know the info he/she is
not privy to.
4. If not for the doctrine, the co. could escape creditors by denying the authority of
officials to act on its behalf.
5. However, there are certain exceptions to Doctrine of Indoor Management, which are
as follows:
a. Knowledge of irregularity – If the ‘outsider’ has actual knowledge of irregularity
within the co., the benefit under the rule of indoor management would no longer
be available. In fact, he/she may well be considered part of irregularity.
b. Negligence – If with a min. effort, the irregularity within a co. could be
discovered, the benefit of this rule would not apply. In other words, if the
surroundings of the contract are so suspicious as to invite inquiry and outsider
dealing with the co. doesn't make proper inquiry, the befit isn’t available.
c. Forgery – The rule doesn’t apply where a person relies upon a doc. that turns out
to be forged since nothing can validate forgery.
d. Where the question is in regard to the very existence of an agency.

SECTION 6: ACT TO OVERRIDE MEMORANDUM, ARTICLES, ETC.

The provisions of the Companies Act shall have overriding effect to the provisions contained
in:

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 a. MoA, or
b. AoA, or
c. Any agreement executed by it, or
d. Any resolution passed by the co.

Any provision contained in the MoA, AoA, agreement or resolution to the extent in conflict to
the provisions of the Act, shall be void.

SECTION 7: INCORPORATION OF COMPANY

Filing of documents & info with the registrar

1. The duly signed MoA and AoA:

The MoA and AoA shall be duly signed by all subscribers to the memorandum in the
manner prescribed:
a. Each subscriber shall add his name, address, description & occupation, if any, in
the presence of at least 1 witness who shall attest the sign in the similar manner.
b. If a subscriber is illiterate, he shall affix his thumb impression which shall be
described as such by the person writing for him who shall write the name of the
subscriber below the mark and authenticate it with his own signature.
c. Where a subscriber is a body corporate, the MoA and AoA shall be signed by
director, officer or employee of the body corporate as authorised by a resolution
of the BoD.
d. Where the subscriber is a LLP, it shall be signed a partner of the LLP, duly
authorised by a resolution by all the partners of the LLP.
e. Where the subscriber is foreign national residing outside India, his signature and
address shall be notarized by a Notary (Public) with a certificate.

2. Declaration of Compliance by Professional & Director, Manager or Secretary of

company:
A declaration that all the requirements of this Act have been complied with shall be
filled in Form No. INC-8 by:
a. an advocate, a CA, CS, cost accountant who is engaged in the formation of the
company, and
b. a person named in the articles as director, manager or secretary of the company.

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 3. Declaration by subscribers to the memorandum and persons named as the first
directors:
Stating-
a. He is not convicted of any offence in connection with the promotion, formation or
management of any company, or
b. He has not been found guilty of any fraud or misfeasance or of any breach of
duty to any co. under this Act or any previous company law during the last 5
years,
c. That all files filed are correct & to the best of his knowledge.

4. Address for correspondence:

The address for correspondence till its registered office is established.

5. Particulars of persons named as first directors

The particulars, i.e. name, incl. surname or family name, the DIN, residential address,
nationality and such other particulars including proof of identity of each person
mentioned in the articles as first director of the company and his interest in other
firms or bodies corporate along with his consent (Form No. DIR-2) to act as director
of the company shall be filed in Form No. DIR-12 along with prescribed fee.

6. Particulars of subscribers to the memorandum

Following particulars of every subscriber to the MoA shall be filled:
a. Name (incl. surname) & recent photograph affixed
b. Father’s / Mother’s Name
c. Nationality
d. DOB & Place (District & State)
e. Educational Qualification & Occupation
f. PAN
g. Email id & Phone No.
h. Permanent & Present residential address
i. Residential Proof such as Bank Statement, Telephone which shall not be more
than 2 months old
j. Proof of Identity (Voter Id for Indian Nationals & Passport for Foreign nationals
and NRI)
k. If subscriber is a director, CIN of such co.

If subscriber is a body corporate, following particulars shall be filled:

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 a. Name of the body corporate and CIN
b. GLN, if any
c. The registered office
d. Email id
e. Certified copy of board resolution, in case body corporate is a co.
f. Certified copy of resolution agreed upon by all partners, in case the body
corporate is a LLP
g. Details regarding the copy of certificate of incorporation & the registered office
address, in case of a foreign body corporate

Issue of certificate of incorporation on registration

On the basis of documents & info filed, the registrar shall register all the documents & info
in the register and issue a certificate of incorporation in the Form No. INC-11 to the effect
that the proposed co. is incorporated under this Act.

Allotment of Corporate Identity Number (CIN)

On and from the date mentioned in the certificate of incorporation, the Registrar shall allot
to the company a Corporate Identity Number (CIN), which shall be a distinct identity for the
co. and which shall also be included in the certificate of incorporation.

Maintenance of copies of all documents & information

The company shall maintain and preserve copies of all the documents & info as originally filed
at its registered office, till its dissolution under this Act.

Furnishing of false or incorrect information or suppression of material fact at the time

of incorporation (i.e. during incorporation process)

If any person furnishes any false or incorrect particulars of any info or suppresses any
material info, of which he is aware in any of the documents filed with the RoC, he shall be
liable for action for fraud u/s 447.

Company already incorporated by furnishing any false or incorrect information or

representation or by suppressing any material fact (i.e. post incorporation)

At any time after incorporation of a co., it is proved that the co. has been got incorporated
by

a. furnishing any false or incorrect info or representation, or

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 b. by suppressing any material fact or info in any documents or declaration filed or
made for incorporating such co., or
c. by fraudulent action,

The promoters, the persons named as the first directors of the co. and the persons
making declaration shall each be liable for action for fraud u/s 447.

Order of the Tribunal

If a co. has been incorporated by

a. furnishing any false or incorrect info or representation, or

b. by suppressing any material fact or info in any documents or declaration filed or
made for incorporating such co., or
c. by fraudulent action,

The tribunal (NCLT) may pass order as it may deem fit incl.:

a. regulation of the management of the co., or

b. direct the liability of the members shall be unlimited, or
c. direct removal of the name of the co. from the register of companies, or
d. winding up of the co.

Provided that before making any such order,

a. the co. shall be given a reasonable opportunity of being heard in the matter, and
b. the Tribunal shall take into consideration the transactions entered into by the co.,
incl. any obligation, if any, contracted or payment of any liability.

SECTION 8: FORMATION OF COMPANIES WITH CHARITABLE

OBJECTIVES
Who can issue and get the license u/s 8

The CG (RoC in its behalf) may grant such a license if it is proved to the satisfaction that a
person or an association of persons proposed to be registered under this Act as a limited co.

a. has in its objects the promotion of commerce, art, science, sports, education,
research, social welfare, religion, charity, protection of environment or any such
other object,

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 b. intends to apply its profits (if any) or other income in promoting its objects, and
c. intends to prohibit payment of any dividend to its members.

NOTE:

• A firm may be a member of the co registered u/s 8.

• The words “ltd” or “pvt ltd” shall not be added to its name.

Registration of company using license

After granting license, an application shall be made to the registrar in Form SPICe+ along
with the following documents:

a. The MoA and AoA of the proposed co. in the Form No. INC-13 and Form No. INC-31,
respectively
b. An estimate of future annual income and expenditure of the co. for the next 3 years
specifying the sources of the income and the objects of the expense,
c. The declaration by an advocate, a CA, CS or cost accountant stating that:
 the MoA and AoA have been drawn up in conformity with the provisions of
section 8, and
 all the requirements of the act have been complied with.

Alteration of memorandum and articles requires prior permission of government

a. CG (power delegated to regional directors) for alteration of MoA.

b. CG (power delegated to ROCs) for alteration of AoA.

Conversion into any other kind of company

a. A co. shall pass a special resolution at a general meeting for approving such
conversion
b. An explanatory statement to notice of such general meeting must set-out the details
on reason of such conversion
c. Co. shall file an application in the Form No. INC-18 with the regional Director with
the fee along with a certified true copy of the SR
Also attach the proof of notice served by registered post or hand delivery to:
 the Chief Commissioner of Income Tax having jurisdiction over the co.
 Income Tax Officer who has jurisdiction over the co.
 the Charity Commissioner
 the Chief Secretary of State
 and organisation or Department of the CG or SG

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 d. A copy of the application as filed with the Regional Director shall also be filed with
the Registrar.
e. The co. shall, within a week from the date of submitting the application to the RD,
publish a notice at its own expense:
 at least once in a vernacular newspaper in the principal vernacular language of
the district where the registered office is located, and
 at least once in English language in an English newspaper having wide
circulation in that district, and
 on the website of the company, if any
f. The co. should have filed all its Financial Statements and Annual Returns upto the FY
preceding the submission of the application to the RD.
g. On being satisfied, the RD shall issue an order approving the conversion of the co.
into a co. of any other kind subject to such T&C as may be imposed in the facts and
circumstances of each case.
h. Before imposing the conditions or rejecting the application, the co. shall be given a
reasonable opportunity of being heard by the RD.
i. On the receipt of approval from RD, the co. shall convene a general meeting of its
members and pass a special resolution for amending its MoA & AoA and the co. shall
thereafter file these with the Registrar
j. on the receipt of documents mentioned above, the Registrar shall register the
documents and issue the fresh Certificate of Incorporation.

Revocation of license

a. The CG may (power delegated to RD) may by order revoke the license of the co.
where:
 the co. contravenes any of the requirements or the conditions of this sections
subject to which a license is issued or
 the affairs of the co. are conducted fraudulently or in violation of the
objects of the co.

However, the co. shall be given a reasonable opportunity of being heard.

b. Where the license is revoked and the CG is satisfied, that it is essential in the public
interest then after giving a reasonable opportunity of being heard, by order it may
direct that
 Company be wound up. Excess assets on winding up after satisfaction of its
debts and liabilities, may be transferred to:
▪ Another company registered u/s 8 having similar objects, or

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 ▪ May be sold and proceeds thereof credited to the Insolvency and
Bankruptcy Fund.
 Company be amalgamated with another co. registered u/s 8 having similar
objects.

Penalty / Punishment in contravention

SECTION 9: EFFECT OF REGISTRATION

From the date of incorporation, mentioned in the certificate of incorporation, the

subscribers to the memorandum and all other members shall be a body corporate by the
name contained in the memorandum.

Thereafter, such body corporate shall be capable of:

a. Exercising all the functions of an incorporated co. under this Act, and
b. Having perpetual succession
c. Power to acquire, hold and dispose of property, both movable and immovable, tangible
and intangible,
d. To contract and to sue and be sued.

SECTION 10: EFFECT OF MEMORANDUM AND ARTICLES

When the memorandum got registered, it shall bind the:

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 a. members to the company,
b. Company to the members,
c. Members to the Members

To observe all the provisions of the memorandum and of the articles, as signatory thereof.

SECTION 10A: COMMENCEMENT OF BUSINESS ETC.

A co. incorporated

a. after the commencement of the Companies (Amendment) Ordinance, 2019, and

b. having share capital

Shall commence any business or exercise any borrowings powers only if:

a. the co. has filed with the Registrar a verification of its registered office as provided
u/s 12(2), and
b. a declaration is filed with the Registrar, by a director, within a period of 180 days of
the date of incorporation of the co., in Form No. INC-20A, duly verified by a CS or
CA or cost accountant in practice along with prescribed fee, stating that every
subscriber to the memorandum has paid the value of the shares agreed to be taken
by him on the date of making such declaration.
NOTE: In case the objects of a co. require approval or registration of RBI/SEBI,
then such approval or registration shall also be included with the declaration.

Penalty

If any default is made in complying with the requirements of this section, penalty shall be:

Declaration mot filled by director within 180 days

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Where no declaration has been filed by directors within a period of 180 days of the date of
incorporation with the Registrar and the Registrar has reasonable cause to believe that the
co. is not carrying on any business or operations, he may initiate action for the removal of the
name of the co. from the register of companies under Chapter XVIII.

SECTION 12: REGISTERED OFFICE OF COMPANY

1. Once a co. gets incorporated, it is required to maintain a registered office. This is a
physical office where the corporation will receive service of legal documents from
ROC or in case of a lawsuit, etc
2. This address cannot be a P.O. Box but must be a physical location where someone is
present, to receive service of legal documents during normal business hours.
3. A co. shall, within 30 days of its incorporation and at all times thereafter, have a
registered office capable of receiving and acknowledging all communications & notices
as may be addressed to it.
4. The co. shall furnish to the Registrar verification of its registered office within a
period of 30 days of its incorporation.
5. Every co. shall:
a. paint or affix its name, and the address of its registered office, and keep the
same painted or affixed on the outside of every office or place in which its
business is carried on, in a conspicuous position, in legible letters, in general use in
that locality.
b. have its name engraved in legible characters on its seal, if any,
c. get its name, address, CIN, along with telephone no., fax no. and email id, if any,
printed on all its business letters, billheads, letter papers and in all its notices
and other official publications, and
d. have its name printed on hundies, promissory notes, bills of exchange and other
such documents as may be prescribed.

NOTE:

• where a co. has changed its name(s) during the last 2 years, it shall paint or affix
both such names in case of point a as well as c above.
• in case of OPC, the words “One Person Company” shall be mentioned in brackets below
the name of such co., wherever its name is printed, affixed or engraved.
6. Notice of change of the situation of the registered office after the date of
incorporation of the co. verified in the Form No. INC-22 along with prescribed fee

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 shall be filed with the Registrar within 30 days of such change, who shall register the
same.

Change in Place of Registered Office

1. The registered office of the co. shall be changed only by passing of SR by a co.,
outside the local limits of any city, town or village where such office is situated or
where it may be situated later by virtue of a SR passed by the co.
2. Where a co. changes the place of its registered office from the jurisdiction of one
Registrar to the jurisdiction of another Registrar within the same state, there such
change is to be confirmed by the Regional Director on an application made by the co.
Application shall be made in Form No. INC-23 along with fee.
3. The confirmation of change of registered office from jurisdiction of one registrar to
another registrar within the same state, shall be:
a. communicated within 30 days from the date of receipt of application by the RD
to the co., and
b. the co. shall file the confirmation with the Registrar within a period of 60 days
of the date of confirmation who shall register the same, and
c. certify the registration within a period of 30 days from the date of filing of such
confirmation.

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Penalty in case of defaults

If any default is made in complying with the requirements of this section, the co. and every
officer who is in default shall be liable to a penalty of ₹1000 for every day during which the
default continues but not exceeding ₹1lakh.

SECTION 13: ALTERATION OF MEMORANDUM

Company may alter the provisions of its memorandum with the approval of the members by a
special resolution. Further, the co. shall file such special resolution with the Registrar.

Name change of the company

1. Any change in the name of the co. shall be effected only with the approval of the CG
(power delegated to RoC) in writing in Form No. INC-24 along with fee prescribed.
2. No such approval shall be necessary where the change in the name of the co. is only
the addition/deletion of the word “pvt”.
3. On any change in the name of a co., the Registrar shall enter the new name in the
register of companies in place of the old name and issue a fresh certificate of
incorporation with the new name and the change shall be effective.

Example : Tata Sky Limited changed its name to Tata Play Limited.

Change in the registered office

1. The alteration of the MoA relating to the place of the registered office from one
state to another shall not have any effect unless it is approved by the CG (power
delegated to the Regional Director) on an application along with fee and shall be
accompanied by following documents, namely:
a. copy of MoA, with proposed alterations,
b. copy of minutes of the general meeting at which the resolution authorising such
alteration was passed,
c. copy of board resolution or power of attorney or the executed vakalatnama, as
the case may be,
d. list of creditors and debenture-holders,
e. acknowledgement of service of a copy of the application with complete annexures
to the Registrar and Chief Secretary of the SG or Union Territory where the
registered office is situated at the time of filing the application.

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Advertisement in Newspapers

1. The co. not more than 30 days before the date of filing the above application, shall
advertise in the vernacular newspaper in the principal vernacular language in the
district and in English language in an English newspaper with wide circulation in the
state in which the registered office of the co. is situated.

Dispose of the application by CG

1. The CG ( power delegated to Regional Director) shall dispose of the application of

change of place of the registered office within a period of 60 days.
2. Before passing the order, CG may satisfy itself that-
a. the alteration has the consent of the creditors, debenture-holders and other
person concerned with the co., or
b. the sufficient provisions has been made by the co. either for the due
discharge of all its debts and obligations, or
c. adequate security has been provided for such discharge.

Filing of the certified copy of the order with the registrar

Where alteration of place of registered office is from one state to another, a certified copy
of the order of the CG approving the same shall be filed the RoC of each state within 30
days from the date of receipt of certified copy of the order, who shall register the same.

Issue of fresh certificate of incorporation

The registrar of the state where the registered office is being shifted to, shall issue a
fresh certificate of incorporation indicating the alteration.

Change in the object of the company

Who can make the change in object clause & how?

1. Where a co. has raised any money from the public through a prospectus and has any
un-utilised amount out of the money so raised, it can change the objects for which
the money was raised by passing a special resolution through postal ballot and the
notice of the resolution for altering the objects shall contain the following
particulars, namely:
a. total money received,
b. total amount utilised for the object stated in the prospectus,
c. un-utilised amount out of the money so raised through prospectus,

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 d. particulars of the proposed alteration or change in the objects,
e. justification for the alteration or change in objects,
f. amount proposed to be utilised in the new object,
g. estimated financial impact of the proposed alteration on the earning and cash
flow of the co.,
h. other relevant info which is necessary for the members to take an informed
decision on the proposed resolution,
i. place from where any interested person may obtain a copy of the notice of the
resolution to be passed.

Advertisement

The ad giving details of each resolution to be passed for the change in objects,
simultaneously to the dispatch of postal ballot notice to shareholders, shall be:

a. published in newspaper (English & vernacular), and

b. hosted on the website of the co., if any.

Dissenting shareholders to the change of object

The dissenting shareholders shall be given an opportunity to exit by the promoters and
shareholders having control in accordance with the regulations to be specified by the SEBI.

Registrar to certify the registration on alteration of the objects

The Registrar shall register any alteration of the memorandum with respect to the objects
of the co. and certify the registration with 30 days from the date of filing of the special
resolution.

SECTION 14: ALTERATION OF ARTICLES

1. A co. may alter its articles by a special resolution, subject to the provisions of the
Act and those contained in the memorandum.
2. Alteration of articles include alterations having effect of conversion of a private co.
into a public co. or vice-versa.
3. Any alteration having the effect of conversion of public co; into a private co. shall not
be valid unless it is approved by an order of the CG on an application made within 60
days from the passing of SR.

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 4. In case of a private co., where post alteration the articles no longer include the
restrictions and limitations which are required to be included in the articles of a
private company under this Act, then such co. shall cease to be a private co., from
the date of such alteration.
5. Every alteration of articles and a copy of the order of the CG approving the
alteration shall be filed with the Registrar, together with a printed copy of altered
articles within a period of 15 days in the Form No. INC-27 along with the fee and the
Registrar shall register the same.

SECTION 15: ALTERATION OF MEMORANDUM OR ARTICLES TO BE

NOTED IN EVERY COPY

1. Every alteration made in memorandum and articles of a co. shall be noted in every
copy, because MoA and AoA are public documents.
2. If a co. makes any default in complying with the stated provisions, the co. and every
officer who is in default shall be liable to a penalty of ₹1000 for every copy of the
articles issued without alteration.

SECTION 16: RECTIFICATION OF NAME OF COMPANY

Where the CG (power delegated to Regional Director) is of the opinion that the name of the
co. is too identical with or too nearly resembles to the name by which a co. in existence:

a. on its own, or
b. on an application by a proprietor of already registered trade mark under the Trade
Marks Act, 1999

Then it may direct the co. to change its name.

The co. shall change its name or new name as the case may be, within 3 months from the
issue of such direction, after adopting an ordinary resolution for the purpose.

After changing the name, the co. shall give notice about the same to the Registrar and the
CG within 15 days from such change.

Registrar shall carry out necessary changes and issue a fresh certificate of incorporation.

If a co. makes any default in complying with any directions of rectification:

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 a. co. shall be punished with fine of ₹1000 for every day during which the default
continues, and
b. every officer in default shall be punishable with fine which shall not be less than
₹5000 but which may extend upto ₹1,00,000.

SECTION 17: COPY OF MOA, AOA, ETC. TO MEMBERS

A co. shall on payment of the prescribed fee send a copy of each of the following documents
to a member within 7 days of the request being made by him:

a. memorandum
b. articles
c. every agreement and every resolution referred u/s 117(1)

Any failure will make the co. as well as every officer in default liable to a fine of ₹1000 for
each day during which default continues or ₹1lakh, whichever is less.

SECTION 18: CONVERSION OF COMPANIES ALREADY REGISTERED

1. A co. of any class registered under this Act can convert itself as a co. of another
class by altering its MoA & AoA in accordance with the provisions of this Act.
2. Wherever a conversion is done, the Registrar on the basis of an application filled with
it by the co., shall after satisfying himself that the provisions applicable for
registration of companies have been complied with,
a. close the former registration of the co., and
b. issue a certificate of incorporation in the same manner as the first registration.
3. The registration of a co. under section shall not affect any debts, liabilities,
obligations or contracts incurred or entered into, by or on behalf of the co. before
conversion and they may be enforced in a manner as if no registration is done.

SECTION 19: SUBSIDIARY COMPANY NOT TO HOLD SHARES IN ITS

HOLDING COMPANY

1. A subsidiary co. is not allowed to hold shares of its holding company.

2. This provision also extends to the nominee of the subsidiary company.

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 3. Thus, any allotment or transfer of shares in a holding co. to its subsidiary co. shall be
void.
4. Certain exceptions of this section are as follows:
a. where the subsidiary is holding shares as a legal representative of a deceased
member of the holding co., or
b. where the subsidiary holds such shares as a trustee, or
c. where the subsidiary co. is a shareholder even before it became a subsidiary co.
of the holding co.

SECTION 20: SERVICE OF DOCUMENTS

1. A document may be served on a co. or an officer thereof by sending it to the co. or

the officer at the registered office of the co. by-
a. registered post, or
b. speed post, or
c. courier service, or
d. leaving it at its registered office, or
e. means of such electronic or other mode as may be prescribed.
2. A document shall be served on the Registrar or any member by sending it to him by-
a. post, or
b. registered post, or
c. speed post, or
d. courier service, or
e. delivering at his office or address, or.
f. means of such electronic or other mode as may be prescribed.

NOTE: However, a member may request for delivery of any document through a particular
mode, for which he shall pay such fees as may be determined by the co. in its AGM.

3. In case of delivery by post, such service shall be deemed to have been effected:
a. in case of a notice of a meeting, at the expiry of 48 hrs after the letter
containing the same is posted, and
b. in any other case, at the time at which the letter would be delivered in the
ordinary course of post.

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SECTION 21: AUTHENTICATION OF DOCUMENTS, PROCEEDINGS AND
CONTRACTS
Any document requiring authentication or any contract on behalf of a co. may be signed by:

a. any Key Managerial Personnel (KMP), or

b. an officer or employee of the co. duly authorised by the Board in this behalf.

SECTION 22: EXECUTION OF BILLS OF EXCHANGE

1. A bill of exchange, hundi or promissory note shall be deemed to have been made,
accepted, drawn or endorsed on behalf of a co. if made, accepted, drawn or endorsed
in the name of, or on behalf of or on account of, the co. by any person acting under
its authority which can either be express or implied.
2. Formal deeds can be executed only through a power of attorney.
3. Therefore, sub-section 2 & 3 together provides:
a. a co. may, by writing under
▪ its common seal, if any
▪ in case of no common seal, then authorised by 2 directors or by a director
and the CS,
b. authorise any person,
c. either generally or in respect of any specified matters,
d. as its attorney to execute other deeds on its behalf,
e. in any place either in or outside India.
f. deed signed by such an attorney on behalf of the co. and under his seal shall bind
the co.

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THANK YOU FOR PATIENCE READING

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