COMPANIES ACT, 1956

Meaning of Company

Sec.3 of Companies Act, 1956

defines company as-
A company formed and
registered under the Act or an
existing company formed and
registered under any of the
previous company laws.
Formation of Company
Company comes into existence
when a number of persons come
together with an intention to do
some business. These persons are
called promoters
Process of Formation of Company

Name of the company

Location of registered office of the
company
Drawing up of Memorandum of
Association
Drawing up of Articles of Association
Submitting documents to the
Registrar
Getting the company registered
Memorandum of Association
A Memorandum of Association is a
fundamental document of a company
which is also known as the Charter of the
company. It lays down objectives, scope
of activities, limitations, power of a
company beyond which a company cannot
go.
Characteristics Of Memorandum of
Association
• Essential to prepare MOA for registration.
• It should be originally framed. It cannot be adopted.
• It lays objectives of the company.
• It serves as a basis of contract between the company
and the outsiders.
• It is usually unalterable.
• It enable those who deal with the company to know
about the permitted range of activities.
Contents of MOA
THE NAME CLAUSE: Name which is confirmed
by the Registrar should be stated in this clause.
The name with “Limited” as the last word of the
name in case of public limited company and
with “Private Limited” as the last word of the
name in case of private limited company.
REGISTERED OFFICE CLAUSE: This clause
states the name of the state in which the
Registered office of the company is to be
situated.
THE OBJECT CLAUSE: Main objectives to be
pursued by the company on its incorporation and
Objects incidental or ancillary to the attainment of
main objects.
THE LIABILITY CLAUSE: the nature and extent of
liability of its members.
THE CAPITAL CLAUSE: The amount of share
capital with which the company is to be registered.
It shall also give the number and face value of the
shares.
THE ASSOCIATION OR SUBSCRIPTION CLAUSE:,
the subscribers express their desire and
agreement to form a company, agree to sign the
memorandum and take specified number of shares
Articles of Association
The Articles of Association is a document of
a company which contains the rules,
regulations or bye –laws for regulating the
internal affairs of a company.
It defines the mode and form in which the
business of the company is to be carried on.
They are framed with the object of carrying
out the aims and objects as set out in
Memorandum of Association.
 If it does
not
register its
articles
AOA is
the table A
subsidiar
of
Schedule I y to MOA
to the act
It is not
applies to Regulate
essential
it.
for a IMPOR the
public internal
company TANCE affairs of
to have its OF AOA a
own company.
articles. Define
powers
It is an
and
alterable It is a duties of
document public
directors
. document
which is
and
subject to officers
public
 Contents of Articles
The articles of a company usually contain
regulations relating to the following maters:
◦ Share Capital and rights attached to
different classes of shares.
◦ Calls on shares.
◦ Forfeiture of shares.
◦ Transfer and Transmission of shares.
◦ Redemption of Preference shares.
◦ Rights of members.
◦ General Meetings.
◦ Rights of members in General meetings.
◦ Constitution of Board of Directors.
Prospectus
According to Companies Act,
“prospectus" means any document
described or issued as a prospectus and
includes any notice, circular,
advertisement or other
document inviting deposits from the
public or inviting offers from the public
for the subscription or purchase of any
shares in, or debentures of, a body
corporate.
If No Public Issue, then a company shall
issue a “Statement in lieu of Prospectus”
 A private company does not issues
prospectus because is prohibited from
making any invitation to the public
Certificate of Commencement
of Business
 A certificate of commencement of
business is issued by registrar after filing
of a declaration by a director or secretary
stating that the company has collected
the minimum subscription stated in the
prospectus and that the directors have
taken the qualification shares
Registration of Company
The MOA and AOA, if any, have to be
submitted to the Registrar of Companies
of the state in which it is proposed to
locate the registered office of the
company.
Following documents should also be
submitted:
◦ Form1 declaration of compliance with the
requirements of Companies Act 1956
◦ Form 10- notice of situation/ change of
situation
◦ Form 32- Appointment of Directors
◦ Form 29- Consent to act as Director``