CS eet) Chapter 2 parece eat acu! Matters incidental thereto. Summary of Forms: font ie INC-03 Consent of nominee while formation of OPC INC-04 OPC to inform ROC within 30 days of replacement of nominee or withdrawal INC-08 Declaration of compliance of Act or Rules during incorporation of co. INC-09 Declaration by subscribers to MoA and First Directors INC-I1 CoZ issued on registration of company INC-13 ‘MoA of Section 8 company INC-14 Declaration by CA/CS/Cost account w.rt compliance at incorporation INC-15, Declaration by person making application for incorporation of sec 8 co. INC-18 ‘Application to RD for conversion of Section 8 Co. to any other kind INC-19. Notice to be published within a week of application in INC-18 INC-20A Declaration by director that every subscriber has paid the due amount ING-22 Notice of change in situation of RO to be verified INC-23 Application for change of RO from one state to another INC-24 ‘Application for change in name to ROC u/s 13 INC-25 Fresh COL issued after change in name on application in INC-25 INC-26 Form for advertisement regarding application to CG for change of RO INC-27 Altered AoA to be filed with RoC for registration INC-28 CG's approval for change of RO (state) to be filed with ROC of each state ING-31 ‘AoA for Section 8 company. INC-32 SPICe+ Form to incorporate a company INC-33 E-MoA to be furnished to RoC at the time of incorporation ING-34 E-AoA fo be furnished to RoC at the time of incorporation 3 3 7 7 7 8 8 8 8 8 peed er > A person who initiates promotion of a company is called as Promoter [as defined u/s 2(69)] > Inthis chapter we are going to read about - Incorporation of company, constitutional documents (MoA and AoA) and various other key provisions. > Types of company on the basis of Liability: Limited by Limited by Limited by Unlimited Unlimited Shares Guarantee with Guarantee without company with company without Share Capital Share Capital Share Capital Share Capital Note - Specified IFSC company shall be formed only as company limited by shares,> A promoter is one who undertakes to form a company w.r.t. a given project, and to set it going, cand 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 (create and mould) a company and set it going, in a fiduciary position, ‘A company may be formed for any lawful purpose by: (@) >= 7 persons in case of a public company; |}(©) > = 2 persons in case of a private company; or (c) 1 person, where the company to be formed is to be OPC that is to say, a private company, by subscribing to a memorandum and complying with the requirements of this Act. ‘In case of OPC, MoA to specify nominee: 1. Nominate a person: In case of OPC, the MoA shall indicate: the name of the other person, with his prior written consent in the prescribed form, who shall, in the event of the subscriber's death or his incapacity to contract become the member of the company v vyv The written consent so obtained shall also be filed with the Registrar at the time of incorporation of the OPC along with its MoA and AoA 2. Withdrawal: > Nominee may withdraw consent by giving a notice in writing to the sole member and to OPC. > Sole member shall nominate another person within 15 days of such withdrawal. > Send intimation of such nomination + written consent (Form INC 3) & > OPC to inform RoC in Form INC-4 within 30 days of withdrawal of nomination. 3. Replacement of Nominee - Member of OPC may, at any time, change the name of Nominee by: || > Member to obtain written consent of new nominee (INC-3) > Intimate the company about such change. >» OPC to inform RoC in Form INC-4 within 30 days of intimate of change of nominee from member. » Change of such name shall NOT be deemed as Alteration of MoAtne necro) Peoria Tf at any time, the no. of members e Company carries on business for > 6 is reduced below prescribed limit months while no. of members is so ive., 7 (public) or 2 (private) reduced (_________| Every person who is a member during the time that it so carries on business after those 6m and is cognizant of the fact that business is carried on by reduced member, such members shall be severally liable for payment of whole debts contracted during that time, and may be severally sued therefor. Me eee eo) Basics of MoA: > Base document for the formation of the company (MoA + AoA = Constitutional Document) > Content of MoA need to be in compliance with Companies Act, 2013 > MoA contains object for formation of co. beyond which its actions cannot go. > A memorandum is a public document u/s 399 of the Companies Act, 2013. Consequently, every person entering into a contract with the company is presumed to have knowledge of conditions contained therein, > Shareholders must know the purposes for which his money can be used by the company and what risks he is taking in making the investment. > Co, cannot depart from provisions contained in MoA - Otherwise, ultra vires Act. Legal provision: 1. The MoA of a company shall state: [NR SOLO] the Name of co. with last word "Limited" (public) or "Private Limited" (Pvt co.); (Not applicable to Sec 8 Co.) Objects for which the company is proposed to be incorporated and any matter incidental thereto the state in which the Registered of fice of the company is to be situated In case of company having SC: incase of OPC > Name the Liability of ‘a. Amount of registered SC (divided of person who, in event Dente into amt and no. of shares) of death of subscriber, whether limited or the no. of shares each subscriber shall become the member anlinited™ intends to take opposite to his name. ‘of OPC (nominee). ** Liability clause: State that liability is limited to unpaid amt of shares (in case of co. limited by shares) or amt upto which member undertake to contribute in event of winding up (in case of ltd. by Guarantee). List A and List B is to be prepared (to be discussed in accounts). 2. Name Clause: The name stated in the memorandum shall: (a) NOT be identical with or resemble too nearly to name of an existing co. under this/previous Act;Cel eel ect lel CaP eo) (b) NOT be such that its use by the company: (i) will constitute an offence under any law for the time being in force: or (ji) is undesirable in the opinion of the CG (power delegated to RoC). Aname is said to "resemble" when difference is only of: Plural or Spacing between letter or Use of different Slight variation of spelling Singular punctuation marks tenses (Disc Ltd vs Disk Ltd.) Different phonetic spellings Complete translation in Hindi or English (National (Jay Kay Ltd. and JK Ltd) Service Ltd vs. Rashtriya Seva Ltd) Use of www, or *.net" etc. (SS Order of words is similar (Ravi Builders and Teacher Ltd vs $S.com Ltd) Ltd. vs Ravi Teacher and Builder Ltd) Addition or deletion of numerals (unless numerals Addi \ddition of name of place represent brand) 3. Without prejudice to provision u/ss (2), a.co. shall not be registered with a name which contains: a. any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the CG, any SG, or any local author corporation or body constituted by the CG/SG under any law for the time being in force: or b. such word or expression, as may be prescribed, unless the previous approval of CG has been obtained for the use of any such word or expression. Bacau (Gins Following words and combinations thereof shall not be used in the name of a company in English or any of the languages depicting the same meaning unless the previous approval of the CG has been obtained: > Board; [> National; [> Authori > Forest > Development > Union; |> Republic: > Municipal; corporation; Authority: > Nation |> President |> Panchayat; |> Development |> Small Scole > Central; [> Mi rer; > Commission; ‘Scheme; Industries; > Federal: |> Governor; |> Undertaking: |> Courtor | Financial > Bureau |> Rashtrapati: Judiciary: Corporation and > PMor CM; > Statute or the like; Statutory; |» Khadi and Village Industries Corporation: > The use of word of Scheme with the name of Government (s), State, India, Bharat or any Government authority or in any manner resembling with the schemes launched by CG/SG or local Governments/authOP rutoeere) Approval of Regulator: Tf the proposed name include words such as ‘Insurance’, ‘Bank’, ‘Stock Exchange’, ‘Venture Capital’, ‘Asset Management’, ‘Nidhi’, ‘Mutual fund’ etc., unless a declaration is submitted by the applicant that the requirements mandated by the respective regulator, such as IRDA, RBZ, SEBI, MCA etc. have been complied with by the applicant; Bonus Point: a. Incase of Govt co., the suffix - "Pvt Ltd” or “Ltd” is not required provided 92 + 137 b. Incase of OPC, add the suffix ~ (OPC) Private Limited A person may make an application (SPICe+/RUN form) to Registrar for reservation of a name asi (@) the name of the proposed company: or (b) the name to which the company proposes to change its name. Resubmission may be allowed within 15 days, in case of any defect. Reservation of Name: a. Upon receipt of appin u/ss (4), the Registrar may, on the basis of info. and docs furnished with application, reserve the name: For 20 days [From approval or such other prescribed period in case of New Compan For 60 days [From approval in case of Existing Company. (2 BEEEZG Application for extension of time can be made before expiry of 20 days as follows: ‘Another 20 days (Total 40 days) Fees Rs, 1,000 Further 20 days (Total 60 days) Fees Rs, 2,000 40 days in one go (Total 60 days) Fees Rs. 3,000 b.. Where after reservation, it is found that name was applied by furnishing wrong or incorrect info, then: Tf co. is not yet Cancel reserved name + Applicant liable for penalty upto Rs. 1L incorporated Tf company is Registrar may, after giving the company an OOBH : incorporated a. direct co, to change name within 3m, after passing an Of b. take action for striking off name of co. from register: or ¢._make a petition for winding up of the company General Circular No, 29/2014 dated 11th of July, 2014: C6 directed Registrar that while allotting names to Cos./LLPs, the RoC concerned should exercise due care to ensure that the names are not in contravention of the provisions of the “Emblems and Names (Prevention of Improper Use) Act, 1950. It is necessary that Registrars are fully familiar with the provisions of the said Act. MoA shall be in respective forms specified in Tables A, B, C, D and E in Sch I as may be applicable.CCT nance of co lmited by guarantee and not having a share copital = Ary provision in MoA/AOA purporting to give any person a right to participate in div ible profits of co. otherwise than as ‘a member, shall be void. Doctrine of Ultra Vires > Whatever is not stated in MoA as objects of co. is prohibited by doctrine of ultra vires. > Anact which is ultra vires is void and does not bind the company. > Neither the company nor the contracting party can sue on i. S Theco. cannot make it valid, even if every member assents to it (ie., such act cannot be ratified) Important Case Laws: Rajendra Nath Dutta v. Sha ilendra Nath Mukherjee, 1982 str act which is intra vires the company but outside the authority of the directors may be ratified by the company in proper form. House of Lords in- Ashbury Railway Carriage and Tron Co.Ltd. v.Riche Facts of the case: > Mod defined its objects os - “The objects for which the company is established are to make and sel, or lend or hire, railway plants to carry on the business of mechanical engineers and general contractors..." ‘The company entered into a contract with MV's. Riche, @ firm of railway contractors to finance the construction of a railway line in Belgium. > On subsequent repudiation of this contract by the compaly on the ground of its being ultra vines, Riche brought a case for damages on the ground of breach of contract, as according to hin the words "general contractors! in the objects clause gave power to ‘the company to enter into such a finance contract and, therefore, it was within the powers of the company. > More go because the contract was ratified by a majority of shareholders, it is a valid contract. v Decision by The House of Lords: > Held that the contract was ultra vires the company and, therefore, null and void. > The term “general contractor" was interpreted to indicate as the making generally of such contracts os are connected with the business of mechanical engineers. > ‘The Court held that if every shareholder of the company hed been it the room and had said, That tg.a contract which we desire to make, which we authorise the directors to make", still it would be ultra vires. > ‘The shareholders cannot ratify such a contract, as the contract was ultra vires the objects clause, which by Act of Parliament, they were prohibited from doing Author's Note - The purpose of doctrine of ultra vires has been defeated as now the object clause can be easily altered, by passing just a special resolution by the shareholders.CA Shubham Singhal (AIR 4) Vn mambo Oe) [Nothing in this sec shall apply to articles of a company registered under previous act] 1. AoA shall contain the regulations for management of the company (internal rules and regulations) 2. AoA to include such matters, as may be prescribed, Provided that co. may include additional matters in AoA as considered necessary for management. Entrenchment Provision: 3. AoA may contain provisions for entrenchment Effect of such provision - AoA may be altered only if conditions or procedures as that are more restrictive than those applicable in case of special resolution, are met or complied with. 4, Provisions for entrenchment shall only be made: > either on formation of a company, or > by an amendment in AoA agreed to by: i) all members (in case of private company) or ii) by a special resolution (in case of public company) 5, Where AoA contain prov. for entrenchment > Co, shall give notice to Registrar of such provision in SPLCe* (new companies) or MGT-14 (within 30 days of entrenchment provision) @ 6. AoA shall be in respective forms specified in Tables, F, G, H, I and J in Schedule I as applicable ‘to such co. 7. Aco. may adopt all or any of the regulations contained in model articles applicable to such co, 8. Where registered AoA do not exclude or modify regulation contained in model AoA applicable to such co., the regulations (in model AoA) shall be deemed to be regulation of such co. as if they were contained in duly registered AoA of the co Doctrine of Indoor Management: > Persons dealing with the co. cannot be assumed to have knowledge of internal problems of co. > Stakeholders need not enquire whether the necessary meeting was convened and held properly or whether necessary resolution was passed properly. They are entitled to take it for granted that it is all done, > The doctrine helps protect external members from the company and states that the people are entitled to presume that internal proceedings are as per documents submitted with the RoC.Cree meine) Doctrine of Indoor Management (DIM) vs Doctrine of Constructive Netice (DCN) ‘The DIM evolved around 150 years ago in the context of the DCN. The role of DIM is opposed to the role of DCN. Whereas the DCN protects a compary against outsiders, the DIM protects gutsiders against the actions of a company. This doctrine also is a possible safeguard against the possibility of abusing the DCN. Basis for Doctrine of Indoor Management > What happens internal to a company is not a matter of public knowledge. An outsider can only presume the intentions of a company, but not Know the information he/she is not privy To, y Ef not for the doctrine, the company could escape creditors by denying the authority of officials +o act on its behalf. Exceptions to DIM (ie,, Applicability of DCN): a. knowledge of irregularity: In case this ‘outsider’ has actual knowledge of irregularity within the compary, the benefit under DIM would no longer be available. In Fact, he/she may well be considered part of the irregularity. b. Negligence: If witha minimum of effort, the irregularities within a company could be discovered, the benefit of the DIM would not apply. The protection of the rule is also not available where the circumstances surrounding the contract are so suspicious as to invite inquiry, and the outsider dealing with the company does not make proper inquiry. ¢, Forgery: The rule does not apply where a person relies upon a document that Tunns out to be forged since nothing can validate forgery. A company can never be held bound for forgeries committed by its officers. d. Where the question is in regard to the very existence of an agency. Where the act is ultra vires to the company itself. Paine Save as otherwise expressly pro his Ac a. the provisions of this Act shall hve ef fect notwithstanding anything to the contrary contained in: MoA/AoA any agreement executed by co. BoD resolution or SH resolution b. any provision contained in the memorandum, articles, agreement or resolution shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.CA Shubham Singhal (AIR 4) eames 1. File the following documents and information with the Registrar within whose jurisdiction the Registered Office (RO) of a company is proposed to be situated: Declaration (Form INC-8), that requirement of act w-r.t., incorporation is complied with, by: 1. Advocate, CA, Cost Accountant, CS in practice engaged in formation of co., AND. 2. Person named in AoA (director, manager or secretary of co. ) MoA (eMOA in INC-33) & AoA (eAOA in INC-34) - duly signed by Subscribers* Address for correspondence till RO is estb. Related to first directors @ - Interest in other firms/ BC + Consent to act as directors (DIR -2) filed with ROC in DIR-12 Declaration from each Subscribers and First Directors (in Form INC 9) that: @ (@) he is not convicted of offence w.r.t., promotion, formation or mgt. of any co., or (b) that he has not been found guilty of any fraud/misfeasance or breach of duty to any co. during preceding 5 years AND (6) all docs filed with RoC for registration contain correct, complete and true information to best of his knowledge and belief Particulars (name, residential Particulars of first directors - address, nationality and Names, DIN, residential address, others) of every subscriber + nationality and other particulars + Proof of identity Proof of identity Such documents shall be filed along with application for incorporation in SPICE Form INC 32 @& we a ae Generally - er to add - Name, address, description, ‘occupation (himself and at least 1 witness) Tlliterate Subscriber Affix thumb impression Body corporate Subscriber | Director, officer/employee authorized (not himself a subscriber) LLP Subscriber Duly authorized partner (not himself a subscriber) Foreign national ‘Signature to be notarized by Notary Subscriber Foreign national visiting | Valid Business Visa required. However, Business visa N.A. India to incorporate aco. _| for Person of Indian Origin or Overseas Citizen of India Add on - Tn case of OPC, file the written consent of nominee in addition to above documents! 2. Issue of Certificate of incorporation ("COI") - RoC shall, on basis of above doc and info, register and issue a COT in Form INC -11. @ 3. Allotment of Corporate Identity Number (CIN) - RoC shall allot to the co. a CIN, which shall be a distinct identity for the company and which shall also be included in the COLited is L85110KA1981PLCO13115: Decoding CIN of Infosys L Status - Listed or Unlisted [1981 ___| Vear of Inc. 85110 _| Serial No. PLC. Public/Private etc, (NPL - Not for profit) KA___| State of inc. (013115 | Registration no. with ROC in & preserve at its RO copies of all docs & info. as originally filed u/ss (1) till dissolution, Tf person funnishes any false/incorrect particulars of info. or suppresses ary material info. of which he is aware in any of docs filed with RoC above > Such person shall be liable u/s 447 Tf after incorporation, it is proved that co. is incorporated by furnishing false/incorrect info. or representation or by suppressing any material info, for incorporating such co., or by any froudulent action: a. promoters, first directors & persons making declaration u/s 7(1)(b) shall each be liable u/s 447 b. Tribunal may, on an application made to it [MR. LOW}: i. pass orders for regulation of Management of the co. including changes, if any, in its MoA/ ‘AoA, in public interest or in the interest of company and its members and creditors; or direct that Liability of the members shall be unlimited: or i. direct Removal of the name of the company from the register of companies; or iv. pass an order for the Winding up of the company; or v. pass such Other orders as it may deem fit Prior to such orders ~ Reasonable OOBH to Co. + take into consideration transaction entered into by co. Simplified Proforma for Incorporating Company Electronically (SPLCe) - For ease of doing i business, MCA has now simplified the process of filing forms for incorporation of company ‘though SPICe. ‘Summary of Incorporation of a Company 1. Determine the nature of __, 2. Reservation of name by __, 3. Drafting and signing of company (private or public) filing an application MOA & AOA 6. Submission of statutory | 5.Consent of persons |_ 4. Submission of MOA and declaration of compliances nominated as directors AOA to ROC 7. Pay fees &amount of _, 8, Obtain certificate of __, 9. File declaration about stamp duty incorporation address of Registered office ‘Additional points related to incorporation: > If objects of co. require prior approval of sectorial regulators such as RBI/SEBZ, obtain such approval prior to pursuing the objects & declaration in this behalf to be submitted at incorporation.CA Shubham Singhal (AIR 4) > Incase of Nidhi co., declaration by CG u/s 406 is to be obtained prior to commencement of business + Declaration to the ROC Formation of One Person Company (OPC) > MoA of OPC to indicate name of other person (nominee) who becomes member of the OPC in case of death/ incapacity of subscriber. > When such nominee becomes a member, he shall appoint a new nominee within 15 days of becoming member. OPC to inform RoC in Form INC-4 within 30 days of becoming member. » Nominee to give his prior written consent in Form INC-3, @ > Such written consent to be filed with RoC along with MoA/AoA > Nominee may withdraw consent any time in prescribed form > Member of OPC may, at any time, change the name of Nominee by: a. Giving notice in prescribed form b. Intimating the company about such change €. Onreceipt of such intimation, company to inform Registrar. d. Change of such name shall NOT be deemed as Alteration of MoA > Only a natural person who is an Indian citizen whether resident in India or otherwise: shall be eligible to incorporate OPC; shall be a nominee for the sole member of OPC. “Resident in India" means a person who has stayed in India for >= 120 days during immediately preceding FY. . > Annatural person shall not be member of > 1 OPC at any point of time and the said person shall not be a nominee of >1 OPC. > Where a natural person being member in OPC becomes member in another such company by virtue of his being a nominee in that OPC, such person shall meet eligibility criteria (as given in point above) within 180 days. > No minor shall become member or nominee of the OPC or can hold share with beneficial interest. > Such Company cannot be incorporated or converted into a section 8 company. OPC may be converted to private/public companies in certain cases. The procedure of conversion is given in the Rules 6 & 7 of Chapter II of the Companies Act, 2013, > OPC cannot carry out Non-Banking securities of any BC. inancial Investment activities including investment in~ bs (Ae Pama oer ais : Mavnere CG (power delegated to RoC) is satisfied that a person/AOP proposed To be registered as Limited co.: a. Has its objects to promote ~ Commerce Art Science Sports Education Research Social Welfare Religion Charity Protection of envirnoment Other Object b. intends to apply its profits, if any, or other income in promoting its objects: and ¢. intends to prohibit the payment of any dividend to its members, C6 may issue a license and thereupon the RoC shall register such company as Limited Company. [Without addition of the word °Limited” or "Pvt. Ltd” as the case may bel 2. Sec 8 co = Privileges and obligation of Limited company, 3, Cana Firm become member of Section 8 company - Yes! |4. Additional points relating to Section 8 co. 4, Not alter provision of MoA or AoA w/o prior approval of CG (RoC) tb. May be converted to any other kind of company ~ Subject te passing SR at GM approving such conversion and approval of CG (RD) 5. CG (ROC) may suo motu also issue license u/s 8 to an existing public or private co. \6. Revocation of License and conversion to normal company: Where the company? a. contravenes any requirements of this section or contravenes any conditions subject to which a license is issued or ¢. the affairs of co. are conducted fraudulently or in manner violative of objects of co. to public interest, C6 (RD) may, by order (after reasonable OOBH): > revoke license > direct the company to Convert its status and > change its name to add the word! Limited" or the words "Private Limited”, as the case may be to its name and thereupon the Registrar shall register the company accordingly: 7. Where license is revoked, CG may, in public interest, order (reasonable OOBH).: > winding up under this Act, or amalgamate such co. with other company registered under this section and having similar objects, constitution, powers, rights, etc. to be defined by C6e.Woelret ctrl C04 ee) 8. Tf on winding up/dissolution, there remains, after satisfaction of its liabilities, any asset, it may be: a. transfer to another sec 8 co. having similar objects subject to T&C imposed by Tribunal, or b. sold & proceeds thereof credited to Insolvency and Bankruptcy Fund formed u/s 224 of IBC 9. Section 8 co. shall amalgamate only with another Sec 8 co. having similar objectives 10. Punishment for default in complying with this section: Tf a co. makes any default in complying with requirements of this section, the co. shall be Punishable with fine which shall not be less than Rs. 10 lakhs but which may extend to Rs. 1 crores AND the directors and every officer of the company who is in default shall be punishable with fine which shall not be less than Rs. 25,000 but which may extend to Rs. 25 lakhs [Amercimen*] Provided that when it is proved that affairs of co. were conducted fraudulently, every OID liable u/s 447. || [Minimum fine Rs. 10 lakhs Rs. 25,000 ‘Maximum fine Rs. 1 crore, Rs. 25 lakhs Affairs of co. - fraudulent = Sec 447 ‘Steps to incorporate a section 8 company: 1. Application to ROC in SPICe + (INC 32) 2. Documents to be attached to such application: a, MoA (INC -13) and AoA (INC - 31) b. Estimated for income.and expense - Future 3 years ¢. Declaration by advocate, CA, CS, Cost Acc. in practice (in INC-14) and by each person making application (in INC-15) that: i. MoA/AoA is in conformity with provision of section 8 ii, All requirements of act w.r.t. registration of section 8 co. is complied with. aoa > Pass SR at GM. Explanatory statement of such notice to set out details of conversion, > The company should have filed FS and AR upte last FY. Additional FS - Where application is made after 3m from end of last FY, attach a FS made upto date not » 30 days of filing such application duly signed by CA, > Serve a notice of such conversion to the following for representation, if any: Income Tax Charity Cheif Secretary of State CG/SG department Auth, Commissioner where RO is situated having jurisdiction Above authorities may make representations to RD within 60 days after OOBH to company. > Apply to RD (INC-18) with fee + certified copy of resolution + proof of delivery of above notice. > Forward a copy of the above application to ROC. | > Within a week of such application to RD, publish a notice (Form INC-19) at its own expense in 2 newspaper (vernacular * english) and its website. j > _If RD is satisfied, approve conversion subject to terms and conditions imposed,a 9 CA Shubham Singhal (AIR 4) > Before rejecting application or imposing conditions - RD to give OOBH to such co. > Onreceipt of such approval - Pass SR at GMM for alteration of AoA/MoA. > Copy of altered AoA/MoA to be filed with RoC. RoC to issue fresh CoD, Examples of exceptions to Sec 8 companies: Call for GM by giving clear 14 days’ notice (instead of 21) b. Requirement of min. no. of director, ID, does not apply. ¢. Need not constitute NRC or SRC Concept clar eck: 1 Cana Sec 8 co. be incorporated with unlimited liability? - No. See 8 co. only be a limited co. 2. Canan existing co. seek license u/s 8? - Yes. In such case, + will drop the suffix Ltd or pvt ltd. 3, Cana Firm become member in a normal public co.- No Partnership firm is not separate legal entity. (le faihe date of incorporation mentioned in COL, such subscribers to MoA and all other persons, as may, from time to time, become members of the compary, shall be: > abody corporate by the name contained in the memorandum, > capable of exercising all the functions of an incorporated company under this Act and > having perpetual succession with power to acquire, hold and dispose of property, both movable cat inmoveble, tangible and intangible, to contract and to sue and be sued, by the said name. Subject to the provisions of this Act, the MoA and AoA shall, when registered bind the company nd the members thereof to the same extent as respectively signed by them and contained covenants on its and his part to observe all the provisions of the MoA/AoA. 2. All monies payable by any member to the co. under MoA/AoA shall be a debt due from him to to. (re. co. can recover calls in arrears from members as if it a loan recovery) Note - Company is liable to members and vice-versa. But members are not liable to each other. tll Pe Cy eeu acu me ake Mrcompany having a share capital shall net commence any business or exercise ony borrowing, powers unless: declaration by a director, within 180 days of incorp. is filed with The co. hes filed with RoC that . As on date of declaration, every subscriber has paid RoC a verification of RO the value of shares agreed to be taken provided u/s 12(2) 2. Tf any default under this section > Co. ~ Rs. 50,000 ‘and every OID - Rs. 1,000/day upto Rs. 1LCA Shubham Singhal (ATR 4) 3. Tf no declaration within 180 days + RoC has RGTB that co. is not carrying on any business or operations > RoC may initiate action for the removal of the name of the company from register of companies As per the Companies (Incorporation) Rules, 2014: > Declaration u/s 10A by a director shall be in Form INC-20A and contents of the said form shall i be verified by a CS/CA or a Cost Accountant, in practice. > Incase of a co. pursuing objects requiring registration/approval from any sectoral regulators such as RBI, SEBI, etc., the regt./approval from such regulator shall also be obtained and attached with the declaration, Pen me monooaenis Co. shall, within 30 days of incorporation and at all times, thereafter, have a RO, capable of receiving communications. 2. Co. to furnish to RoC verification of RO within 30 days of incorporation. 3, Every company shall: a. paint or affix its name, address of its RO on the outside of every office or place in which its business is carried on, in a conspicuous position, in legible letters in languages in general use in that locality. . have its name engraved in legible characters on its seal; if any ©. get its name, address of its RO and the CIN along with telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other of ficial publications; and d. have its name printed on hundies, promissory notes, bills of exchange and such other docs as prescribed, Provided that, in case name change during the last 2 years, print or affix former name as well. In case of OPC - The words “One Person Company" to be mentioned in bracket below such name. Change in RO: 4. Notice of change in situation of RO, verified in Form INC22, shall be sent to RoC within 30 doys @ of change. 5. Except by passing a SR, the RO shall NOT be changed: a. in the case of an existing company, outside the local limits of any city, town or village where such office is situated at commencement of this Act or where it may be situated later by virtue of SR passed by co.; b. in the case of any other company, outside the local limits of any city, town or village where. such office is first situated or where it may be situated later by virtue of a SR passed by ‘the company:CA Shubham Singhal (ATR 4) Provided that no company shall change RO from jurisdiction of one RoC to another RoC within the same State unless confirmed by Regional Director (RD) on appln made in this behalf by co. in prescribed manner. 6. On application u/ss 5, RD to communicate confirmation within 30 days from date of receipt of application. (On such confirmation, co. to file the same with RoC within 60 days of date of confirmation RoC shall register the same and certify the registration within 30 days from filing such confirmation. 7. The certificate referred u/ss (6) shall be conclusive evidence that all the requirements of this ‘Act wars, change of RO have been complied with and the change shall take effect from the date of the certificate. 8. If any default is made in complying with this section > Company and every OLD shall be liable to penalty of Rs. 1,000/day during which the default continues but not > Rs. 1 lakhs. 9. Tf RoC has RGTB that co. is not carrying on any business or operations, he may cause a physical Verification of the RO in prescribed manner and if any default is found to be made in complying with requirements of sub-section (1) > Initiate action for the removal of the name of the company from register of companies. Can RO be different from Head Office or Corporate office? - Yes! ‘Concept clarity check: ‘A Ltd, has current Registered office at Dadar, Mumbai, Maharashtra under Mumbai RoC. Tt is considering changing the location of RO. Help A Ltd. with the approvals required. Proposed RO RoC | Sec] Board | SR C6 (RD) approval Resolution Bandra, Mumbai | Mumbai] 12] Yes | No No (within local limits) (Notice to RoC ~ 30 days) Thane District_| Mumbai | 12 | Yes | Yes No (Notice to RoC - 30 days) Pune, MH Pune | 12 | Yes | Yes Yes (RD to approve in 30 days of application. Co. to submit RD's approval +o ROC in 60 days. Post that, RoC to register & certify in 30 days) ‘Ahmedabad, | Gujarat 13 | Yes | Yes Yes Gujarat (RD to approval within 60 days and then ROC to register within 30 days of application)Bay CA Shubham Singhal (AIR 4) = Se nnn ene ene Renee eae ~~ ea] ous Cee ucmmcuaictuy [Alteration = Addition, Omission or substitution] | | t 1. Co. may alter provisions of MoA by a SR + by complying with procedure of this section Filing with RoC: A company shall, in relation to any alteration of its memorandum, file with the Registrar: (@) the SR passed by the company u/ss (1); (b) the approval of C6 u/ss (2), if alteration involves any change in the name of the company. Change in Name ~ Effective only with approval of CG in writing (power delegated to RoC) in Form INC-24 + Fee. Note - No approval if the only change is addition/deletion of word "Private" on conversion, On change of name - RoC shall enter the new name in register of cos, and issue new COT. Name change effective from issue of Col in Form INC -25. @ Alteration of registered office from one state to another - Effective only on approval of CG (delegated to RD) on application in Form INC-23: @ > Certified copy of the order of CG approving such change - File with RoC of each of the States. > Such RoCs shall register the same, and > Registrar of the State where the RO is being shifted to, shall issue a fresh CoT ‘Such application to CG (RD) shall be accompanied with: > Copy of MoA with proposed alteration Copy of minutes of GM at which resolution authorizing such alteration was passed Copy of board resolution List of creditor and debenture holder Acknowledgement of service of copy of application to - RoC, Chief secretary of RO state. vvvv Advertisement - Within 30 days before such application, advertise in Form INC-26 in 2 @ newspapers. On application to C6 u/s 13(4) for approval of change in state where RO is situated: 4. C6 to dispose application within 60 days. b. Before passing order, may satisfy itself that: i. Alteration has the consent of creditors, DH and other persons concerned with company, or ji, sufficient provision has been made by co. for due discharge of all its debts & obligations or iii, adequate security has been provided for such discharge. Note - Where RO is shifted from one state to another, file CG's approval with ROC of each state in Form INC -28 within 30 days of receipt of order of CG. &eer and: > publ 6. Change in object for which money raise Co,, which has raised money from public tH 7. Alteration of Object clause of Mo. ‘The RoC shall register any alteration of MoA w.r.t, the objects of the company and certify the registration within 30 days from the date of filing of the SR w/ss (6)(a) of this section. 8. No clteration made under this section. 9. Any alteration of the MoA of purporting to give any persona than as a member, shall be void. ‘Summary of provision related to Al mendment of MoA: d from Public: hrough prospectus + still has any unutilised amount, shall not change its objects for which it raised such money unless a special resolution is passed a, prescribed details (discussed in sec 27) f such resolution shall be: lished in newspapers (English + vernacular which is in circulation at place where RO is situated) and > placed on website of the company, if any, indicating the justification for such change: b. the dissenting shareholders shall be given an opportunity to exit by the promoters and shareholders having control in accordance wi regulations to be specified by the SEBT. his section shall have any effect until it has been registered as per ‘a.company limited by guarantee and not having a share capital, right to participate in divisible profits of the company otherwise MOA ET Ec Chen tector Gas Name. ‘SR | Approval of CG | Change ef fective from date of issue of Fresh Col (ROC) + Sec 4.& | by ROC 16 NA. where only word *Pvt" is added/deleted on conversion Domicile SR | Approval of CG | CG shall dispose appln within 60 days and before (State) (RD) approving, may satisfy itself that consent of (only when RO is |crs, DH, etc. or that sufficient provision is made changed from one| for due discharge or that adequate security is state to another) | provided for discharge of debts. ‘Objects SR - Co., which has raised money from public through prospectus + still has any unutilised amount, shall not change its objects for which it raised such money unless a SR is passed and:Orato enor) i. the details of SR - published in newspapers + Placed on website of co. indicating justification for such change; ii, the dissenting SH shall begiven an opportunity to exit by the promoters and SH having control as per SEBI regulatn Es Wiemeaees Company may, by SR, alter its AoA. Alteration of AoA includes conversion of @. Pvt co. to public co, b. Public co. to Private co, (subject to approval of CG as given below) An alteration having effect of converting public co. to private shall not have effect unless approved by CG on appin, within 30 days from passing SR to RD in Form RD-1 with following @ docs: Draft MoA and Copy of minutes of Copy of Declaration by ‘AoA with proposed GM in which such SR Board KMP regarding alteration was passed resolution compliances. Provided that - Where a private co. alters its article such that it does not include restriction/ limitation which a Pvt. co. is required to include in AoA as per Act, such Pvt. co. shall cease to be private from date of alteration. 2. Following shall be filed in Form INC 27 with RoC, within 15 days of alteration of AoA, for @ registration: > Every Alteration of AoA > Approval of CG for such alteration > Printed copy of the altered articles, ||. Any alteration of AoA registered u/ss (2) shall be valid as if it were originally in the articles. Andrews vs Gas Meter Co, - The power to alter articles vests with the Company by virtue of Companies Act, 2013. A company cannot divest itself of these power. Peace nour nae wmcioe I (1) Every alteration in MoA/AoA shall be noted in every copy of the MoA/AoA, as the case may be. } (2) Default > Co, + OID - Liable to penalty of Rs. 1,000 for every copy issued without alteration,Cer rrecw) Tf, through inadvertence or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which: 4. in opinion of CG, is identical with or too nearly resembles the name by which a company in existence had been previously registered, it may: > direct the co. to change its name and > the co, shall change its name within 3m from such direction, after adopting an OR: on an application: > bya registered proprietor of a trade mark > made to CG within 3 years of incorporation or registration or change of name of the co. > that the name is identical with or too nearly resembles to a registered trade mark of such proprietor under the Trade Marks Act, 1999, > inthe opinion of CG, is identical with or too nearly resembles to an existing trade mark, > C6 may: i) direct the co. to change its name and ii) the co, shall change its name within 3m from such direction, after adopting an OR: b. 2, Where a'co, changes its name or obtains a new name u/ss (1), it shall, within 18 days from date of such change, give notice of the change to Registrar along with the order of C6, who shall carry out necessary changes in the Col and memorandum. 3. Taco. is in default in complying with any direction given u/ss (1), the CG shall allot a new name to the co. in prescribed manner and Registrar shall enter the new name in register of companies in place of the old name and issue a fresh Col with the new name, which the company shall use thereafter [Amendment] Provided that nothing here shall prevent a company from subsequently changing its name as per Sec 13 Ee Ae anno Aula 1. Co. shall, on being so requested by a member, send to him within 7 days of the request and subject to the payment of such fees os may be prescribed, a copy of each of the following documents, namely: Memorandum A les agreement and resolutions u/s 117(1) not so included in MoA/AoA 2. If default u/s 17 > Co. + Every OID - Liable for each default - Rs. 1,000/day or Rs. 1 lakh WEL Eee menue uc pecan RoC to issue fresh _, No affect on debts/ CoL liabilities Alter MoA/AoA —> Application to RoC —> 1. Aco. of any class registered under this Act may convert itself as a company of other class under this Act by alteration of MoA and AoA of the co. as per the provisions of this Chapter.2. CA Shubham Singhal (ATR 4) Application to RoC for fresh Col: > Where conversion is required to be done under this section, > the RoC shall, on an application made by co, after satisfying himself that provisions of this Chapter is complied with, > clase the former registration of the co. and > after registering docs referred u/ss (1), issue a Col in same manner as its first registration The registration of a co. under this section shall not affect any debts, liabilities, obligations or contracts incurred or entered into, by or on behalf of the company before conversion and such debts, liabilities, obligations and contracts may be enforced in the manner as if such registration had not been done. Eee Restrictio > No co, shall (itself/nominees) hold any shares in its holding co., and >» No holding co. shall allot/trf its shares to any of its subsy co, and > any such allot/trf of shares of a co. to its subsy. shall be void Provided that nothing in this sub-section shall apply to a case: a. where subsy co. holds such shares as legal representative of a deceased member of holding co: b. where the subsy co. holds such shares as a trustee; or ¢. where subsy company is a SH even before it became a subsidiary co, of the holding co, Provided further that subsy co. referred to in the above proviso shall have a right to vote at a meeting of holding co. only w.r-t., the shares held by it as a LR/trustee, as referred to in said proviso. ‘The reference in this section to shares of a holding co. which is a co. not having share cap (ltd. by guarantee or unlimited), shall be construed as reference to interest of its members, whatever be the form of interest. Note - A subsidiary can buy shares of holding where it is a part of scheme of amalgamation sanctioned by court/ Tribunal, Concept clarity check: As on April'22 - A Ltd holds 5% shares in B Ltd. ‘As on June'22 - Due to some transactions, A Ltd, becomes subsidiary of B Ltd. ‘As on July'22 - A Ltd calls for AGM. Question 1 ~ Can B Ltd. vote in such AGM as A Ltd. is a subsidiary of B Ltd? Answer ~ No! The exception of right to vote at a meeting is only in case shares as held as a LR/Trustee. It is not applicable in the third exception that is” where subsy co. is SH even before it became a subsy of holding company”"CA Shubham Singhal (AIR 4) Question2 = Can B Ltd. issue bonus shares to A Ltd (say, in the ratio 1:1) ‘Answer ~ Yes, as this transaction is under purview of exemption, such bonus shares con be issued. fal ie needs 1, A document may be served on a co. or an officer thereof by sending it at the RO of the co. by? registered speed courier —leavingit | —_ means of such electronic or other mode post post service at its RO ‘as may be prescribed However, where securities are held with a depository, the records of the beneficial ownership may be served by such depository on the company by means of electronic or other mode. 2. A document may be served on Registrar or any member by sending it to him by post resistered speed courier delivering at hig means of such e-mode or post post service office or address other prescribed mode Provided that member may request delivery through a particular mode by paying fees as determined in AGM. “Author's Note ~ Law only provides for an option to pay extra fees and decide an alternate mode for receiving notice. However, the notice will still be sent at the registered address of the ‘member only. Company is not responsible for sending the notice to any ther address (even if, extra fees is paid) Exception to Nidhi Co. Tn case of Nidhi Company, u/s 20 (2), docs may be served only on members who hold shares more than’ Rs. 1,000 in face value or 1% of the total PUSC \ wi ever is less. For other SHs, docs may be served by a public notice in newspaper circulated in the district here the RO of Nidhi is situated: and publication of the same an the netice board of fhe Nidhi Se cncironie transmission means a commurication that creates a record that is capable of retention, retrieval and review (RRR), and which may thereafter be rendered into clearly legible tangible form. Tt includes: : posting of electronic message other mode capable of fox email board or network verifying the sender > Incase of delivery by post, such service shall be deemed to have been effected: (i): in case of notice of a meeting, at expiration of 48 hours after letter containing the same is posted: andeet Gil) in any other case, at time at which the letter would be delivered in the ordinary course of post Ly Meee ee ee Save as otherwise provided in this Act, (@) a document or proceeding requiring authentication by a company: or (b) contracts made by or on behalf of a company, may be signed by any KMP or an officer or employee of the company duly authorised by the Board in this behalf. Cee cma ces mcs A BOE, hundi or promissory note shall be deemed to have been made, accepted, drawn or endorsed on behalf of co. if it is made or drawn by any person acting under its authority, ‘express or implied. 1 Company having seal: A company may, by writing under its common seal, if any, authorise any person as its attorney to execute other deeds on its behalf in any place (India/outside India) Company not having seal: Provided that in case if no common seal, the authorisation under this subsection shall be made by 2 directors or by director + CS, wherever the company has appointed a CS. A deed signed by such an attorney on behalf of the company and under his seal shall bind the co. ++ The EndRST Wet AU Coets) (F | Student's Notes piace