2.

INCORPORATION OF COMPANY AND

MATTERS INCIDENTAL THERETO

Section 1 - Short Title, Extent, Commencement and Application

 Companies Act, 2013.

 Act shall extend to the whole of India
 This section shall come into force at once and the remaining
provisions of this Act shall come into force on such date as the Central
Government may, by notification in the Official Gazette
 1. Companies
2. Insurance companies (except)
3. Banking companies (except)
4. Companies producing / supplying electricity (except)
5. Company regulated by special Act (except)
6. Entities as notified by CG
Section 2 – Definitions (Study important definitions from study material)

 Section 2(69) – Promoter

Means a person –
a. Who has been named as such in a prospectus or is identified
by the company in annual return u/s 92: or
b. Who has control over the affairs of the company, directly or
indirectly whether as shareholder, director or otherwise: or
c. In accordance with whose advise, directions or instructions the
BOD of the company is accustomed to act
Provided that nothing shall apply to a person who is acting
merely in a professional capacity
Note: Promoter is one who undertakes to form a company with reference to a
given project, and to set it going, and 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

Position of promoter
a. He stands in fiduciary capacity towards the company
Position similar to that of an agent or trustee
 Functions
a. Generating the idea of starting the business, making feasibility
study
b. Preparation of MOA, AOA, and other documents, arranging
subscribers to MOA
c. Filling documents, entering into negotiations or preliminary
contracts.
A subscriber to the MOA doesn’t become a promoter automatically
Section 3 - Formation of Company

 Section 3 (1) - lawful purpose, by subscribing their name to memorandum and

complying with requirement of this Act
a. Public 𝟕 or more
b. Private 2 or more
c. OPC 1 person

 Section 3 (2) – Company may incorporate as follows

a. Limited by shares, Or
b. Limited by guarantee, Or
c. Unlimited

 Legal Requirements
1. Lawful purpose
2. Subscription to MOA
3. Filing of documents with ROC
4. Compliance of requirements of this Act

ONE PERSON COMPANY (OPC) – Section 2 (62)

1. Who can form one person company?
 Only a natural person, other than minor
 Resident in India or otherwise
 Resident in India means a person who has stayed in India for a period of not
less than 120 days during the immediately preceding FY

2. Indicate Name & Consent Nominee

 Indicate the name of the natural person, other than minor; who is an Indian
citizen, whether resident in India or otherwise
 Prior written consent in the Form No. INC-3
 File Form No. INC-32 (SPICe) along with INC-3, Fee, MOA & AOA to ROC
 In the event of death od member, Nominee become member (perpetual
succession)
  Where a natural person, being member in OPC in accordance with this rule
becomes a member in another such Company by virtue of his being a
nominee in that OPC, such person shall meet the above specified criteria (can
be member of only one OPC) within a period of 180 days
3. Withdraw of Consent by Nominee
 May withdraw his consent by giving a notice to member
 Member shall nominate another person as nominee within 15 days from
notice
 shall send an intimation of nomination in writing to the Company, along with
INC-3 of new nominee
 Alter MOA
4. Replacing Nominee with another one
 May change for any reason including death or incapacity ∴ INC-3
 Member can do so by intimation in writing to the company
 Intimation shall be prior to making change or can be made afterward
5. When Nominee become Member
 When sole member ceases to be the member and nominee become new
member
 New member shall nominate within 15 days of becoming member
6. Notice of change to Registrar
 Shall file the notice with the Registrar of such withdrawal of consent, change
or cessation respectively and intimate the name of such another person
(new nominee) in Form No. INC-4 along with INC-3 within 30 days
 Additional reading – Read later

 Section 3A
o Generally, the members are jointly liable for the debt of company
o The number of members of a company is reduced below 7 in
public, and 2 in private company, & carries on business for more
than 6 months, Then
o Every such person who carries on business after those six months
is cognizant (aware) of the fact that business is carried reduced
members

Section 7 – Incorporation of Company

Steps for Incorporation
1. Determine the nature of the company (private or public)
2. Reservation of name by filing an application
File application in (SPICe+) Form (INC-32) along with Fee and Accompanied by
following Documents & Information
3. Drafting and signing of MOA & AOA
e-MOA in Form No. INC-33
e-AOA in Form No. INC-34

 Duly signed by all the subscribers to the memorandum in the manner

prescribed by rule 13 of the Companies (Incorporation) Rules, 2014 as stated
below,
a. Each subscriber in the presence of at least one witness together
Shall add his name, address, description & occupation
b. If illiterate, affix his thumb impression & Name
c. If body corporate, director, officer or employee duly authorized by BR
d. If LLP, Designated partner
e. Foreign national residing outside India, proof of identity shall be notarized
by a Notary (Public) & authenticated by a Diplomatic or Consular Officer
f. Foreign national residing outside India and visited in India, he/she is having
a valid Business Visa.
4. Submission of MOA and AOA to ROC
5. Consent of persons nominated as directors
a. Declaration of Compliance by Professional & Director, Manager or Secretary
of company in INC – 8
b. Declaration by subscribers to the memorandum and persons named as the
first directors
o He is not convicted of any offence in connection with the
promotion, formation or management of any company, or
o He has not been found guilty of any fraud or misfeasance or of any
breach of duty to any company under this Act or any previous
company law during the last five years
c. Address for correspondence until its registered office is established.
d. Particulars of persons named as the first directors his interest & consent in
DIR – 2 and DIR – 12 along with fees
6. Submission of Statutory declaration of compliances
7. File declaration about address of Registered office

RESERVATION OF NAME

 Application can be made for two alternative names by using reserve unique
name (RUN) to the Registrar in such form along with specified fees, for either
i. For reservation of name for a company to be incorporated
ii. By a company already in existence, for a new name.
Resubmission shall be allowed within 15 days, for rectification of any defect.
 Upon receipt of application, the Registrar may reserve the name for
a. A period of 60 days from the date of approval, in the case of
application by an existing company for change of name,
b. A period of 20 days from the date of approval, in other cases. (New
companies)
 Where name is reserved by furnishing wrong information
a. If the company has not been incorporated, then
i. The reserved name shall be cancelled
ii. The applicant shall be liable to a penalty of Rs. 1 Lakh.
b. If the company has been incorporated, then, the Registrar may, after
giving ROBH,
i. Direct the company to rectify its name, and the company
shall, within 3 months, rectify by passing Ordinary
Resolution, or
ii. Strike off the name of the company from the Register of
Companies, or
iii. Present a petition for winding up of the company
 Legal requirements with respect to name of a company
i. Name shall not resemble or be identical with the name of
an existing company.
ii. The use of the name should not be offensive or
undesirable in the opinion of CG
iii. Some words or expressions may be used only after prior
approval of CG.
iv. For Sec.8 companies, the name may include words
"Association"," Council"," Forum", "Foundation".
v. The name should not be same as another existing
company or LLP or trade mark.

 While allotting names, the Registrar of Companies 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
 An application for extension of reservation of name under rule 9A of the
Companies (Incorporation) Rules 2014 can be made before expiry of 20
days;
 For another 20 days (total of 40 days) with fee of 1000, which may be
further extend by another 20 day (total of 60 days) with fee of 2000. OR
 For another 40 days (total of 60 days) with fee of 3000
Section 4 – MEMORANDUM OF ASSOCIATION (MOA)

 Definition
"Memorandum" means the memorandum of association of a company as
originally framed or as altered from time to time in pursuance of any
previous company law or of this Act. [Section 2(56)]
 Objective/Importance
 Constitution of the company also known as the charter of the
company
 Key document containing vital details about the company
 Public document and deals with external affairs of the company
 Powers are defined here. No company can be registered without it.
 Identifies the possible scope of its operations beyond which its actions
cannot go
 shareholders, creditors and all those who deal with company to know
what its powers are and what activities it can engage in
 Contents/Clauses of MOA
A. Name clause
 Contains the name of the company, Put company shall have "Private
Limited", Public Company shall have "Limited" as the last words of the
name of the company. (not for section 8 company)
 For Section 8 company, the name shall include the words foundation,
Forum, Association, Federation, Chambers, Confederation, council,
Electoral trust and the like etc. [The Companies (Incorporation) Rules,
2014]
 As per MCA notification dated 5th June, 2015, a Government
company’s name must end with the word “Limited”. In the case of
One Person Company, the words “One Person Company”, should be
included below its name
B. Situation/Domicile Clause/Registered office clause
 The name of the State in which the registered office is proposed to be
Situated under Section 12
C. Object clause
 Objects for which the company is proposed to be incorporated, and
any incidental matters. Relevant doctrine: Doctrine of Ultra Vires
 If any company has changed its activities which are not reflected in its
name, it shall change its name in line with its activities within a period
of six months from the change of activities after complying with all
the provisions as applicable to change of name
D. Liability clause
 In the case of a company limited by shares - liability of its members is
limited to the amount unpaid, if any, on the shares held by them
 In the case of a company limited by guarantee - to the assets of the
company in the event of its being wound-up
 (While he is a member or within one year after he ceases to be a
member for payment of the debts and liabilities of the company or of
such debts and liabilities as may have been contracted before he ceases
to be a member)
E. Capital Clause
 divided into share of fixed amounts and the number of shares with the
subscribers to the memorandum have agreed to take, indicated
opposite their names, which shall not be less than one share
F. Association clause/Subscription clause
 Detail of the subscribers to be formed into a company.
 Every subscriber to the Memorandum shall take at least one share, and
shall write against his name, the number of shares taken by him
G. Nomination clause
 In the case of OPC, the name of the person who, in the event of
death/incapacity of the subscriber, shall become the member of the
company.
 Format of MOA
Table A- Company limited by shares.
Table B- Company limited by guarantee having no share capital.
Table C- Company limited by guarantee having a share capital.
Table D- Unlimited Company having no share capital.
Table E- Unlimited Company having a share capital.

Section 5 – ARTICLES OF ASSOCIATION (AOA)

 Definition
"Articles" means the articles of association of a company
as originally framed or as altered from time to time or applied in pursuance
of any previous company law or of this Act [Section 2(5)]
 It is rules and regulations, which are framed to manage its internal affairs.
 It is a memorandum contains the fundamental conditions upon which the
company is allowed to be incorporated
 The articles play a part subsidiary to memorandum of association
 Accept the memorandum as the charter of incorporation
 Accepting it the articles proceed to define the duties, the rights and
powers of the governing body as between themselves and the company
and the mode and form in which the business of the company is to be
carried on
 Articles of association are in fact the bye-laws of the company according
to which director and other officers are required to perform their functions
as regards the management of the company, its accounts and audit. It is
important therefore that the auditor should study them and, while doing
so he should note the provisions therein in respect of relevant matters
 Contents of articles of association
1. Contains regulations - contain the regulations for management of the
company
2. Inclusion of matters - a company may also include such additional
matters in its articles as may be considered necessary for its
management
3. Contain provisions for entrenchment - provisions for entrenchment
(to protect something) to the effect that specified provisions of the
articles may be altered only if conditions or procedures as that are
more restrictive than those applicable in the case of a special
resolution, are met or complied with
4. Manner of inclusion of the entrenchment provision - shall only be
made either on formation of a company, or by an amendment in the
articles agreed to by all the members of the company in the case of a
private company and by a special resolution in the case of a public
company
5. Notice to the registrar of the entrenchment provision - Where the
articles contain provisions for entrenchment, whether made on
formation or by amendment, the company shall give notice to the
Registrar of such provisions in such form and manner as may be
prescribed.
6. Forms of articles - The articles of a company shall be in respective
forms specified in Tables, F, G, H, I and J in Schedule I as may be
applicable to such company
Table F: Company limited by shares.
Table G: Company limited by guarantee having a share capital.
Table H: Company limited by guarantee having no share capital.
Table I: Unlimited Company having a share capital.
Table J: Unlimited Company having no share capital.
 Difference between MOA & AOA
 Objectives
 Relationship
 Alteration
 Ultra Vires

DOCTRINE OF ULTRA VIRES

1. Ultra vires is simply “beyond (their) powers

2. “Ultra vires” is applicable only to acts done in excess of the legal powers of
the doers.
3. Memorandum can be departed from only to the extent permitted by the Act,
thus far and no further.
4. Any act done or a contract made by the company which travels beyond the
powers not only of the directors but also of the company is wholly void and
inoperative in law and is therefore not binding on the company
5. An act which is ultra vires the company being void, cannot be ratified by the
shareholders of the company.
6. When an act is performed, which though legal in itself, is not authorized by
the object clause of the memorandum, or by the statute, it is said to ultra
vires the company, and hence null and void.
7. An act which is ultra vires, the company cannot be ratified even by the
unanimous consent of all the shareholder
8. An act which is ultra vires the directors, but intra vires the company can be
ratified by the members of the company through a resolution passed at a
general meeting.
9. Eg: Ashbury Railway Carriage and Iron Company Limited v. Riche-(1875)

DOCTRINE OF CONSTRUCTIVE NOTICE

1. Section 399 of the Companies Act, 2013 provides that any person can
inspect by electronic means any document kept by the Registrar, or make a
record of the same, or get a copy or extracts of any document, including
certificate of incorporation of any company, on payment of prescribed fees
(Public Document)
2. Whether a person reads the documents or not, he is presumed to have
knowledge of the contents of the documents. He is not only presumed to
have read the documents but also understood them in their true
perspective
3. Every person dealing with the company not only has the constructive notice
of the memorandum and articles, but also of all the other related
documents, such as Special Resolutions etc., which are required to be
registered with the Registrar
4. If a person enters into a contract which is beyond the powers of the
company as defined in the memorandum, or outside the authority of
directors as per memorandum or articles, he cannot acquire any rights
under the contract against the company.

DOCTRINE OF INDOOR MANAGEMENT

1. Doctrine of Indoor Management is the exception to the doctrine of

constructive notice.
2. The aforesaid doctrine of constructive notice does in no sense mean that
outsiders are deemed to have notice of the internal affairs of the company.
3. If an act is authorised by the articles or memorandum, an outsider is entitled
to assume that all the detailed formalities for doing that act have been
observed
 4. The Royal British Bank vs. Turquand - Turquand Rule.
5. The company’s indoor affairs are the company’s problem.
6. A contract is entered into by any director or officer on behalf of the company
is enforceable against the company if provisions contained in MOA and AOA
have been complied with, even though some internal irregularity has arisen
of which the outsider was unaware
7. Doctrine of Indoor Management or Turquand Rule has limitations of its own.
That is to say, it is inapplicable to the following cases, namely ;
i. Actual or constructive knowledge of irregularity
Person dealing with the company has notice, whether actual or
constructive, of the irregularity
ii. Suspicion of Irregularity
Where the transaction is unusual or not in the ordinary course of
business, it is the duty of the outsider to make the necessary enquiry,
(those who behave negligently)
iii. Forgery
The doctrine of indoor management applies only to irregularities
which might otherwise affect a transaction but it cannot apply to
forgery which must be regarded as nullity.

Section 6 – Act to override MOA & AOA

 The provisions of this Act shall have overriding effect to the provisions
contained in :
a. Memorandum of Company, Or
b. Articles of Company, Or
c. Any agreement executed by it, Or
d. Any resolution passed by the company in general meeting or by its
Board of Directors in Board Meeting
- Any provision contained in the memorandum, articles, agreement
or resolution, to the extent in conflict to the provisions of the Act;
shall be void.
- Note: This section starts with saving clause i.e. “Save as otherwise
….”, means if any other section of the Act says that provisions
contained in the memorandum, articles, agreement or resolution
is superior then we will treat it accordingly.

Section 9 – Effect of Registration

 From the date of incorporation specified in the certificate of incorporation,

the subscribers to the memorandum and all other persons, who may
become members of such company,
  Thereafter such body corporate, by the said name; shall be capable of;
a. Exercising all the functions of an incorporated company 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 Registration (Effect of MOA & AOA)

 It aims to impart contractual force to the Memorandum and Articles. It

provides, when the memorandum and articles got registered; it shall bind
the –
 Members to the company;
 Company to the members;
 Members to the members;
 Section 399 – MOA & AOA become public document

Section 10A – Commencement of Business

 Applicable to the
- Company having a share capital
- Incorporated after the commencement of the Companies
(Amendment) Ordinance, 2019
 Shall commence any business or exercise any borrowing powers only if;
- Filing of declaration by a director w.r.t payment of money for
shares subscribed by subscribers to the memorandum:
o Within 180 days of incorporation of the company.
o Verified by a CA/CS/CMA in Practice.
o Along with RBI/SEBI approval for specified companies.
- Filing of verification of Registered Office under Section 12.
[within 30 days]
 Punishment for contravention
- Company – 50,000
- Officer – 1000 per Day, up to 1,00,000
 The Registrar may initiate action for the removal of the name of the
company from the Register of Companies, if
- The declaration is not filed with the Registrar within 180 days of
INC.
- He has reasonable cause to believe that the company is not
carrying on any business/operations.
Section 12 – Registered Office of Company

 It is mandatory for every company to have its Registered Office

i. Within 30 days of its incorporation
ii. At all times thereafter.
 Communications to be sent to Registered Office
i. All communications shall be sent at the Registered Office of the
company
ii. The R.O shall be capable of receiving and acknowledging all
correspondences.
 The company shall file a verification of the R.O with the Registrar within 30
days of incorporation [Section 10A]
 After physical verification of RO, If the Registrar has reasonable cause to
believe that a company is not carrying on any business, he may cause a
physical verification to be made, and if it is found that the company does not
have a R.O, he may initiate action for the removal of the name of the
company from the Register of companies.
 Notice of every change in the Registered Office shall be given to the
Registrar within 30 days of such change.
 Change of R.O within local limit
- Pass a Board Resolution and inform ROC within 30 days of change.
 Change of Registered Office outside the City
- Pass a Special Resolution in General Meeting
- Inform ROC within 30 days of change.
 Change of Registered Office from one ROC to another ROC
- Pass SR in General Meeting [Form MGT-14]
- Obtain the confirmation of Regional Director (RD) -Steps
o Make application to RD.
o The RD shall examine the application; pass
approval/rejection order within 30 days of receipt of
the application complete in all respects.
o The confirmation order of RD shall be filed by the
Company with the ROC within 60 days of the date of
confirmation.
o ROC shall certify the registration within 30 days of filing
such confirmation.
 Punishment for Default
- The company and every officer in default
- Penalty of 1000 per each day of default,
- But not exceeding one lakh rupees.
Section 13 – ALTERATION OF MEMORANDUM (MOA)

 Alteration of Name clause

a. Pass SR
b. Obtain CG Approval, except for change in the name consequent upon
conversion of a private company into public and vice versa i.e., mere
addition/deletion of the word "Private" does not require separate
approval.
c. The company shall file a copy of SR and a copy of CG approval order
with the ROC.
d. ROC shall enter the new name in the Register and issue fresh COI
e. Change of name shall not be allowed to a company which has
- Not filed Section 92 or 137 due for filing with ROC, OR
- Failed to pay or repay matured deposits/debentures/interest
thereon.
 Alteration of Object clause
a. Pass SR
b. If the company has raised money from public by issue of prospectus,
and any part of such money remains unutilized, it shall not alter the
objects unless
- The details and justification for alteration are published in 2
newspapers (an English and another in vernacular language), and
placed on the website,
- The dissenting shareholders have been given an exit opportunity.
c. A copy of the SR shall be filed with ROC,
d. ROC shall, within 30 days, register the alteration and issue a fresh COI
 Alteration of Capital Clause
a. Refer Section 61.
 Alteration of Situation Clause
o Shifting of Registered Office from One State to Another State
- Pass SR
- Obtain Approval of Central Government
- The CG, after satisfying itself that
 The alteration has the consent of the Creditors, debenture
holders and other concerned persons, or
 The sufficient provision has been made by the company either
for the due discharge of all its debts and obligations, or
 Adequate security has been provided for such discharge,
Shall dispose of the application of change of place of R.O
within a period of 60 days.
- The certified copy of the order of CG approving the alteration shall
be filed by the company with the Registrar of each of the States
within 30 days of receipt.
 - The Registrar of the State where the Registered Office is being
shifted to, shall issue a Fresh COI indicating the alteration.
 Liability clause
- In case of a company not having Share capital [Guarantee
company], any alteration resulting in giving any person, a right to
participate in the divisible profits (dividend) of the company,
otherwise than as a member, shall be void.

Section 14 – ALTERATION OF MEMORANDUM (MOA)

Alteration of AOA is subject to the provisions of this Act and the

Memorandum.
 Special Resolution is required for every alteration, including alteration for
the purpose of conversion of a Private company into a Public company and
vice versa.
 Every alteration registered by the Registrar is valid as if originally contained
in the AOA.
 Conversion of a Private company Into Public
o Pass SR in such a manner that the Articles no longer include the
restrictions and limitations required to be included in the articles of a
Private company as per Sec. 2(68)
o The conversion shall take effect from the date of alteration of
Articles.
o A copy of the altered articles shall be filed with the Registrar, within
15 days of alteration.
 Conversion of a Public company into Private
o A public company may get itself converted into a Private company,
by
a. Altering the Articles by passing SR, so as to include the
restrictions and limitations required to be included in the
articles of a Private company as per Section 2(68).
b. Making an application to the CG, for approval.
c. The alteration shall not have effect unless approved by CG.
d. Once approved by CG, the Company shall file with the
Registrar, within 15 days of receipt of the order along with
copy of the order of CG approving the alteration, and copy of
the altered articles.
Section 15 – Alteration to Be Noted In Every Copy

 Alterations to be noted
a. Every alteration of MOA or AOA shall be noted in every copy.
b. A company shall not issue any copy of MOA or AOA unless it contains
every alteration made therein.
  Punishment
Company and every officer in default- Rs. 1000 per copy issued without
alteration.

RESERVATION OF NAME
 Application for Reservation
 Application can be made for two alternative names by using reserve unique
name (RUN) to the Registrar in such form along with specified fees, for either
i. For reservation of name for a company to be incorporated
ii. By a company already in existence, for a new name.
Resubmission shall be allowed within 15 days, for rectification of any
defect.
 Reservation by the Registrar
Upon receipt of application, the Registrar may reserve the name for
a. A period of 60 days from the date of approval, in the case of
application by an existing company for change of name,
b. A period of 20 days from the date of approval, in other cases. (New
companies)
 Where name is reserved by furnishing wrong information
a. If the company has not been incorporated, then
i. The reserved name shall be cancelled
ii. The applicant shall be liable to a penalty of Rs. 1 Lakh.
b. If the company has been incorporated, then, the Registrar may, after
giving an opportunity of being heard,
i. Direct the company to rectify its name, and the company shall,
within 3 months, rectify by passing Ordinary Resolution, or
ii. Strike off the name of the company from the Register of
Companies, or
iii. Present a petition for winding up of the company.

 While allotting names, the Registrar of Companies 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.
 An application for extension of reservation of name under rule 9A of the
Companies (Incorporation) Rules 2014 can be made before expiry of 20 days;
 For another 20 days (total of 40 days) with fee of 1000, which may be further
extend by another 20 day (total of 60 days) with fee of 2000. Or
 For another 40 days (total of 60 days) with fee of 3000
  Legal Requirements With Respect To Name Of A Company
 Name shall not resemble or be identical with the name of an existing
company.
 he use of the name should not be offensive or undesirable in the opinion of
CG
 Some words or expressions may be used only after prior approval of CG.
 For Sec.8 companies, the name may include words "Association"," Council","
Forum", "Foundation".
 The name should not be same as another existing company or LLP or trade
mark. [Refer Sec. 16]

Section 16 – Rectification of Name of Company

 Where name is identical or similar to name of a co. already registered

o Where a company is registered by a name (whether on first
registration or a change of name), which in the opinion of CG,
resembles with the name of a company previously registered, then CG
may direct the company to rectify its name.
o The company shall rectify it name within 3 months of such order, by
passing an Ordinary Resolution.
 Where name is identical or similar to name of a registered trade mark
o The owner of a registered trademark may make an application to the
CG that the name of a company resembles the registered trademark
o Such an application may be made by such owner, within 3 years of
Incorporation of the company by such name, or change of name.
o On receipt of such application, if CG is of the same opinion, it may
direct the company to rectify its name.
o The company shall rectify its name within 3 months of such order, by
passing an OR.
 Filing requirements and changes in MOA and COI.
o The company shall, within 15 days of passing the Ordinary Resolution,
file with the Registrar
i. A notice of rectification of name, and
ii. A copy of the order of CG.
iii. The Registrar shall make necessary changes in the MOA & COI
 Default in complying with CG order to rectify name
o The CG shall allot a new name to the company
o The ROC shall enter the new name in the Register of companies in
place of old name
o The ROC shall issue a fresh COI with the new name, to be used
thereafter.
o The company may subsequently change the name under Section 13
Section 17 – Copies of MOA & AOA to be given to Members
 Any member of the company may demand from the company,
i. Copy of MOA.
ii. Copy of AOA.
iii. Every agreement and resolutions not embodied in the MOA or AOA.
 The company shall furnish the above, within 7 days of request, if the
member pays prescribed fees.
 Penalty for default
Company and every officer in default- Rs.1000 per day up to Rs. 1 Lakh.

Section 18 – Conversion of Companies Already Registered

 Legal Requirements
o A company of any class registered under this Act may convert itself
into a company of another class by-
i. Alteration of MOA and AOA
ii. Making an application to the Registrar for conversion.
o Issue of fresh COI
Where the Registrar is satisfied that the provisions of this Chapter
have been complied with, he shall
Close the former registration of the company
Register the new documents and issue a fresh COI

Section 19 – Subsidiary Company Not to Hold Shares in Its Holding Company

 A subsidiary company is not allowed to hold shares of its holding company.
The prohibition also extends up to the nominees of the subsidiary company
 Any allotment or transfer of shares in a holding company to its subsidiary
shall be void.
 If the holding company is a guarantee or unlimited company, not having a
share capital the above restriction will apply on holding the interest,
whatever be the form of interest.
 The prohibition does not apply to the following cases:
a. Where the subsidiary is concerned as a legal representative of a
deceased member of the holding company; or
b. Where the subsidiary holds such shares as a trustee; or
c. Where the subsidiary company is a shareholder even before it
became a subsidiary company of the holding company.

Section 20 – Service of Documents

 On the Company /Officers
o Leaving at the R.O. of the company or by Registered post, or Speed
Post, or Courier Service, or electronic mode.
o Records of beneficial ownership may be served by the depository to
the company by electronic or other means.
  On the Registrar
o By Registered post, or Speed Post, or Courier, or electronic mode, or
leaving it at the office of ROC.
o Where any provision requires that a document shall be served by
electronic mode, it shall be sent only by electronically.
 On the members
o By Registered post, Speed Post, Courier Service, electronic mode, or
leaving it at the address of the member.
o Member may request for a particular mode, on payment of
prescribed fee.
o Nidhi Co.'s: only members holding shares of value at least Rs. 1000 or
1% of total PUSC are entitled to get the documents.
 In Case of Delivery by Post, Service is deemed to have been effected ;
o In case of Notice of meeting – at the expiry of 48 hours after the
letter is posted
o In other Case – Delivery time in the ordinary course of post

Section 21 – Authentication of Documents, Proceedings and Contracts

a. A document or proceeding requiring authentication by a company or
b. Contracts made by or on behalf of a company
May be signed by
i. Any KMP u/s 2(51)
ii. An officer or employee of the company duly authorized by the
Board in this behalf
Section 22 – Execution of Bills of Exchange, Etc.
 Any bill of exchange/promissory note may be made, accepted, drawn and
endorsed by any person acting under the authority of the company expressed
or implied.
 Company having the common seal may authorize any person as its Power of
Attorney.
 If the company does not have a common seal, the authorization shall be
made by 2 Directors OR by 1 Director along with Company Secretary,
wherever appointed.

SIMPLIFIED PROFORMA for INCORPORATING COMPANY electronically [SPICe]

 The MCA has introduced a SPICe form in 2016, which has simplified the procedure of
incorporation of companies.
 It has eliminated the requirement of hard copies of physically signed documents.
Section 8 – Formation of Companies with Charitable Objects, Etc.
 Who can issue and get the license under section
o Central Government (ROC in its behalf) may grant such a licence, 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
company
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;
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.
 Registration of company using license
o After granting licence, an application shall be made to registrar under
section 8(1) itself for registration of company in the manner specified
in rule 19 of the Companies (Incorporation) Rules 2014.
 Application for registration
o A person or an association of persons desirous of incorporating a
company with limited liability under section 8(1), shall make an
application to registrar in Form SPICe+ (Simplified Proforma for
Incorporating company Electronically Plus: INC32) along with the fee
as provided in the Companies (Registration offices and fees) Rules,
2014.
 Supporting document along with Application
o The MOA and AOA of the proposed company in the Form No. INC-13
and Form No. INC-31, respectively;
o An estimate of the future annual income and expenditure of the
company for next three years, specifying the sources of the income
and the objects of the expenditure;
o The declaration in by an Advocate, CA, CMA or CS in practice Form No.
INC-14 and by each of the persons making the application in Form No.
INC-15, that;
a. the MOA and AOA have been drawn up in conformity with the
provisions of section 8 and rules made thereunder and
b. all the requirements of the Act and the rules made thereunder
relating to registration of the company under section 8 and
matters incidental or supplemental thereto have been
complied with;
 Alteration of MOA and AOA requires prior permission of government
a. Central Government (power delegated to regional directors) for
alteration of its memorandum and
b. Central Government (power delegated to ROCs) for alteration of its
articles.
 Conversion into any other kind of company
o A company registered under this section may convert itself into
company of any other kind only after complying with such conditions
as may be prescribed in rule 21 and 22 of the Companies
(Incorporation) Rule 2014 as described below;
a. A company 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. The company shall file an application in Form No. INC-18 with the
Regional Director with the fee along with a certified true copy of the
special resolution and a copy of the Notice convening the meeting
including the explanatory statement for approval for conversion.
Also attach with RD the proof of serving of the notice served
by registered post or hand delivery, to:
1. The Chief Commissioner of Income Tax having jurisdiction over
the company,
2. Income Tax Officer who has jurisdiction over the company,
3. The Charity Commissioner,
4. The Chief Secretary of the State in which the registered office
of the company is situated,
5. Any organisation or Department of the Central Government or
State Government or other authority under whose jurisdiction
the company has been operating.
d. A copy of the application with annexures as filed with the Regional
Director shall also be filed with the Registrar.
e. The company shall, within a week from the date of submitting the
application to the Regional Director, publish a notice at its own
expense, and a copy of the notice, as published, shall be sent forthwith
to the Regional Director and the said notice shall be in Form No. INC-
19 and shall be published;
I. At least once in a vernacular newspaper in the principal
vernacular language of the district in which the registered office
of the company is situated, and having a wide circulation in that
district, and at least once in English language in an English
newspaper having a wide circulation in that district; and
II. On the website of the company, if any, and as may be notified or
directed by the Central Government.
f. The company should have filed all its financial statements and Annual
Returns up to the financial year preceding the submission of the
application to the Regional Director and all other returns required to
be filed under the Act up to the date of submitting the application to
the Regional Director
 g. On receipt of the application, and on being satisfied, the Regional
Director shall issue an order approving the conversion of the company
into a company of any other kind subject to such terms and conditions
as may be imposed in the facts and circumstances of each case.
h. Before imposing the conditions or rejecting the application, the
company shall be given ROBH by the Regional Director
i. On receipt of the approval of the Regional Director, the company shall
convene a general meeting of its members to pass a special resolution
for amending its MOA and AOA of association and the Company shall
thereafter file these with the Registrar (with declaration to adhere
conditions if any, imposed by Regional Director)
j. On receipt of the documents referred above, the Registrar shall
register the documents and issue the fresh Certificate of
Incorporation.

 Revocation of License
A. The Central Government (power delegated to regional director) may by
order revoke the licence of the company where;
 The company contravenes any of the requirements or the
conditions of this sections subject to which a licence is issued or
 The affairs of the company are conducted fraudulently, or in
violation of the objects of the company or prejudicial to public
interest,
 Before such revocation a written notice must be served on such
company and ROBH in the matter shall be given.
B. Where a licence is revoked and the Central Government is satisfied, that
it is essential in the public interest; then after giving ROBH; by order it
may direct that
 Company be wound up under this Act. Excess assets on the
winding up or dissolution, after the satisfaction of its debts and
liabilities, may be transferred to;
a. Another company registered under this section and having
similar objects, subject to such conditions as the Tribunal
may impose, or
b. May be sold and proceeds thereof credited to the
Insolvency and Bankruptcy Fund formed under section
224 of the Insolvency and Bankruptcy Code, 2016.
 Company be amalgamated with another company registered
under this section and having similar objects. The Central
Government empowered with overriding effects to provide the
said amalgamation to form single entity with such constitution,
properties, powers, rights, interest, authorities and privileges and
with such liabilities, duties and obligations as may be specified in
the order.
  Penalty/ Punishment In Contravention
Company – 10L to 1Cr
Director/Officer – 25k to 25L
447 also applicable

SECTION 8 COMPANY- SIGNIFICANT POINTS

 Formed for the promotion of commerce, art, science, religion, charity, protection of
environment, sports, etc.
 Requirement of minimum share capital does not apply.
 Uses its profits for the promotion of the objective for which it is formed.
 Does not declare dividend to members.
 Operates under a special licence from Central Government.
 Need not use the word Ltd./ Pvt. Ltd. in its name and adopt a more suitable name
such as club, chambers of commerce etc.
 Licence revoked if conditions contravened.
 On revocation, Central Government may direct it to
- Converts its status and change its name
- Wind up
- Amalgamate with another company having similar object.
 Can call its general meeting by giving a clear 14 days’ notice instead of 21 days.
 Requirement of minimum number of directors, independent directors etc. does not
apply.
 Need not constitute Nomination and Remuneration Committee and
Shareholders Relationship Committee.
 A partnership firm can be a member of Section 8 Company.
Section 1 - Short Title, Extent, Commencement and Application
Section 2 – Definitions (Study important definitions from study material)
Section 3 - Formation of Company
Section 4 – Memorandum of Association (MOA)
Section 5 – Articles of Association (AOA)
Section 6 – Act to override MOA & AOA
Section 7 – Incorporation of Company
Section 8 – Formation of Companies with Charitable Objects, Etc.
Section 9 – Effect of Registration
Section 10 – Effect of Registration (Effect of MOA & AOA)
Section 10A – Commencement of Business

Section 12 – Registered Office of Company

Section 13 – Alteration of Memorandum (MOA)
Section 14 – Alteration of Memorandum (MOA)
Section 15 – Alteration to Be Noted In Every Copy
Section 16 – Rectification of Name of Company
Section 17 – Copies of MOA & AOA to be given to Members
Section 18 – Conversion of Companies Already Registered
Section 19 – Subsidiary Company Not to Hold Shares in Its Holding Company
Section 20 – Service of Documents
Section 21 – Authentication of Documents, Proceedings and Contracts
Section 22 – Execution of Bills of Exchange, Etc.

Doctrine of Ultra Vires

Doctrine of Constructive Notice
Doctrine of Indoor Management
Reservation of Name
One Person Company