The procedure of incorporation of a joint stock company.
The word incorporation denotes giving recognition in the eyes of the law. A joint stock company does not enjoy the status of a legal entity until and unless it is incorporated. Before proceeding for registration the following steps are considered by a promoter:
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- He has to ascertain from the Registrar whether the proposed name of the company is available or not. The other name will be selected when the proposed name is not available.
- If the nature of business comes under the Industries (Development and Regulation) Act, 1951, the promoter has to obtain a letter of intent or license from such an authority.
- He has to fix up the underwriter, banker, solicitors, auditors and the signatories of the memorandum of Association and Articles of Association.
- He has to prepare the memorandum of association and articles of association in printed form.
After the above steps, the promoter will proceed to prepare and submit the following documents to the Registrar of joint stock company. The documents submitted with the registrar are:
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i. Memorandum of Association: It is the fundamental charter which defines the objectives of the company. The document is signed by at least seven persons in case of public company and two persons in case of private company.
ii. Articles of Association: It is an important document which contains rules and regulations for the internal management of the company. It should be stamped and duly signed by the signatories of the memorandum of association. A public limited company may not file this document because it adopts Table A of the Companies Act.
iii. The name and addresses of the registered office of the company is situated.
iv. A statement of nominal capital of the company. If it exceeds Rs. 5 Lakhs, a certificate from the central government permitting such issues.
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v. A list of proposed directors, their names, addresses and occupations. The consent of the directors to act as directors, should be attached.
vi. The contact with managing directors, secretaries and the treasurers.
vii. A statutory declaration by an advocate or attorney stating that all the legal requirement of the Act, necessary for incorporation have been complied. This can be obtained from the chartered accountant or an officer of the company engaged in the formation of company.
The above documents along with necessary fees, stamp duty and registration fees is submitted to the registrar.
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If he is satisfied with regard to the above documents, the name of the company is listed in the registrar of the companies. After this a certificate of incorporation is issued. On receipt of certificate of incorporation, the private limited companies can start their business. A public limited company can commence its business operation after getting one more certificate called the certificate of commencement.