Introduction 

• The incorporation of a company is a fundamental process that transforms a business idea into a legally recognized entity with its own identity.  
• This process marks the official birth of a company, granting it a separate legal existence from its founders and providing benefits such as limited liability protection, perpetual succession, and enhanced ability to raise capital.  
• The incorporation process is governed by specific legal requirements that ensure transparency, accountability, and compliance with regulatory frameworks.  
• What is a Company? 
  • Section 2(20) of the Company’s Act, 2013 (CA) as: 
    • Company means a company incorporated under this Act or under any previous company law 
• Chapter II of the Company’s Law states the provisions for Incorporation of Company and Matters Incidental Thereto. 
• Section 7 of the CA states the process for the Incorporation of company.

What is Section 7 of CA? 

Documents and Information Required 

• As per Section 7(1), the following documents and information must be filed with the Registrar within whose jurisdiction the proposed registered office of the company is to be situated: 
  • Memorandum and Articles of Association: These foundational documents must be duly signed by all subscribers to the memorandum in the prescribed manner. 
  • Professional Declaration: A declaration in the prescribed form must be submitted by: 
    • An advocate, chartered accountant, cost accountant, or company secretary in practice who is engaged in the formation of the company, and 
    • A person named in the articles as a director, manager, or secretary of the company. 
• This declaration confirms that all requirements of the Act and rules regarding registration and related matters have been complied with. 
• Declaration from Subscribers and First Directors: Each subscriber to the memorandum and person named as a first director in the articles must declare that: 
  • They have not been convicted of any offense related to the promotion, formation, or management of any company 
  • They have not been found guilty of fraud, misfeasance, or breach of duty to any company under this Act or previous company law during the preceding five years 
  • All documents filed for registration contain information that is correct, complete, and true to the best of their knowledge and belief 
• Correspondence Address: The address for correspondence until the registered office is established. 
• Subscriber Details: Particulars of each subscriber to the memorandum including: 
  • Name (including surname or family name) 
  • Residential address 
  • Nationality 
  • Other prescribed particulars along with proof of identity 
  • For corporate subscribers, such particulars as may be prescribed 
• First Directors Information: Particulars of persons mentioned as the first directors, including: 
  • Names (including surnames or family names) 
  • Director Identification Number (DIN) 
  • Residential address 
  • Nationality 
  • Other prescribed particulars including proof of identity 
• Directors' Interests: Particulars of the interests of the first directors in other firms or corporate bodies, along with their consent to act as directors of the company in the prescribed form and manner. 

Registration Process and Certificate of Incorporation 

• Upon submission of the above documents and information under sub-section (1), the Registrar will: 
  • Register all the documents and information in the register 
  • Issue a certificate of incorporation in the prescribed form confirming that the proposed company is incorporated under the Act 
  • Allot a corporate identity number (CIN) to the company, which serves as its distinct identity and is included in the certificate 
• The company is considered incorporated on and from the date mentioned in the certificate of incorporation. 

Post-Incorporation Compliance 

• Following incorporation, the company must: 
  • Maintain and preserve at its registered office copies of all originally filed documents and information until its dissolution 

Penalties for False Information 

• The Act prescribes severe penalties for misrepresentation during the incorporation process: 
  • Individual Liability: Any person who furnishes false or incorrect particulars, or suppresses material information in documents filed with the Registrar, shall be liable for action under section 447. 
  • Collective Liability: If after incorporation it is proven that the company was incorporated by: 
    • Furnishing false or incorrect information or representation 
    • Suppressing material facts or information 
    • Engaging in fraudulent action 
  • Then the promoters, first directors, and persons making declarations can each be held liable under section 447. 
• Tribunal Powers: In cases where a company has been incorporated through false information or fraudulent means, the Tribunal may, upon application and if satisfied the situation warrants: 
  • Regulate the management of the company, including changes to its memorandum and articles 
  • Direct unlimited liability for members 
  • Remove the company's name from the register 
  • Order the winding up of the company 
  • Pass other appropriate orders 
• Before making such orders, the Tribunal must: 
  • Provide the company a reasonable opportunity to be heard 
  • Consider the transactions entered into by the company, including obligations contracted or liabilities paid 

Conclusion 

• The incorporation of a company is a structured legal process that creates a new legal entity with its own rights and obligations. This process requires meticulous attention to detail and strict adherence to regulatory requirements. The documentation and declarations submitted during incorporation form the foundation of the company's legal existence and establish the framework for its operations. 
• The severe penalties for misrepresentation underscore the importance of transparency and truthfulness during the incorporation process. By ensuring all information provided is accurate and complete, founders can avoid personal liability and secure the legitimacy of their corporate entity.