CA Shubham Singhal's Lecture Notes on Incorporation of Company

Introduction

• Welcome to the rapid revision of the chapter "Incorporation of Company."
• Relevance: The lecture covers the latest module from the ICAI and amendments for exam preparation.
• Recommended Book: "The Ultimate Solution Book"
  • 200 pages covering 100% of CA Inter Law.
  • Contains highlighted keywords for exam.

Key Concepts in Incorporation

Formation of a Company

• A company must be formed for lawful purposes.
• Types of Companies:
  • Public Company: Minimum 7 members required.
  • Private Company: Minimum 2 members required.
  • One Person Company (OPC): Minimum 1 member required.
• Subscribers to the memorandum: Before incorporation, they are not shareholders.

One Person Company (OPC)

• Definition: A company with one member and one nominee.
• Nominee: Acts as a member in case of the member's death or incapacity.
• Important Forms:
  • INC-3: Consent of the nominee.
  • Nominee can withdraw consent via written notice.

Company Formation Process

• Initial steps include subscribing to the memorandum and complying with legal requirements.
• After formation, the company can commence business operations.

Important Sections

Section 3: Formation of Companies

• Formation must be for lawful purposes.
• Detailed eligibility requirements based on company type.

Section 4: Memorandum of Association (MoA)

• MoA is the foundational document and is considered a public document.
• Any act beyond the objects stated in the MoA is considered ultra vires and void.

Section 5: Articles of Association (AoA)

• AoA defines internal rules and regulations.
• Can include entrenchment provisions to amend the articles.

Section 6: Override of MoA by Act

• In case of a conflict, the Act will override the MoA.

Section 7: Documents for Incorporation

• Seven documents needed for registration:
  1. Memorandum and Articles of Association (INC-33 and INC-34)
  2. Address for correspondence.
  3. Details of the first subscribers and directors.
  4. Consent and interest of directors.
  5. Declaration of compliance with the law.

Section 10: Commencement of Business

• A company cannot start business until certain conditions are met within specified time frames (180 days, 30 days).

Section 12: Registered Office

• Must be established within 30 days of incorporation.
• Requires verification and must display company name prominently.

Section 13: Alteration of MoA/AoA

• Procedures and approvals required for altering the MoA and AoA.

Important Concepts

Doctrine of Ultra Vires

• Any act outside the scope of the MoA is void.
• Important case: Ashbury Railway Carriage & Iron Co. v. Riche.

Doctrine of Indoor Management

• Protects outsiders dealing with the company; they are presumed to know only the MoA.
• Key points include:
  • Outsiders are not assumed to know internal management problems.
  • They need not verify the legitimacy of internal resolutions.

Conclusion

• Emphasized the importance of knowing the structure and provisions surrounding the incorporation of companies.
• Keep revising the key sections and their implications for better understanding and preparation for exams.