A company comes into existence when a number of persons come together with a view to exploit some business opportunity. These persons are called promoters. Under section 12, any seven or more persons may form an incorporated company for a lawful purpose by subscribing their names to the memorandum of association and complying with other requirements in respect of registration. Such an incorporated company may be a company

a) Limited by shares,

b) Limited by guarantee, or

c) An unlimited company.


The application for registration of a company should be presented to the registrar of the state in which the business office of the company is to be situated. The application shall be accompanied by the following documents.

1. The memorandum of association.

2. The articles of association, if any, duly signed by the subscribers of the memorandum.

3. A statement of the nominal capital and where it exceeds 25 lakhs, a certificate from the controller of capital issues, permitting the issue of capital. This certificate is not required under the companies Act 1956, but under the Capital Issues Control Act 1947.


4. A notice of address of the registered office of the company. This may be done within 30 days of registration if it cannot be filed at the time of registration.

5. A list of directors and their consent to act signed by each.

6. An undertaking in writing signed by each such director to take and pay for their qualification shares.

7. A declaration that all the requirements of the act have been complied with. Such a declaration may be signed by an advocate of the supreme court or high court, an attorney or pleader entitled to appear before a high court, a chartered accountant practicing in India who is engaged in the formation of the company, or by a person named in the articles as director, manager or secretary of the company.


Items number 5 and 6 are not required to be filed in the case of a private company.

If the registrar is satisfied that all the requisite documents delivered to him are in order, he shall register the memorandum and the articles, if any, provided he is satisfied on the following point:

(a) The relevant provisions of the act have been complied with.

(b) The objects of the company are lawful.


(c) The requisite number of persons required under the act have subscribed and duly signed.

(d) The memorandum and the articles comply in all respects with the provisions of the act.

(e) The name selected by the company is acceptable.

(f) The statutory declaration has been properly made.


If the registrar of companies is satisfied that all the aforesaid requirements have been complied with, he will register the company and place its name on the register of companies. It is clear that once the statutory requirements have been complied with, the registrar has no option but to register it. On refusal to register on improper grounds, he may be compelled by a writ of mandamus.

Certificate of incorporation :

On registration the registrar will issue a certificate of incorporation whereby he certifies that the company is incorporated and in the case of a limited company, that the company is limited. From the date of incorporation mentioned in the certificate, the company becomes a legal person separate from its shareholders. The legal effect of incorporation is as under:

1. A company becomes a body corporate distinct from its members. It becomes a legal person and not a mere aggregate of the shareholders. Thus, where all the members of a company were killed by a bomb the company was deemed to survive.

2. A company has a perpetual succession and a common seal it is an immortal being.


3. A company can sue and be sued in its own name.

4. A company has a right to hold and alienate its own property. The property of the company belongs to the company itself and not to the individual members.

5. Company’s debts and obligations are the liabilities of the company only and cannot be enforced against the individual shareholders.

Conclusiveness of the certificate of incorporation :

The certificate of incorporation shall be conclusive evidence that-

i) All the requirements of the act have been complied with in respect of registration;

ii) All the pre-conditions of registration have been complied with;

iii) The company is duly registered, and

iv) That the company came into existence on the date of the certificate.

The certificate of incorporation prevents the re-opening of matters prior to the registration and essential to it. It places the existence of the company as a legal person beyond doubt. Consequently, even if the seven signatures to a memorandum were written by one person or were all forged, the certificate would be conclusive that the company was duly registered. Similarly, if the signatories were all infants, the certificate would still be conclusive.