Incorporation of Company – CA Inter Law Notes

Incorporation of Company – CA Inter Law Notes is designed strictly as per the latest syllabus and exam pattern.

Incorporation of Company – CA Inter Law Notes

Promoter:
Definition – Pro-moter – Section 2(69)

‘Promoter’ means a person:
Who is named in prospectus or annual return as promoter; or
Who has control over affair of company, directly or indirectly whether shareholder, director or otherwise; or
In accordance with whose advice, directions or instructions the board is accustomed to act.

Important Note:

Persons acting in professional capacity are not regarded as promoters.
A promoter may be an individual, firm, an association of persons or a body corporate.

Legal Position of Promoter

Promoters of company are not:
- An agent of company.
- A trustee.
- An employee.
Promoters of company stand in fiduciary position in relation to company.
Fiduciary position means position of taking care or position of acting in good faith for beneficiary.

2. Duties Of Promoter
To Disclose Secret Profit

Promoter must not make any secret profit at the expense of the company he promotes.
The death of a promoter does not relieve him from liabilities. The property of the deceased promoter shall be liable in an action by a company for fraud or breach of trust.

Liability for Fraudulently Inducing Persons to Invest Money – Section 36
If promoters makes false promises or statement and induce person:

to invest money, or
to enter into underwriting agreement, or
to obtain credit facilities, he is liable for punishment for fraud under section 447.

Liability in Case of Private Placement – Section 42
If company contravenes any provisions relating to private placement, company, its promoter and directors are liable for penalty as prescribed under Act.

Rights of Promoter:
Right to Recover Incorporation Expenses

Promoters can recover incorporation expenses from company, if there is valid contract.
Pre-incorporation expenses can be recovered from Board of Directors.
Articles of company may provide payment of incorporation expenses. Regulation 62 of Table F authorises reimbursement of pre-incorporation expenses.

Right to Recover Proportionate Amount from Co-promoters
Where entire liability arising out of mis-statement in the prospectus is paid by one of the promoters; he is entitled to recover proportionate amount from co-promoters.

Incorporation Of Company
Promoters decide name of company, its objects, capital and type of company which they w’ould like to incorporate. Following are steps for incorporation of company:

Step 1 Application for Availability of Name

The promoters should ascertain from the Registrar of Companies whether the name by which the company is to be started is available or not.
An application for reservation of name should be made Online along with fee. Alternatively, promoters may file integrated incorporation Form INC 32 (SPICe).
This application should be made to the Registrar of the State where the Registered Office is to be situated.
If name is available, Registrar issues name approval letter. It is valid for certain days within which promoters are required to prepare and file other documents.

Important Note:

Necessary care should be taken while selecting the name that it must not be undesirable or it must not be identical or too nearly resemble the name of an existing company.
The name is considered as undesirable if:
It attracts the provisions of section 3 of the Emblems and Names (Prevention and Improper Use) Act, 1950
It includes the name of a registered trade mark
It includes any word which is offensive to any section of the people
It is identical with name of any LLP (inside or outside India)
If name contains the words ‘British India’
It implies association or connection with embassy or consulate or a foreign government or national hero
It was identical with company which was dissolved within last 2 years.
It include words such as ‘Insurance’, ‘Bank’, ‘Stock Ex¬change’, ‘Venture Capital’, ‘Asset Management’, ‘Nidhi’, ‘Mutual fund’ etc., unless a declaration is submitted by the applicant that the requirements mandated by the respective regulator, such as IRDA, RBI, SEBI, MCA etc. have been complied with by the applicant
It includes the word ‘State’ except in case the government company
It is containing only the name of a continent, country, state, city
The word ‘National’ is allowed to be used as part of name of company if it is government company.
Name ‘Electrol Trust’ may be allowed to be used for forma¬tion of section 8 Company as per Electrol Trusts Scheme, 2013.
Name identical with name of company which is struck off in pursuance of action under Companies Act, 2013 or Companies Act, 1956 can be allowed only after expiry of 20 years from the publication in official gazette striking off the name.
Abbreviated name (ie. ’23K Limited’ or ‘DJMO Ltd’) is allowed if it is not violative of provisions of IPR.

Step 2 Filing Other Documents Application

After name approval letter, an application for incorporation of company is made in Form INC 32 (SPICe).
Memorandum and Articles of Association of the company duly stamped and signed by each subscriber to the Memorandum shall be attached with Form INC 32.
Two persons in case of private company and seven-person in case of public company should be named as promoters/ subscribers. They should obtained DIN.

Declaration
Declaration from professional is given in Form INC 8.

Affidavit from Subscribers

A declaration from each of the subscribers of MOA and from person named as first directors in AOA (if any) that:
He is not convicted of any offence in connection with promotion, formation or management of company; or
He has not been found to be guilty of fraud or misfeasance or breach of duty of any company in previous five years; and
All documents filed with ROC contain information that is correct and complete and true to the best of his knowledge.
A Declaration from the subscriber of MOA is given in Form INC. 9.

Verification of Registered Office
Furnishing verification of Registered Office in Form INC 22 within 30 days of incorporation. This period is for 60 days for IFSC public and IFSC private company.

Particulars of Di-rectors
Particulars of directors is filed in Form INC 12.

Step 3 Certificate of Incorporation

If all above documents are in order, Registrar will issue certificate of Incorporation in Form INC 11,
Company is allotted Corporate Identification Number (CIN).

Important Note:
All documents filed for incorporation shall be maintained by company at its Registered Office till dissolution. – Section 7(4)

Certificate Of Incorporation
Effect of Incorporation – Section 9

Following are effects of Certificate of Incorporation granted by ROC:
The company is incorporated on the date as mentioned in Certificate of Incorporation.
Subscribers to the Memorandum become members of the company.
Company becomes a body corporate having perpetual succession and common seal, with power to acquire, hold and dispose of property, and to sue and be sued in the name of company.

Jubilee Cotton Mills Ltd. vs. Lewis

Registrar issued the certificate of incorporation on 8th January but dated it 6th January, which has the date on which he received the documents.
On 6th January some shares were allotted to Lewis.
The question arose whether the allotment made before the certificate was actually issued was void.
It was held that the certificate was conclusive evidence of incorporation on 6th January and that the allotment was not void on the ground that it was made before the company was incorporated.

Legality of Objects
Certificate of Incorporation does not mean ail objects of company are legal.

Conclusive Evidence – Section 7(7)

Certificate of Incorporation is not conclusive evidence.
If it is found that false or incorrect particulars were submitted or material information was suppressed at the time of incorporation of company, NCLT may on application pass following order:
- to direct regularisation; or
- to remove name of company from register; or
- to order winding up; or
- pass such other order as it deems fit
Before passing an order, NCLT shall give opportunity of hearing to the company.

Pre-Incorporation Contract Or Preliminary Contract
Meaning – Pre incorporation Contract
It means contract entered by the promoters on behalf of company before incorporation of company.

Position of Pre-in-corporation Con-tract
Following are two possible position of pre-incorporation contract:

The contract is binding. It is binding, if it is adopted as per sections 15 & 19 of the Specific Relief Act, 1963; or
The contract is not binding. If the contract is not binding, promoters are personally liable for such contract.

Effects of Pre-in-corporation Con-tract When not Adopted
Following are effects of pre-incorporation contract:

Not binding on company
Company cannot ratify it
Promoters are personally liable
Company cannot sue or be sued on that contract

Kelner vs. Baxter

Three promoters of a company signed a contract on behalf of company, while the company was not yet in existence, for the supply of goods that were to be used in the business of the company.
The company was subsequently registered but quickly became insolvent.
The supplier of goods therefore sued the promoters personally.
The Court held that the company was not in existence at the time of entering into contract and therefore it cannot be held liable. Promoters of company, who entered into contract on behalf are liable. Company cannot ratify contract.

Requirements of Adoption of a Pre-incorporation Contract

Pre-incorporation contract entered into by promoters are binding to company and other party if following conditions are satisfied:
The promoters entered into contract before incorporation and it was for company.
Contract is warranted by the terms of incorporation of
company (le. contract is within objects specified under MOA)
Company has accepted such contract after incorporation and communicated its acceptance to other party.

Applicability
Pre-incorporation contract is possible for all types of company.

Fresh Contract in Place of Pre-incorporation Contract
If company has entered into fresh contract in place of pre-incorporation contract after incorporation, pre-incorporation contract is discharge and fresh contract is binding to company and party. – Howard vs. Patent Ivory Manufacturing Co.

Commencement Of Business
Commencement of Business

According to Companies Amendment Act, 2015, company is not required to obtain Certificate to Commencement.
It means, company can start business immediately after getting Certificate of Incorporation.

Commencement of New Business by Existing Company

Company can undertake any business which is provided or supported by its object clause of MOA.
If existing company wants to commence any business other than stated under ‘object’ clause of MOA, it has to obtain prior permission of shareholders by way of Special Resolution.

Conversion Of Private Company Into Public Company And Vice Versa – Section 14
Common Principal

Conversion of private company into public company and vice versa is allowed subject to fulfilment of provisions of MOA and Companies Act, 2013.
Conversion of Private Company into Public Company
To convert priv ate company into public company following steps should be taken:
Convey General Meeting and pass Special Resolution.
Alter AOA to remove restriction contained under section 2(68) for private company.
If number of members are less than 7, increase number up to 7.
If number of directors are less than 3, increase number of directors by appointment.
File copy of Special Resolution passed in Form MGT-14.
Application from conversion shall be made in Form INC 27 & file altered copy of Articles to ROC.

Conversion of Public company into Private Company

Public company can be converted into private company by taking following steps:
Convey General Meeting and pass Special Resolution.
Alter AOA and insert restriction contained in section 2(68) which are necessary for private company
File copy of Special Resolution passed in Form MGT-14.
Application for conversion shall be made in Form INC 27
Get National Company Law Tribunal (NCLT) approval for conversion.
Copy of order of the Tribunal approving alteration shall be filed in Form INC 28.

Important Note:
In case of company having more than 200 members, the resolution to covert public company into private company is required to be passed through postal ballot.

Effect of Con-version – Section 18(3)

Conversion of private company into public company and vice versa will not effect:
Debts, liability, obligation or contracts incurred or entered into, by or on behalf of companv.
Any legal proceeding which is pending or continuing before any Court.
Rights of members.

Conversion Of Section 8 Company Into A Company Of Any Other Kind – Rules 21 & 22 Of Companies (Incorporation) Rules, 2014
Company registered with charitable objects may convert itself into company of any other kind after complying following conditions:

General Meeting

Convey General Meeting and pass Special Resolution for conversion.
File certified copy of resolution in Form MGT-14.

Application to Regional Director
File an application in Form INC 18 with the Regional Director (RD) with certified true copy of resolution and notice send of General Meeting. – Rule 21 of Companies (Incorporation) Rules, 2014

Copy Forwarded to Authorities

Copy of application made to RD should be send to Chief Commissioner of Income Tax, Charity Commissioner, and the Chief Secretary of State where registered office of company is situated.
These authorities can make presentation to RD within 60 days.
Copy of application made to RD is filed with ROC.

Publish Application to RD

Within one week from submitting an application to RD, publish notice in Form INC 19 in one vernacular newspaper and one English newspaper.
Copy of same is published on website notified by Central Government.
Copy of published notice in newspaper shall be submitted to RD immediately.

Declaration
Board of Directors shall give declaration that income or property of company has not been paid or shall not be paid bv way of dividend or bonus.

No Objection Certificate
If company has obtained any special status, privilege, exemption, benefit or grant from any government authority or government department, it shall obtain no-objection certificate from authority.

No Failure in Filing Financial Statement
Company should have filed all financial statements up to financial year preceding the submission of the application to RD and all other returns under Act.

Certificate of Compliance
Attach certificate from Practising CA/CS/CWA that company has complied with procedure of Act for conversion.

Approval of RD

On being satisfied, RD issues approval order.
On receipt of approval order, company shall convey General Meeting and pass Special Resolution for altering MOA & AOA.
File certified copy of order of RD with ROC within 30 days, altered copy of MOA-AOA and declaration by directors that conditions, if any, imposed by RD have been fully complied with.

Revocation of License
After conversion, an application for revocation of license cense shall be submitted in Form INC 20.

Conversion Of Opc Into Public Or Private Company – Rule 6 Of Companies (Incorporation) Rules, 2014

OPC can be converted into public or private company either:
- Compulsorily; or
- Voluntary
When OPC cross threshold limit specified for paid up capital or turnover, steps should be taken to convert it compulsorily into public or private company.

Compulsory Conversion

OPC shall cease status of OPC and convert itself compulsory either into private or public company if:
Paid up capital exceeds ₹ 50 Lacs; and
Average annual turnover during three preceding financial years exceed ₹ 2 Crore
It shall convert within period of 6 months from when paid capital exceed or 6 months from relevant period.

Voluntary Con-version

To convert into private or public company, OPC shall take following steps:
Increase number of members and directors.
Pass Special Resolution at General Meeting to alter MOA & AOA.
Notice in Form INC 5 is given to ROC within 60 days

Conversion Of Private Company Into Opc – Rule 7 Of Companies (Incorporation) Rules, 2014
Which Private Company can be Converted into OPC?

Following private company can be converted into OPC:
Where it has paid up capital ₹ 50 Lacs or less; and
Its average turnover during three preceding financial years is ₹ 2 Crore or more

Important Note:
Section 8 company cannot be converted into OPC.

Procedure for Conversion

Following steps shall be taken for conversion of private company into OPC:
Obtain NOC from members and creditors
Pass Special Resolution at General Meeting
File Form MGT-14 with certified copy of Special Resolution passed to ROC
File an application in Form INC 6 for conversion. Following documents attached with application:
Affidavit by directors that members and creditors have given their consents
List of members and creditors
Last audited Balance Sheet & Profit and Loss Account
No objection letter from creditors

Incorporation Of One Person Company (Opc)
Procedure of incorporation of OPC is very similar to incorporation of any other company. Following are steps required to be taken to incorporate OPC:

Step 1 Name Approval

Application should be made with Registrar in Form INC 1 for reservation of name after checking availability of name online.
Name of OPC shall end with word ‘OPC’.

Step 2 Application for Incorporation

After receipt of name approval letter, application shall file an application to incorporate OPC in Form INC 32.
Following documents are attached with Form INC 32:
MOA&AOA
Consent of nominee in Form INC 3
Declaration from the subscribers to memorandum and first directors in Form INC 9
Particulars of Directors in Form INC 12
Declaration by professional in Form INC 8
Applicant is required to pay fees and stamp duty on MCA portal.

Important Note:

OPC shall have one member and minimum one director.
If company intends to pursue any object which requires registration or approval from sectoral regulators like SEBI, RBI, TRAI etc., a declaration shall be filed at the time of incorporation that company shall obtain the required approval before pursuing that object.
Proviso to Rule 12 of Companies (Incorporation) Rules, 2014, inserted w.e.f. 29-5-2015.

Step 3 Certificate of Incorporation

If all above documents are in order, Registrar will issue certificate of Incorporation.
Furnishing verification of Registered Office in Form INC 22 within 30 days of incorporation.

Special Provisions for OPC
Member or nominee in one OPC
Person who is member or nominee in one OPC cannot incorporate more than one OPC or become nominee in more than one such company.

Change in membership of OPC

The company shall file Form INC-4 in case of cessation of member of OPC on account of death, incapacity to contract or change in ownership.
In the same form, user needs to provide details of the new member of the OPC.
Form INC-4 shall be hied in case of withdrawal of consent by the nominee or in case of intimation of change in nominee by the member.

Member of OPC becomes member in another OPC by virtue of being a nominee
Where a person, being member in OPC becomes a member in another OPC by virtue of his being a nominee in that OPC, then such person shall meet the eligibility criteria of being a member in only one OPC within a period of one hundred and eighty days, Le., he shall withdraw his membership from either of the OPCs within 180 days.

Incorporation of section 8 company (Association Not For Profit)

Section 8 company can be incorporated like any other company.
Promoters desirous to incorporate section 8 company shall apply to Central Government and obtain license.
Section 8 company may be private company or public company.
Section 8 company is incorporated as limited company.
Following two methods are available for getting license: a License for new company with charitable objects.
H License for existing company.

Procedure to Get License for New Company – Rule 19 Companies (Incorporation) Rules, 2014
Application
Person proposed to incorporate section 8 Company shall make an application in Form INC 12.

Attachments with an Application

Following documents shall be attached with an application:
Memorandum of association in Form INC 13.
A declaration in Form INC 14 that draft MOA-AOA are in conformity with section 8 and rules of Companies Act, 2013. This declaration can be given by an advocate or Practising CA or CS or CWA.
An estimate about future income and expenditure and sources of its income and object of expenditure for next 3 years.
Declaration by each applicant in Form INC 15.

Procedure to Get License for Existing Company – Rule 20 Companies (Incorporation) Rules, 2014
Application
Company which is registered under previous Companies Act or Companies Act, 2013 and having charitable object may apply in Form INC 12 to obtain license.

Attachment with an Application

Following documents shall be attached with an application:
Memorandum of Association and Articles of Association.
A declaration in Form INC 14 that draft MOA-AOA are in conformity with Section 8 and rules of
Companies Act, 2013. This declaration can be given by an advocate or Practising CA or CS or CWA.
Last two years financial statements, Directors’ Report and Auditor’s Report.
Statement showing details of assets and liabilities.
An estimate about future income and expenditure and sources of its income and object of expenditure for next 3 years.
Certified copy of Board-General Meeting resolution approving registration of company under section 8.
Declaration by each applicant in Form INC 15

Notice

The company shall, within a week from the date of making the application to the Registrar, publish a notice in Form INC 26 in:
a vernacular newspaper where the Registered Office of company is situated, and an English newspaper
Above notice is published on the websites as may be notified by the Central Government.
A copy of the published notice shall be sent to the Registrar.

Approval of Authority

Registrar may require applicant to get approval from other authority, body or Government.
Registrar will decide objection, if any, raised from any authority or Government within 30 days from publication of notice in newspaper.
Issue of License (For above both methods)
Registrar shall issue license in Form INC 16 or Form INC 17.
Registrar can impose conditions at the time of issue of license which is necessary.

Revocation of License

Central Government can revoke license granted to section 8 company if:
It contravenes any terms and conditions of license
Affairs of company are conducted with fraudulent objective or prejudicial to public interest
Before revocation of license, Central Government shall give written notice and opportunity of being heard.
On revocation of license, Central Government may direct:
To convert it status and change its name
To wind up company if it is necessary in public interest
To amalgamate with any other section 8 company or company with similar object in public interest

Practice Questions

Question 1.
Private company can commence business immediately after receipt of ‘certificate of incorporation’. Comment.
Answer:
The requirement of Certificate of Commencement is omitted by Companies Amendment Act, 2015. Now, company can commence its business immediately after Certificate of Incorporation.

Question 2.
The promoter of new company have decided to start their company with the name ‘i2 Technologies Ltd.’ However, the jurisdictional Registrar of company has declined to allow the name starting with small alphabets. Is the ROC’s contention valid under the company law as prevalent in India?
Answer:
ROC may allow name starting with small alphabets i2 Technologies Ltd., provided that name starting with small alphabets does not have phonetic or visual resemblances with name of company already registered. ROC’s contention is invalid in this case.

Question 3.
The promoters of a company are not only agents but also trustees for the company promoted. Comment.
Answer:
Statement is false. Promoters are not agent of company. They start working before company is incorporated. Please refer paragraph no.

Question 4.
A, B, C and D developed a business plan. To implement the plan, it was decided that A and B will incorporate a company and C, a Chartered Accountant, will provide them his professional services for the same.
It was also decided that D will provide loan to the company. The loan to be provided by D was essential to start the business of the company. Advice, out of C and D, who shall be regarded as a promoter of the company.
Answer:
Persons acting in professional capacity are not regarded as promoters. At the same time, person who provides loan to company to start its business cannot be regarded as promoter especially when he is not satisfying any one condition of section 2(69). Accordingly, neither Mr. C nor Mr. D are promoters.

Question 5.
Mr. A an Indian Citizen wants to appoint his wife as nominee for proposed OPC. Advice.
Answer:
Member of OPC can appoint any person as nominee. Nominee can be relative, spouse or friend. There is no prohibition under Companies Act, 2013 to appoint relative, spouse or friend from appointment of nominee of OPC.

Question 6.
Mitesh is 15 years old student. He wants to start his own OPC for software development. Advice.
Answer:
Minor cannot be member or nominee in OPC.

Question 7.
Raj is director in A Ltd. He has incorporated Raj One Person Company. Now, he wants to appoint his friend as sleeping partner in OPC. Advice
Answer:
Raj cannot appoint his friend as sleeping partner in OPC. OPC does not have concept of sleeping partner.

Question 8.
Whether ROC can allow name of company as ‘Three Ltd.’ when another ‘ company is already registered with name ‘3 Ltd.’?
Answer:
Name ‘3 Ltd.’ shall not be allowed. If a name contains numeric character like 3, resemblance shall be checked with ‘Three’.

Question 9.
The promoters of your company, incorporated on 9th April 2016, had entered into a contract with M on 8th March 2016 for supply of goods. After incorporation, your company does not want to proceed with the contract. As a company secretary, advise the management of your company.
Answer:
Pre-incorporation contract is void ab initio unless company immediately after incorporation adopts it.

Past Examination Questions

Question 1.
The Registrar of Companies issued a Certificate of Incorporation on 8th January 2014. However, by mistake, the certificate was dated 5th January 2014. An allotment of shares was made on 7th January 2014. Could the allotment be declared void on this ground that it was made before the company was incorporated? (CA May 1999)
Answer:
Allotment is valid. The moment company is registered and Certificate of Incorporation is granted, it becomes legal entity.

Question 2.
XYZ Co. Ltd. was in the process of incorporation. Promoters of the company signed an agreement for the purchase of certain furniture for the company and payment was to be made to the suppliers of furniture by the company after incorporation. The company was incorporated and the furniture was used by it. Shortly after incorporation, the company went into liquidation and debt could not be paid by the company for the purchase of above furniture. As a result, supplier sued the promoters of the company for the recovery of money.
Examine whether promoters can be held liable for payment under the following situations:
i. When the company has already adopted the contract after incorporation?
ii. When the company makes a fresh contract with the suppliers in terms of pre-incorporation contract? (CA November 2001, May 2013)
Or
K Ltd. was in the process of incorporation. Promoters of the company , signed an agreement for the purchase of certain furniture for the company
and payment was to be made to the suppliers of furniture by the company after incorporation. The company was incorporated and the furniture was used by it. Shortly after incorporation, the company went into liquidation and debt could not be paid by the company for the purchase of above furniture. As a result, supplier sued the promoters of the company for the recovery of money.
Examine whether promoters can be held liable for payment under the following situations:
i. When the company has already adopted the contract after incorporation?
ii. When the company makes a fresh contract with the suppliers in terms of pre-incorporation contract? (CA May 2013)
Answer:
(i) A company cannot ratify pre-incorporation contract entered into by the promoters on its behalf. The promoter will be liable for it as company has not entered into fresh contract. Adoption of contract means ratify contract.
(ii) If company after incorporation enters into fresh contract with same terms and conditions, liability of promoters will be over.

Question 3.
A company was incorporated on 6th October, 2003. The certificate of incorporation of the company was issued by the Registrar on 15th October, 2003. The company on 10th October, 2003 entered into a contract which created its contractual liabilities. The company denies the said liability on the ground that company is not bound by the contract entered into prior to issuing of certificate of incorporation. Decide under the provisions of the Companies Act, 2013, whether the company can be exempted from the said contractual liability. (CA November 2003)
Or
Sunrise Limited submitted the documents for incorporation on 5th October, 2015. It was incorporated and certificate of incorporation of the company was issued by the Registrar on 20th October, 2015. The company on 14th October, 2015 entered into a contract which created its contractual liabilities. The company denies the said liability on the ground that company is not bound by the contract entered into prior to issuing of certificate of incorporation. Decide under the provisions of the Companies Act, 2013, whether the company can be exempted from the said contractual liability.
Answer:
It is pre-incorporation contract. Pre-incorporation contract can be enforced against company, if same contract is warranted by terms of incorporation and adopted by company after incorporation as per section 19 of Specific Relief Act, 1963.
In the given case, company has neither entered into fresh contract nor adopted pre-incorporation contract pursuant to Specific Relief Act, 1963, company can be exempted from the said contractual liability.

Question 4.
Explain the provisions of the Companies Act, 2013 relating to registration of a non-profit organization as a company? What procedure is required to be adopted for the said purpose? (CA May 2004)
Or
Mr. V, along with six other persons desire to float a company for charitable purpose, as permissible under section 8 of the Companies Act, 2013. He seeks you advise about the procedure to be followed to give effect to the above proposal. Advise him. (CA November 2007)
Or
What is the law and procedure relating to registration of a non-profit organisation as a company under Company Law. (CA May 2011)
Answer:

Question 5.
What is a meaning of Certificate of Incorporation? (CA May 2006)
Answer:

Question 6.
Though six out of seven signatures to the Memorandum of Association of a company were forged, the company was registered and the Certificate of Incorporation issued. Can the registration of the company be challenged subsequently on the ground of forged signatures? (CA May 2007)
Answer:

Question 7.
Mr. Ram Lai and his friend desire to incorporate a public company and approach you for help. Advise. (CA May 2007)
Answer:

Question 8.
What is meant by ‘Pre-incorporation Contracts’? Can these contracts be enforced by the prospective company after its incorporation against the third parties with whom the promoters had entered into certain contracts? Explain. (CA November 2007)
Answer:

Question 9.
Mr. Ramlal and his friend desire to incorporate a public company and approach you for help. Advice. (CA November 2007)
Answer:

Question 10.
Before the incorporation of the company, the promoters of the company entered into an agreement with Mr. A to buy an immovable property on behalf of the company. After incorporation, the company refused to buy the said property. Advise Mr. A whether he has any remedy under the provisions of the Companies Act, 2013? (CA May 2008)
Answer:
It is case of pre-incorporation contract. For pre-incorporation contract, company cannot sue or be sued when it comes into existence. However, Mr. A has remedy available against promoter or person who has entered into pre-incorporation contract on behalf of company.

Question 11.
A certificate of incorporation issued by the Registrar of Companies is not valid if all the signatures of the subscribers to Memorandum of Association have been forged. (CA May 2008)
Answer:
Certificate of registration may be cancelled.

Question 12.
The Memorandum of Association of a company was presented to the Registrar of Companies for registration and the Registrar issued the certificate of incorporation. After complying with all the legal formalities a company started a business according to the object clause, which was clearly an illegal business. The company contends that the nature of the business cannot be gone into as the certificate of incorporation is conclusive. Answer the question whether company’s contention is correct or not. (CA November 2008)
Answer:
Registration of company and issue of certificate of incorporation do not guarantee that object clause of company is legal. If object of company is found to be illegal, registration of company can be cancelled. Therefore, contention of company is not tenable. Nature of business can be gone in to (ie. examine) after issue of certificate of incorporation.

Question 13.
Decide, under the Companies Act, 2013 whether Mr. Prabhu can incorporate a new company using the phrase ‘Electrol Trust’ with the name of company. (CA May 2014)
Answer:
Yes. He can incorporate section 8 company with ‘Electrol Trust’ as per Electrol Trusts Scheme 2013.

Question 14.
Who shall be considered as promoter according to the definition given in the Companies Act, 2013? Explain (CA November 2014)
Answer:

Question 15.
The promoters of your company, incorporated on 9th April 2016, had entered into a contract with M on 8th March 2016 for supply of goods. After incorporation, your company does not want to proceed with the contract. As a company secretary, advise the management of your company.
Answer:
Pre-incorporation contract is void ab initio unless company immediately after incorporation adopts it.

Question 16.
State the documents and information for registration of One Person Company (OPC) required to be filed with the Registration of Companies (CA May 2016)
Answer:

Incorporation of Company – CA Inter Law Notes

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