describe the procedure of incorporation company
Answers
Explanation:
Steps In Incorporation of A Company
The incorporation of a company refers to the legal process that is used to form a corporate entity or a company. An incorporated company is a separate legal entity on its own, recognized by the law. These corporations can be identified with terms like ‘Inc’ or ‘Limited’ in their names. It becomes a corporate legal entity completely separate from its owners
Steps in Incorporation of a Company
A group of seven or more people can come together so as to form a public company whereas, only two are needed to form a private company. The following steps are involved in the incorporation of a company.
incorporation of a company
1. Ascertaining Availability of Name
The first step in the incorporation of any company is to choose an appropriate name. A company is identified through the name it registers. The name of the company is stated in the memorandum of association of the company. The company’s name must end with ‘Limited’ if it’s a public company and ‘Private Limited’ if its a private company.
To check whether the chosen name is available for adoption, the promoters have to write an application to the Registrar of Companies of the State. A 500 rupee is paid with the application. The Registrar then allows the company to adopt the name given they fulfill all legal documentation formalities within a period of three months.
2. Preparation of Memorandum of Association and Articles of Association
The memorandum of association of a company can be referred to as its constitution or rulebook. The memorandum states the field in which the company will do business, objectives of the company, as well as the type of business the company plans to undertake. It is further divided into five clauses
Name Clause
Registered Office Clause
Objects Clause
Liability Clause
Capital Clause
Articles of Association is basically a document that states rules which the internal management of the company will follow. The article creates a contract between the company and its members. The article mentions the rights, duties, and liabilities of the members. It is equally binding on all the members of the company.
3. Printing, Signing and Stamping, Vetting of Memorandum and Articles
The Registrar of Companies often helps promoters to draw up and draft the memorandum and articles of association. Above all, with promoters who have no previous experience in drafting the memorandum and articles.
Once these have been vetted by the Registrar of Companies, then the memorandum of association and articles of association can be printed. The memorandum and articles are consequently divided into paragraphs and arranged chronologically.
The articles have to be individually signed by each subscriber or their representative in the presence of a witness, otherwise, it will not be valid.