MOA and AOA for Scribd

MEMORANDUM OF ASSOCIATION, ARTICLES OF ASSOCIATION, AND OTHER DOCUMENTS

SPECIALIZATION: FINANCE

YEAR OF SUBMISSION: - AUGUST, 2011

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ACKNOWLEDGEMENT

With immense pleasure I would like to take this opportunity to present this report on “Memorandum Of Association, Articles Of Association, and Other Documents”. I thank xxxxxxxxxxxx for providing me this opportunity to present this project. Special thanks to xxxxxxxxxx for his invaluable guidance, co –operation and taking his time out of his busy schedule to help me with this project, Acknowledgments are due to my parents, friends, colleagues, and all those who have directly or indirectly helped in the successful completion of the project.

xxxxxxxxxx

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TABLE OF CONTENT

 TITLE PAGE…………………………………………………………………………..… …...1  ACKNOWLEDGEMENT….…………………………………………………………… ……2  CERTIFICATE FROM THE GUIDE….………………………………………………… …3

A. INTRODUCTION 

Incorporation of a Company..…………………………. ………..…………………….… …6



Documents in detail... …………………………………………………………………… …..8



Procedure to establish a company……………………………………………………… ...59



Requirements for a Private limited company……………………………………………. .61



Requirements for a Public limited company………………...…………………………….64



Locations of Registrars of Companies in India…………………………..…………… …65



New Directors registration requirements in India……………………………………. ..…67

B. BACKGROUND 

Indian Companies Act 1956……………………………………………………………… . .68

C.METHODOLOGY 

Assumptions about the business……………………………. …….………………..… …74

D. CONCLUSIONS……………………………. …….………………………………………..… …78 E. RECOMMENDATIONS……………………………. …….………………………………..… …81 F. LIMITATIONS……………………………. …….…………………………………………..…… 82 G.BIBLIOGRAPHY……………………………. …….………………………………………..… …83

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INTRODUCTION

The Indian Companies Act of 1956 sets down rules for the establishment of both public and private companies. The most commonly used corporate form is the limited company, unlimited companies being relatively uncommon. A company is formed by registering the Memorandum and Articles of Association with the State Registrar of Companies of the state in which the main office is to be located. MOA and AOA stand for Memorandum Of Association and Articles Of Association respectively and are important source of information for shareholders and other stakeholders in a company that has been duly incorporated. These are documents that are necessary at the time of formation of a company and must be deposited with the registrar of companies who approves the incorporation of the company. Though there are similarities, there are differences between MOA and AOA that need to be highlighted for the benefit of all those who are stakeholders in a company or are potential investors as these documents reveal a lot about a company. Foreign companies engaged in manufacturing and trading activities abroad are permitted by the Reserve Bank of India to open branch offices in India for the purpose of carrying on the following activities in India: 

To represent the parent company or other foreign companies in various matters in India, for example, acting as buying/selling agents in India, etc.



To conduct research work in which the parent company is engaged provided the results of the research work are made available to Indian companies



to undertake export and import trading activities



to promote possible technical and financial collaboration between Indian companies and overseas companies.

Application for permission to open a branch, a project office or liaison office is made via the Reserve Bank of India by submitting form FNC-5 to the Controller, Foreign Investment and Technology Transfer Section of the Reserve Bank of India. For opening a project or site office, application may be made on Form FNC-10 to the regional offices of the Reserve Bank of India. A foreign investor need not have a local partner, whether or not the foreigner wants to hold full equity of the company. The portion of the equity thus not held by the foreign investor can be offered to the public.

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INCORPORATION OF A COMPANY Persons desirous of forming a company must adhere to the step by step procedure as discussed below:1. 2. 3. 4. 5. 6. 7. 8.

Selection of type of the company. Selection of name for the proposed company. Apply for Directors Identification Number and Digital Signatures. Drafting of Memorandum and Articles of Association. Stamping, digitally signing and e-filing of various documents with the Registrar. Payment of Fees. Obtaining Certificate of Incorporation. Preparation and filing of Prospectus/Statement in lieu of Prospectus and e-Form 19/20 (in case of public companies) for obtaining the certificate of commencement of business. 9. Obtaining Certificate of Commencement of business (in case of public limited companies). 1. Selection of the type of company The Promoters of a company may be individual entrepreneurs or body corporate engaged in efforts to incorporate a company. They have the power of defining the object of the company and deciding various matters for the company proposed to be incorporated. It is depending upon, the purposes for which the company is to be incorporated, proposed scale of operations, capital involved, etc. The promoters can select type of the company as they wish to form themselves into viz. private company, public company, non-profit making company, etc. 2. Selection of name Six names are required to be selected in order of preference after taking notes of numerous provisions, clarifications, circulars and rules made by the Ministry of Corporate Affairs, etc. In case key word is required, significance of each key word should be given in the e-Form 1A. 2.1

Applying for ascertaining the availability of the selected name The promoters are required to make an application to the concerned Registrar of Companies to be submitted electronically to the Ministry of Corporate Affairs on the portal of MCA. An application shall be in e-Form 1A as prescribed by Notification No. GSR 56(E) dated 10th Feb., 2006 duly digitally signed by any one promoter or managing director or director or manager or secretary of the company along with the required fee for ascertaining whether the selected name is available for adoption by the promoters of the proposed company.

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Approval of the name After receipt of completed application in e-Form 1A, the Registrar shall intimate whether the proposed name is available for adoption or not. The confirmation of the name made available by the Registrar shall be valid for a period of six months.In case, if the promoters fail to submit all the required documents for incorporation within that period, then they are required to submit another application after payment of requisite fees. 5/82

3. Requirement for having DIN As per provison to section 253 of the Companies Act, 1956, inserted by the Companies (Amendment) Act, 2006, w.e.f. 1-11-2006, no company shall appoint or re-appoint any individual as director of the company unless he has been allotted a Director Identification Number under section 266B. New section 266A has been inserted by the Companies (Amendment) Act, 2006 which provides that every individual, intending to be appointed as director of a company shall make an application for allotment of Director Identification Number (DIN) to the Central Government in the prescribed DIN Form. Therefore, before submission of e-Form 1A all the directors of the proposed company must ensure that they are having DIN and if they are not having DIN, it should be first obtained. Specific care should be taken that a person cannot have more than one DIN, therefore, a DIN once obtained shall serve the requirement for all the companies in which he is a director or intended to be a director. 3.1

Requirement for having digital signatures After 16th Sept., 2006, every documents prescribed under the Companies Act, 1956 is required to be filed with the digital signature of the managing director or director or manager or secretary of the Company, therefore, it is compulsorily required to obtain digital signatures of at least one director to sign the e-Form 1A and other documents. It may be noted that if the director or other persons covered are having digital signatures, their signatures may be used for the above said purpose and there is no need take new signature again.

4. Preparation of the Memorandum of Association (MOA) and Articles of Association (AOA) Drafting of the MOA and AOA is generally a step subsequent to the availability of name made by the Registrar. It should be noted that the main objects should match with the objects shown in e-Form. These two documents are basically the charter and internal rules and regulations of the companies. Therefore, they must be drafted with utmost care with the experts advise and the other object clause should be drafted in a very broader sense.

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DOCUMENTS IN DETAIL 

APPROVAL OF NAME

The first step in the formation of a company is the approval of the name by the Registrar of Companies (ROC) in the State/Union Territory in which the company will maintain its Registered Office. This approval is provided subject to certain conditions: for instance, there should not be an existing company by the same name. Further, the last words in the name are required to be "Private Ltd." in the case of a private company and "Limited" in the case of a Public Company. The application should mention at least four suitable names of the proposed company, in order of preference. In the case of a private limited company, the name of the company should end with the words "Private Limited" as the last words. In case of a public limited company, the name of the company should end with the word "Limited" as the last word. The ROC generally informs the applicant within seven days from the date of submission of the application, whether or not any of the names applied for is available. Once a name is approved, it is valid for a period of six months, within which time Memorandum of Association and Articles of Association together with miscellaneous documents should be filed. If one is unable to do so, an application may be made for renewal of name by paying additional fees. After obtaining the name approval, it normally takes approximately two to three weeks to incorporate a company depending on where the company is registered.

 MOA MOA is the document that reveals the name, registered office address, aims and objectives of the company, clause about its limited liability, share capital, minimum paid up capital etc. MOA also gives information about its first shareholders including the number of shares subscribed by them. MOA is one document that tells people all about the company and its relationship with the outside world. Though it is essential to submit MOA with the registrar when a company is being formed, it does not find mention in the constitution of the company. Subsequent to an amendment added in 2006 Companies Act, it is no longer mandatory to include the details about name, address, objectives and first shareholders names. Hence there is no restriction upon a company to engage in a particular business. In simple language the Memorandum of Association is the most important document as it defines the objectives of the company. No company can legally undertake activities that are not contained in its Memorandum of Association. The Memorandum of Association must be signed by at least seven persons in case of a public company and by two persons in case of a private company. The Memorandum of Association contains different clauses, which are given as follows:

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The name clause: This clause contains the name of the company with which the company will be known, which has already been approved by the Registrar of Companies. Objects clause: This is probably the most important clause of the memorandum. It defines the purpose for which the company is formed. A company is not legally entitled to undertake an activity, which is beyond the objects stated in this clause. The object clause is divided into two sub clauses, which are: The main objects: The main objects for which the company is formed are listed in this sub-clause. It must be observed that an act which is either essential or incidental for the attainment of the main objects of the company is deemed to be valid, although it may not have been stated explicitly in the subclause. Other objects: Objects not included in the main objects could be stated in this sub-clause. However, if a company wishes to undertake a business included in this sub clause, it has to either pass a special resolution or pass an ordinary resolution and get central government‟s approval for the same. Registered office clause: This clause contains the name of the state, in which the registered office of the company is proposed to be situated. The exact address of the registered office is not required at this stage but the same must be notified to the Registrar within thirty days of the incorporation of the company. Capital clause: This clause specifies the maximum capital which the company will be authorized to raise through the issue of shares. The authorized share capital of the proposed company along with its division into the number of shares having a fixed face value is specified in this clause. Association clause: In this clause, the signatories to the Memorandum of Association state their intention to be associated with the company and also give their consent to purchase qualification shares. Below is an example of an MOA of a Private Ltd Company.

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MEMORANDUM OF ASSOCIATION OF ASSOCIATION OF SPECTRUM LIGHTS PROCESSING PVT. LTD. THE COMPANIES ACT, 1956 COMPANY LIMITED BY SHARES MEMORANDUM OF ASSOCIATION OF SPECTRUM LIGHTS PROCESSING PRIVATE LIMITED I. The name of the company is SPECTRUM LIGHTS PROCESING PRIVATE LIMITED II. The Registered Office of the Company will be situated in the State of Maharashtra under the jurisdiction of the Registrar of Companies, Maharashtra at Mumbai. III.The Objects for which the Company is established are :

(A) MAIN OBJECTS OF THE COMPANY TO BE PURSUED BY THE COMPANY ON ITS INCORPORATION : 1. To process, convert, fabricate, manufacture, produce, refine, prepare, treat and otherwise deal in all products related in all forms electrical, electronic, automatic or semi – automatic computers, computer software and hardware products, control magnetic tapes, sound recordings and telephonic and telegraphic installations, chemical material office and all other scientific and photographic instruments, machines, appliances and other industries 2. To impart training and development in air navigation systems & spare equipments. To enter into collaborations, affiliations and tieups with similar companies both in India and outside India.

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3. To carry on the business of manufacturers, importers, exporters, manufacturer‟s representatives and agents and dealing in computer peripherals of every descriptions, to provide all or any of services as a computer service bureau, to engage in data preparation, data processing and programming services, to acquire, sell let lease or hire and otherwise deal in computer time softwares and hardwares. (B) OBJECTS INCIDENTAL OR ANCILLARY TO THE ATTAINMENT OF THE MAIN OBJECTS : 1.

To issue on commission, subscribe for, take, acquire and hold, sell, exchange and deal in shares, stocks, bonds obligations and security of any Government Local Authority or Company.

2.

To acquire, takeover and undertake the whole or any part of the business, property or / and liabilities of any person, partnership or proprietary firm or company carrying on any business which the company is authorized to carry on or possessed or property suitable for the purpose of the Company.

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:3: 3.

To apply for purchase or otherwise acquire any patents, brevets, inventions, licenses, concessions and like, conferring any exclusive or non-exclusive or limited rights to use or any secret or other information as to any which any invention seem capable or being used for any of the purpose of the Company or the acquisition of which many seem calculated directly or indirectly to benefit the company and to use, exercise develop or grant licenses in respect of or otherwise, turn to account in property, right or information so acquired.

4.

To establish, maintain, conduct, provide, procure or make available computer services, including computerized type setting / printing to acquire computers, to conduct feasibility studies, to process data and develop software and hardware, for the transfer and transmission of shares / securities / debentures / bonds / units and other market instruments, to carry on business of registrar to the New Issue / Rights Shares / Bonus shares and Debentures issues convertible or non convertible, and other issues made by the public limited companies or government corporations for the purpose of the business of the Company.

5.

To buy, sell deal-in import, export carry on research and development work to design and develop system software, application software, transfer software and other portfolio management software securities and share accounting software and share accounting packages for the purpose of the business of the Company.

6.

To provide consultancy services advices in India and abroad about securities dealing managerial and marketing services.

7.

To participate, plan and provide consultancy in launching of public issue of equity shares/debentures/securities/euro issues commercial papers or any other money market instruments in India and abroad for public and private enterprises.

8.

To pay out of the funds of the Company all expenses which the company lawfully pay with respect to the formation, registration, of this Company and the issue and the subscription of the shares or loan capital including brokerage and/or commission for obtaining applications for placing or

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shares

and

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guaranteeing the placing of shares or any debentures, debenture-stock and other securities of this Company and also all expenses printing, stamping and circulating of proxies and forms to be filled up by the members of the Company and to remunerate by cash or allotment of fully or partly paid shares to any person, firm or company for services rendered in introducing any property or business to the company or in placing, assisting to place shares, debentures, debenture-stock or other securities of the company or in or about the formation of the company or the acquisition of property by the Company or the conduct of its business or for any other reason which the Company may think proper. 9.

To amalgamate, enter into partnership into any arrangement for sharing profits, union of interest corporation, joint venture or reciprocal concession or for limiting competition with any individual, person or company having similar objects carrying on or engaged in, any business or transaction which the company is authorized to carry on.

10.

To undertake or participate in the formation, management, supervision or control of the business operation of any other company, firm or person, having similar objects.

11.

To receive money on deposit other than public deposit or loan and borrow or raise in such manner as the company shall think fit, and in particular by the issue of debentures or guarantee the subscription thereof and other things capable of being held by way of investment in debenture stock (perpetual or otherwise and secure the repayment of any money borrowed, raised or own by mortgage, charge or lien upon all or any of the property of assets of the company (both present and future) including its uncalled capital, and also by a similar mortgage, charge or lien to secure and guarantee the performance by the company or any other persons or company of any other person or company of any obligation undertaken by the company or any other person or company as the case may be but shall not carry on the business of Banking as defined in the Banking Regulation Act, 1949. subject to provision of Section 58A and directives of Reserve Bank of India.

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12.

To purchase, acquire or undertake, or takeover the whole or any part of the business, goodwill property contracts, agreements, rights, privileges, effects and liability of any persons, firm, or company carrying on or proposing to carry on or ceasing to carry on any business, or activity which the company is authorized to carry on and upon such terms and subject to such stipulations and conditions and at or for such price or consideration (if any) in money, shares debentures money worth or otherwise as may be deemed fit.

13.

To enter into any arrangements with any government or authorities supreme, municipal local or otherwise, of any person or company that may seem conducive to the Company's objects or any of them to obtain from any such government, authorities, person or company any rights, privileges, charters, contracts, licenses and concessions which the Company may think it desirable to obtain, and to carry out, exercise and comply with any such arrangements, rights, privileges, charters, contracts, licenses and concessions.

14.

To employ experts to investigate and examine into the conditions, prospects, value, charter and circumstances of business concerns and undertaking and of any assets, concessions, properties or rights.

15.

To sell, mortgage, exchange grant leases, licenses, easements other rights in respect of, improve, manage, develop and turn to account or deal with in any manner the whole of the property, asset in investments, undertakings, rights, and effects of the company or any part thereof for such consideration as may be thought fit, including shares, debentures or securities of any other company, whether partly paid or fully paid up.

16.

To establish, promote or concur in establishing or promoting any company or companies having similar objects for the purpose of acquiring all or any of the properties, rights and liabilities of the Company.

17.

To draw, make, accept, endorse, discount, execute, issue, negotiate, assign and otherwise deal with cheques, drafts, bills of exchange, promissory notes, hundies, debentures, bonds, bills of lading, letter of credit, delivery order, dock warrants, railway or transport receipts, warrants and all other negotiable or commercial mercantile investments connected with the business of the company.

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18.

To procure the recognition of the Company under the laws or regulation of any other country, state or place outside India, and to do all acts necessary or carrying on any business or activity of the company in any foreign country.

19.

To donate or gift in cash or kind, for any national charitable, benevolent, public or to any institutions, club, society, research association fund, university, college or any other person or body.

20.

To acquire real or leasehold estate and to purchase, lease, construct or otherwise acquire or provide in any place in which any part of the business of the Company may, from time to time, be carried on, all such offices, buildings, houses for employees and Directors, machineries, plant and appliances, as may be considered requisite for the purpose of carrying on the business of the Company or any part thereof.

21.

To sell, improve, manage, develop, lease, rent, mortgage, abandon, dispose of, turn to account or otherwise deal with all or any part of the property and right of the Company.

22.

To carry on the activity of dissemination of useful information by publishing books, magazines, producing films, documentaries and serials, in connection with the business of the Company.

23.

To form, constitute, float, lend money to assist and associations or undertakings whatsoever.

24.

To pay for any properties, rights or privileges acquired by the Company either in shares of the Company or partly in shares and partly in cash or otherwise.

25.

To insure with any other company or person against losses, damages, risks and liabilities of all kinds, which may affect in this Company.

26.

To search for and to purchase, protect, prolong, renew or otherwise, acquire from any Government, State or Authority any patents, protections, licenses, concessions, grants, decrees, rights, powers and privileges, whatsoever, which may seem to the Company capable of being turned to account to work, develop, carry out, exercise and turn to account the same.

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control similar companies,

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27.

To hold, use, work, manage, improve, carry on and develop the lands and moveable and immoveable estate or property and assets of any kind of the Company or any part thereof.

28.

To let mortgage or sell otherwise dispose of any property of the Company either absolutely or conditionally and in such manner and upon such terms and conditions in all respects as may be thought fit and to accept payment or satisfaction for the same in cash or otherwise.

29.

To enter into any arrangements with any government or authorities supreme, municipal local or otherwise, of any person or company that may seem conducive to the Company's objects or any of them to obtain from any such government, authorities, person or company any rights, privileges, charters, contracts, licenses and concessions which the Company may think it desirable to obtain, and to carry out, exercise and comply with any such arrangements, rights, privileges, charters, contracts, licenses and concessions.

30.

To lend, invest or otherwise employ or deal with money belonging to or entrusted to the Company in securities and shares or other movable or immovable property or with or without security upon such terms and in such manner as may be thought proper and from time to time to vary such transactions and investments in such manner as the Directors may think fit subject to the provisions of the Companies Act, 1956.

31.

To open account or accounts with any bank or banks or and to pay in to and to withdraw money for such accounts.

32.

To apply for tender, purchase or otherwise acquire any contracts, sub-contracts, licenses and concessions for or in relation to the objects of business herein mentioned or any of them, and to undertake, execute, carry out, dispose of or otherwise turn to account the same.

33

To carry on business or branch of a business which this company is authorized to carry on by means or through the agency of any subsidiary company or companies and to enter into any arrangement with such subsidiary company for taking the profits and bearing the losses of any business branch so carried on, or for financing any such subsidiary company or guaranteeing its liabilities or to make any other arrangement which may seem desirable with

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reference to any business or branch so carried on including power at any time and either temporarily or permanently to close any such branch or business. 34.

To nominate any Directors or Managers of any subsidiary company or of any other company in which this company is or may be interested.

35.

To take part in the management, supervision and control of the business or operations of any company or undertaking having similar objects and for that purpose to appoint and remunerate any directors, trustees, accounts or other experts.

36.

To pay all preliminary expenses of any company promoted by the Company or any company in which this company is or may contemplate being interested including in such preliminary expenses all or any of the cost and expenses of owners of business or property acquired by the Company.

37.

To make and/or receive donations, gifts or income to or from such persons, institutions or trusts and in such cases and whether of cash or any other assets as may be thought to benefit the company or otherwise expedient and also to remunerate any person or corporation introducing or assisting, in any manner the business of the Company.

38.

To establish and support or aid in the establishment of and support associations, institutions, companies, societies, funds, trust and conveniences for the benefit of the employees or ex-employees or of persons having dealings with the Company or the dependents, relatives or connections of such persons and in particularly friendly or other benefit societies and to grant pensions, allowances, gratuities and bonuses either by way of annual payments or by way of lump sum and to make payments towards insurance and to form and contribute to provident and benefit funds, to or such persons.

39.

To form, subscribe or contribute to or otherwise to assist, aid or guarantee money to public charitable, benevolent, religious, scientific, national, or other institutions, funds, objects, or purposes and to any other institutions, funds, objects or purposes which in the opinion of the Board of Director are likely to promote the interests or the business of the company and/or to further its objects and/or to any other institutions, funds, objects, or purposes whatsoever directly relating to the business of the company.

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To create any depreciation fund, reserve fund, sinking fund, insurance fund, educational fund or any other special fund or reserves whether for depreciation or for repairing, improving, extending or maintaining any of the properties of the Company or for redemption of debentures or redeemable preference shares or for any other purposes conducive to the interest of the Company.

41.

In the event of winding up to distribute any of the property of the company amongst the members in specie or kind subject to the provisions of the Companies Act, 1956.

42.

To place, to reserve or to distribute as bonus shares among the members or otherwise to apply as to the Company any from time to time think fit, any money received by way of premium on shares or debentures issued at a premium by the Company and any money received in respect of forfeited shares and moneys arising from the sale by the Company of forfeited shares, subjects to Section 78 of the Companies Act, 1956.

43.

To accumulate capital from the profits of the Company for any of the purposes of the Company and to use and appropriate the same or any of the Company's assets either conditionally or unconditionally to specific purposes.

44.

To provide for the welfare of Directors or employees of the Company or its predecessors in business and the wives, widows and families or the dependants or connections of such persons by building or contributing to the building or houses or dwellings or quarters or by grants of money pensions, gratuities, allowances, bonuses, profit sharing bonuses or benefits or any other payments or by creating and from time to time subscribing or contributing to provident and other associations, funds, profit sharing or other schemes or trusts and by providing or subscribing or contributing towards places of instruction, recreation, hospitals and dispensaries, medical and other attendance and assistance as the Company shall think fit.

45.

To establish and maintain or procure the establishment and maintenance of any contributory or non-contributory pension or superannuation funds for the benefit of, and give or procure the giving of donations, gratuities, pensions, allowances, or emoluments to any persons who are or were at any time in the employment or service of the Company or who are or were at any time Directors or

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:10: officers of the company or and the wives, widows, families and dependants of any such persons, and also to establish and subsidies and subscribe to any institutions, associations, clubs or funds calculated to be for the benefit of or to advance the interests and well-being of the company or and make payments to or towards the insurance of any such person as aforesaid.

46.

To undertake and execute any trust, the undertaking of Company desirable and either gratuitously or otherwise.

47.

To vest any moveable or immoveable property, rights or interests acquired by or belonging to the company in any person or company and with or without any declared trust in favour of the company, subject to the provisions of the Act.

48.

To lend and advance money or give credit to such persons or companies and on such terms as may seem expedient and in particular to customers and others having dealings with the Company and to guarantee the performance of any contract or obligation and the payment of money of or any such person or companies and generally to give guarantee and indemnities.

49.

To carry on commission business in connection with the objects of the Company.

50.

To aid, peculiarity or otherwise, any association, body or movement having for an object, the solution, settlement or labour problems or troubles or the promotion of industry or trade.

51.

To pay for technical know-how, technical information and/or service, rights or privileges acquired by the company either in shares of the Company or partly in shares or partly in cash or otherwise in connection with the business of the company.

52.

To pay to promoters such remuneration and fees and otherwise remunerate them for their time and for the services rendered by them.

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which

may seem to the

:11: 53.

To borrow or raise money or to receive money other than public deposit from persons, bodies, corporate, financial institutions, banks, and such other lenders and in security of any such money so borrowed raised or received to mortgage, pledge or charge the whole or any part of the property assets or revenue of the Company present or future by special assignment or otherwise or to transfer or convey the same absolutely or in trust and to give the lenders powers of sale and other powers as may seem expedient, by executing negotiable or transferable instrument and deal with all documents mercantile or otherwise, in the ordinary course of business subject to the provisions of Section 58A and directive of the Reserve Bank of India.

54.

To act as principals, agents, contractors, trustees or otherwise and by or through trustees, agents or otherwise and either alone or in conjunction with others.

(C) OTHER OBJECTS : 55.

To carry on business of manufacturers, importers, exporters, dealers, assemblers and distributors, engineers, founders, smelters, fabricators, smiths metal workers, metallugists, sponge Iron, Steel Products, Special Steels, Ferrous and non- ferrous metals, electric and chromium platers, polishers, painters tin smiths, lock smiths, iron magagers, alloy makers, machinist and manufacturers of any dealers in machinery tools, instruments and equipments of all kinds usual in metal fabrication industry.

56.

To carry on all or any of the business of manufacturers and dealers in forgings, castings, stamping of all metals tools, bolts and nuts, nails, rivets, hinges, hooks, handles, buckets, bath tanks, metal tanks, sanitery equipments, flushing systems, stands and pipes, metal furnitures, grills, shutters, windows, doors, partitions, and cup boards, safes, machines locks, jigs chimneys, armaments, guns, gun pipes and parts and componenets of all kinds of machinery.

57.

To carry on all or any of the business of manufacturing processing and dealing in Iron and Steel, ferro alloys, special steels, aluminum, copper, lead, zinc and their alloys and products and of manufacturing and dealing in industrial machinery boilers, furnaces and Arc Frunaces, internal combustions enginers ball rollers and tapered bearings, tubes, cables, wires, pipes, cookers, printing machinery and their components and accessories.

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To carry on business of management consultants to any type of industry, trade, business, institutions, corporation, federation, federations, state/central Government, institutions including banks, company firm and individuals in and outside the union of India, and to advise problems related to industrial management, marketing, sales and distribution management, protection management, stores and inventory management, office administration and personal selection and management, export and import management, and management of every type and to collect, propose, process and distribute information and statistics related to any type of business, trade and industry and to promote or propose such methods, procedure and measures as may be considered desirable or beneficial.

59.

To carry on the business of manufacturers and dealers in all kinds of oil including vegetable oil and as mean manufacturers, oil merchants, cake and corn merchants, millers, flour merchants, bakers, biscuit makers confectioners, milling of flour whole meal atta, suji raw (semolina) basin (gram flour), manufacturing of breakfast food, spaghetti and macaroni.

60.

To purchase or otherwise acquire any land, building or premises and to turn into account, develop, improve, alter, demolish or let out for the purpose of carrying on the business of hotel, restaurant, coffee, house, lodging, house-keepers and to carry on the business of wine, spirit and liquor merchants, importers exporters and manufacturers and aerated, mineral and artificial waters and other drinks whether intoxicating or not or cateres for public amusement or entertainments, properties of motor and other vehicles, garage, proprietors, jomasters, refreshment roomkeepers, farmers, dairymen and ice merchants, victualers, live and dead stock and colonial and foreign produce of all description, hairdressers, perfumers, chemists, proprietors of clubs, baths, dressing room museum reading writing, and newspaper room library, playgrounds, indoor and outdoor game, sport, recreation, cigarettes, agents and railways and tourists, thearical, cinemas and opera box.

61.

To manufacture cotton, woolen and silk, artificial and silk artificial and synthetic Fibre goods of all kinds and to carry on all or any of the following business, Cotton, silk, Dying materials, processors, and printers, of all textiles woolen and silk spinners and doublers, flex and jute spinners, wool combers worsted spinners, linen manufacturers, worsted stuff manufacturers, drapers, flex hemp,

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:13: jute, wool and silk merchants, bleachers and dyers and makers of vitriol, bleaching and dyeing materials, growers of mulberry or other and dyeing materials, growers of mulberry or other trees and producers of any other articles or things whether by cultivation or forestation or by any other machanical or chemical power or appliances for the purposes of obtaining silk, woollen, cotton or any other materials to be converted into cloth, wool combers. 62.

To carry on the business as dealers in and purchasers of dairy farms, garden and their produce of all kinds and in particular milk, cream, butter, ghee, cheese, poultry, eggs, fruits, vegetable, oils, vegetable ghee, artificial ghee, spices, sausages, prawn, potted meat, table delicacies loaves bread manners.

63.

To carry on all kinds or business of manufacturers, importers, exporters, dealers, assemblers and distributors and radios, radiograms, gramophones, wireless apparatus, domestic and commercial refrigerators, cooers, freezers of all kinds humidifying, dehumidifying, ventilating of all kinds, records, bares and rubber insulated wires, cables, flexible cords, fuse wires copper weld and aluminium wires, electric switches and switch gears, contents lamps, motors, fans and electric goods, plastic and light material products equipments and accessories of all kinds cold storage equipments and all articles and things used in manufacture, construction, erection maintenance and working thereof in connection therewith in any way whatsoever. To repair the same and their machinery and apparatus. To manufacture and deal in loudspeakers, transformers, microphones, transmitters, amplifiers, receiveers, public address equipments of all kinds and used in the manufacture, installation erection, repairs, maintainance and working thereof or in connection therewith in any way whatsoever.

64.

To carry on the business as travel agents, tourists and cargo carriers by road, air, sea, or by other modes of transport and to carry on all allied business and activities pertaining to the travelling and tourist business.

65.

To acquire from or sell to any person, firm, body, corporate or unincorporate, whether in India or elsewhere, technical and managerial information, know-how process engineers, manufacturing operating and commercial data, plans, layouts and blueprints useful for the design, erection and operation or any plant or process of manufacture and to acquire, grant or licenses other rights and managerial

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:14: technical and financial consultancy services and to carry on the business of market research organisers, sales promotion agents general, advisers, technical and marketing consultants either alone or in partnership. 66.

To undertake, carry out, promote and sponsor scientific research related to business of the Company and or incur any expenditure on such research, and to assist and contribute to any scientific research association which has as its objects the undertaking of scientific research or to assist and contribute to any university college or other institution any sums to be used for scientific research or research in social science or statistical research.

67.

To carry on the business of manufacturers and dealers in air-conditioning and refrigeration equipments, consumer and domestic appliances radios and transistors, electronic equipment including graphite eletrodes, weighting scales, batteries, flashlights, detonators and wireopes.

68.

To carry on business as manufacturers, producers, dealers, traders importers, stockists, distributors, or agents of G.L.P. lamps, electric bulbs, miniature bulb, tubes or other electrical items, required or used for lighting or for industrial, domestic, electronics, transport vehicles or commercial purposes and glass shells fittings, tubes filaments, tungsten, and molybdenum wires, caps and other materials, machineries, accessories and spares required or used for manufacture of bulbs, lamps, tubes.

69.

To carry on business as producers, distributors, importers, exports, exhibitors and financiers of cinematograph film and to be manufactured, own, acquire, provide, secure arrange or deal in films and photographic paper and equipment cameras, sound recording, musical, lighting appliances, instruments, equipments and machines and to construct, establish, own hire or otherwise acquire, and to manage, let out for rent fee, monetary gain or otherwise studios, laboratories, theatres, buildings halls, open air theatres, bars, restaurants and other buildings or work required, for the purpose of production, distribution or exhibitions, barriesques, vaudeville, revenues, ballets, pantomimes, spectacular pieces, promenadee concert circus or other performance and entertainments and to act as dealers, importers, exporters of musical instruments and records, tapes, cinema and film projectors and cameras, wigs and other products or materials related or connected with the aforesaid object business and to acquire exclusive or

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:15: limited rights to any play, story, script, musical songs and lyric, book, article or any technique by producing, purchasing or otherwise acquiring and to use, exercise, develop or exploit or turn to account such rights for the business of the company, and to act as agents, for training, retaining, arranging and supplying artists, stars, art directors, script or story writers, technicians, extra and other personnel required by the company or other film, cinema or show business. 70.

To carry on business of manufacturers and / or deal in all types of tapes, magnetick and otherwise, tape-recorder, television, broadcast, relay and reception equipments, photographs and other equipments used in and / or for and audio visual communications, apparatus and equipments including those using electro magnetic waves intended for radio telegraphic or radio telephonic communications, photo copies, electronic, lighting controls continuous fan motor speed controls, continuous flashers and fire alarm systems, electromechanical pneumatic controls, automatic calculators, x-ray machines, surgical, madical and other appliances intended for electro and other therapy treatment.

71.

To finance by way of loan or advances or subscription to the capital of any industrial formation Enterprises in India to promote and formation of Capital to provide counseling and advising services and to become member of official Stock Exchanges at India and abroad including over the Stock Exchange and National Stock Exchange.

72.

To carry on the business of technical and management consultants and advisers and to enter into collaboration agreements for the manufacture of items, which the company is entitled to produce in India and abroad with the companies, firms, and individuals, Central and / or State Government and their concerns and to tender and provide all types of services including managerial personnel, secretarial, designing, engineering, preparation of feasibility and project reports, drawing, plant, layouts, tenders for all the plant and machinery, equipments, buildings, and other structures and helping finalisation of contract and recreation and commissioning of plants.

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:16: 73.

To carry on business of amusement parks and promote, organize and manage all kinds of entertainments, sports, recreations, fairs, exhibitions, competitions, concerts, stage and variety shows or performances and other types or kinds of recreation or entertainment.

74.

To manufacture, design, develop, rent out, buy, sell, repairs services, import, export, take on lease or otherwise deal in all render service through computers, computing systems, software materials, instrumentation, madical electronics communication visual devices telecommunication and television, video, video equipment, electronics and electrical products, equipments and devices to act as consultants in the matter of manufacturing mining engineering, quality control, computer hardware and hard discs, computer equipment and other machinery used in computer industry.

75.

To provide computer education, software and electronic and other fields.

76.

To carry on business of manufacturers and dealers, importers and exporters of natural and synthetic resins, moulding powders, adhesives and cements, oil paints, distempers, cellur paints, colours, varnishes, enamels, gold and silver leaf enamels, spirits and other allied articles.

77.

To carry on the development and research work and to manufacture, calcine, rennel, process, import, export, buy, sell, and deal in petroleum coke, calcined coke and coal, tar, anthracite coal and to draw out manufacture and deal in coal tar, canlion products and other bye products as may be possible and to utilise waste gases for industrial uses and purposes.

78.

To carry on the business of processors, combers, spinners, weavers, knitters, manufacturers, dyers, bleachers, finishers, laminators, balers, and pressers of any fibrous or textile material whether on agricultural or animal or natural product or its by products or chemical or synthetic fibre and more or specially jute, hemp, silf, cotton, wool, mesta, nylon, terene, terylene, staple fibre or other synthetick fibre and to manufacture any product form such raw material or textile material and to carry on the business of buyers, sellers, and dealers, of all such raw or processed or semi processed materials and to transact all manufacturing, cutting and preparing process and mercantile business that may be beneficial to the said business.

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:17: 79.

To carry on all or any of the business of transport, cartage and haulage contractors, garage proprietors, owners and charters of road vehicles, aircrafts, ships, tugs, barge, and boats of every description, lightermen, carriers of goods and passengers by road, rail, water or air, carmen, cartage contractors, stevedores, wharfingers, cargo superintendents, packers, hauliers, warehouseman, keepers and jobmasters.

80.

To carry on the business of farming, horticulture, floriculture, sericulture, dairies, cultivators of all kinds of foods grains, seeds, fruits, owners of orchards and radars, exporters, dealers and sellers of the products of farming dairy, horticulture, floriculture, sericulture and pisciculture and fishing and manufacturers of drinks, alcoholic or otherewise, including beverages produced from such products or otherwise to carry on the business of cultivators, growers, manufacturers, millers, grinderes, rollers, processors, cold stores, canners, and preserves and dealers of foods grains and other agricultural, dairy, horticultural and poultry products, fruits, vegetables, herbs, medicines, flowers, drinks, fluids, ash and other fresh and preservable products and to extract by products and dervatives whether edibles, pharmaceutical medicines or any other kind or nature whatsoever and food preparations of every kind and description and generally on the business of manufacture of the trading in preserved, dehydrated, canned or converted agricultural products, fruits and vegetables, foods, dairy and poultry products and articles and other derivatives of all kinds and descriptions and to set up and run machinery for processing and preserving the same.

81.

To establish experimental farms and research stations anywhere in India for conducting experiments., test and research for developing better qualities foods grains and agricultural products and for developing milch strain in cattle by cross breeding or and incrasing egg laying capacity in poultry and also for finding other ways and means of improving other agricultural crops, produce, seeds, fodder corps and cattle feed of all kinds.

82.

To render services to the clients in preparing prospectus, underwriting agreements, and other relating agreements, papers as may be necessary in respect of their public issues and to act as advisers, consultants and for manager to the public issue of the Companies.

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:18: 83.

To do all types of business or things in or outside India within the frame of Law either as principals, agents, trustees, contractors and otherwise and either alone or in conjuction with others and either by or through agents, sub-contactors and otherwise.

84.

To purchase or acquire Industry / Sick Industry and to revive and rehabilate Sick Units.

85.

To carry on the business of dealers, contractors, merchants, exporters, importers, stockists, buyers, sellers, agents brokers, and commission agents of cement, bricks, sand, wood, all kinds of steel and hardware items used directly or indirectly in construction work.

86.

To carry on business as producers, manufacturers, processors, converters, refiners, makers, bottlers, stockiest, dealers, importers, exports, traders, retailers, agents, buyers or sellers of oxygen, acetylene, ammonia carbon dioxide, nitrogen, hydrogen, helium, and other types and kinds of gases required for or used in industries, agriculture, clinics, hospitals, refrigeration, abiation, transport, vehicles, space, rockets, and crafts, communication, objects and media, power plants, domestic or public lighting, heating, cooling or cooking purposes, lighters, plants, producing, water, chemicals or fuels, pesticides, defence or plant, protection and growth and other allied purposes and service, repair, manufacture, market or deal in machinery plants, spares, cylinders, containers, gadgets, appliances, and accessories required for, working on, using or producing any of such gases and products.

87.

To carry on the business of printers, publishers, stationers, lithographers, steroptypers, electrotypers, photographers, printers, lithographers and engravers, diesinking, book binders, designers, draftsmen, paper and ink manufacturers, envelope manufactures, account book manufacturers, machine rulers, numerial printers, bag makers, card board manufacturers, ticket manufactures, calenders and book sellers, diary printers, dealers in playing, visiting, railway, festive complimentary, wedding or other cermonial cards or fancy cards or valentines, dealers in stamps, parchment and agents for the payment of stamp and other duties.

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:19: 88.

To manufacture, produce, buy, sell, import, export, stock and deal in machine tools, grinding machines, automatic lathes, drilling machines, planning machines, plangrindres, machinery of every description, precision tools, cutting and small tools, electric motors, electrical equipments, electric meters, cables, wires, switch gears, flame and drip proof motors, electric fans, regulator of all types, electric kilowatt hour meters, magnets, industrial jewels ammesters, volt meters and other types of measuring equipments, electrical or non electric, die casting screws, nut and bolts, transformers, of all types, circuti brakers, hoists, elevators, gerars, trolleys and coaches, winches, air compressors, welders, refrigerators, switches electric transmission towers, poles, tubes, insulating materials, conductors, fuse and fuse wires, adopter, domestic washing machines, television and wireless apparatus including radio receivers and transmitters, micro wave components, radar equipments, valves, resistors, electronic instruments, conductors, magnetic materials, transistors and allied items, sewing machines, watches and clocks, tape recorders, household appliances and components parts thereof. IV. The liability of the Members is Limited. V. (a) The Authorised Share Capital of the Company is Rs.1,00,000/- (Rupees One Lakh only) divided into 10,000 ( Ten Thousand ) Equity Shares of Rs. 10/(Rupees Ten only) each.

(b) The paid up capital of the Company shall be a minimum of Rs. 1,00,000/- (Rupees One Lakh only).

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:20: We, the several persons, whose names addresses and occupations are hereunder subscribed below, are desirous of being formed into a Company in pursuance of this Memorandum of Association and we respectively agree to take number of shares in the Capital of the company set opposite our respective names : Names, address, occupation & description of Subscriber

Mr. xxxxxxxxxxxxxxxxxxxxxxxx S/o. xxxxxxxxxxxxxxxxxxxxxxxx

No. of Equity Shares taken by each subscriber

Signature of Subscriber

Sd/5000 (Five Thousand)

Signature of Witness, name,address,description and Occupation.

xxxxxxxxxxxxxxxxxxxxxxxx S/o. xxxxxxxxxxxxxxxxxxxxxxxx Hanif Mamsa Chawl, Behind xxxxxxxxxxxxxxxxxxxxxxxx Occupation : Service

xxxxxxxxxxxxxxxxxxxxxxxx Occupation : Business Mr. xxxxxxxxxxxxxxxxxxxxxxxx

Sd/Sd/-

S/o. xxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxx Occupation : Business 5000 Total

(Five Thousand)

10000 (Ten Thousand)

PLACE : MUMBAI DATE : 28/82

 AOA Articles of Association, also simply referred to as Articles, are necessary to be submitted during incorporation of a company with the registrar of companies. When Articles are taken in conjunction with MOA, they form what is called as the constitution of the company. Though there are differences in these articles as to their requirements in different countries, in general AOA is a document that provides following information about the company. 

The manner in which shares have been distributed along with voting rights attached with different classes of shares



Estimate of intellectual property rights



The list of directors with shares allotted to each



Schedule of the meetings of the board of directors along with the quorum required with percentage of votes with directors



Chairman‟s special voting rights and the manner in which he is elected



How profits are distributed through dividends



How the company can be dissolved



Secrecy of know-how and how it is managed



How shares can be transferred, and so on.

Below is an example of Articles of Association of a company

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ARTICLES OF ASSOCIATION OF SPECTRUM LIGHTS PROCESSING PRIVATE LIMITED THE COMPANIES ACT, 1956 COMPANY LIMITED BY SHARES ARTICLES OF ASSOCIATION OF SPECTRUM LIGHTS PROCESSING PRIVATE LIMITED PRIVATE LIMITED 1. Provisions of Table "A" Applicable Regulation contained in Table "A" in the first schedule to the companies Act,1956 shall apply so far as they are applicable to a private limited company and so far only as they are not applicable inconsistent with any of the provisions contained in these Regulations. CERTAIN CLAUSES OF TABLE "A" NOT APPLICABLE 2. Clause Nos. 5, 21, 25, 26, 27, 59, 64, 66, 81 and 84 of Table 'A" shall not apply to this company. The provisions of section 171 and section 173 to 175 of the Act shall not apply to this company. PRIVATE COMPANY COMPANY TO BE A PRIVATE COMPANY 3. The company is a private company within the meaning of section 3(1) (iii) of the companies Act, 1956 and accordingly : (a) The number of members of the company (exclusive of persons who are in the employment of the company and of persons who having been formerly in the employment of the company were members of the company while in that employment and have continued to be members after the employment ceased) shall not exceed fifty but where two or more persons hold one or more shares in the company jointly they shall for purpose of this paragraph be treated as a single member. b) No invitation shall be issued to the public to subscribe for any shares in or debentures of the company.

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:2:

c) The right of transfer of shares of the company is restricted as hereinafter provided. d) Prohibit any invitation or acceptance of deposit from persons other than its members, directors or their relatives. SHARES TO BE UNDER CONTROL OF DIRECTORS. 4.

b)

a)The shares shall be under the control of the Directors who may issue, allot or otherwise dispose of the same to such persons on such terms and conditions and at such time as the Directors think fit and with full power to give to any persons the option to call for any shares either at part or at a premium and for such consideration as the Directors think fit. The Directors shall have the absolute power to divide the shares in the original or any increased capital into different classes and attach thereto at their discretion any preferential deferred or other special right, privileges, conditions or restrictions as to dividends, capital, voting or otherwise. The authorised capital of the Company shall be of Rs. 1,00,000/- (Rupees One Lakh Only). The paid up capital of the Company shall be a minimum of rupees one lakh.

REDEEMABLE PREFERENCE SHARES.

5. Subject to the provision of section 80 of the Act, the company shall have the power to issue preference shares which are at the option of the company to be redeemed and the resolution authorizing such issue shall prescribe the manner, terms and conditions of redemption.

POWER TO REDUCE SHARES CAPITAL.

6.

The company shall have power to reduce the share capital in the manner provided in section 100 to 105 of the Act or any statutory modifications thereof.

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:3:

TRANSFER AND TRANSMISSION OF SHARES

REGISTER OF TRANSFER.

7.

The company shall keep a book to be called the 'Register of Transfer' and therein shall be fairly and distinctly entered particulars of every transfer or transmission of any share.

RIGHT TO DECLINE REGISTRATION OF TRANSFER.

8.

The Board may decline to register any transfer of shares and shall not be bound to give any reason for such refusal, this Article shall also apply in the case of a transferee who is already a shareholder.

Without prejudice to the generality of the aforesaid power, the Board may refuse to register any transfer of share.

DIRECTOR'S POWER TO REFUSE TO REGISTER IN CASES MENTIONED IN THIS REGULATION

(i)

where the company has lien on a share, or

(ii)

in case of shares not fully paid up where it is not proved to their satisfaction that the proposed transferee is a responsible person, or

(iii)

where the Directors are of the opinion that the proposed transferee not being already a member is not a desirable person to admit to membership, or

(iv)

where the result of such registration would be to make the number of members exceed the limit fixed by the Article 3 above.

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:4:

MANNER OF TRANSFERING SHARES.

9.

Notwithstanding the restriction herein contained any share may be transferred by a member to another member and to any child or other issue, lineal ascendants and descendants, mother, brother, sister's daughter, son, wife, husband, brother,s wife, sister's husband, wife's brother, son's wife, daughter's husband, nephews, nieces, of any member and any share of a deceased member may be transferred by this legal representatives to any of the above persons, and the shares of any member may be transferred by his legal representatives to any of the above persons, and the shares of any member may be transferred to the trustee of any deed of settlement or will executed by the member in respect thereof provided such trustees be any such relative of such member and shares standing in the name of trustees of such relative or will of any member may be transferred upon any change of trustees to the trustees for the time being of such settlement or will provided such trustees be any such relative of the member as aforesaid.

EXISTING MEMBER TO HAVE RIGHT OF PRE-EMPTION

10.

Except as herein provided no shares in the company shall be transferred unless and until rights of pre-emption hereinafter conferred shall have been exhausted.

NOTICE OF DESIRE TO TRANSFER TO BE GIVEN.

11.

Any member who intends to transfer shares (hereinafter called the 'vendor') shall give notice in writing to the Board of his intention. That notice shall constitute the Board his agent for the sale of the said shares at a price to be agreed upon by the vendor and the Board or in the event of disagreement at a price which the Auditors of the company for the time being shall certify in writing to be the fair value thereof as between a vendor and the purchaser. In certifying the fair value, the Auditors shall be acting as an expert and not as an arbitrator and accordingly the Indian Arbitration Act, 1940, shall not apply.

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:5:

BOARD TO GIVE NOTICE TO MEMBERS.

12.

Upon the price being settle as aforesaid, the managing Director or Directors who are attending the duties of the company shall in the first instance be entitled to purchase the said shares at such price. In the event of refusal by them to purchase the said shares or any part thereof, as aforesaid, the Board shall give notice to all members of the company of the number and price of the shares to be sold and invite each of them to state in writing within 28 days from the date of the said notice whether he is willing to purchase any, and if so what maximum number of the said shares.

TO ALLOCATE SHARES TO MEMBERS.

13.

At the expiration of 28 days, the Board shall allocate the said shares to or amongst the member or members who has/have expressed his or their willingness to purchase and if more than one, so far any be possible prorata accordingly to the number of shares already held by them respectively. Upon such allocation being made, vendor shall be bound on payment of the said price to transfer the shares to the purchaser or purchasers and if the makers default in so doing the Board may receive and give a good

discharge for the purchase money on behalf of the register of members as holder of the said shares purchased by him.

SHARES NOT TAKEN BY THE MEMBERS MAY BE TRANSFERRED TO SHARES.

14.

In the event of the shares not being sold as aforesaid the vendor may sell and transfer, his shares at any price, to any person subject to the approval by the Directors.

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:6:

TITLE IN CASE OF DECEASED MEMBER.

15.

Any person becoming entitled to a share in consequence of the death or insolvency of a member shall upon such evidence being produced as may from time to time be required by the Directors, has the right , either to be registered as a member in respect of the share or instead of being registered himself, to make such a transfer Of the share as the deceased on insolvent person could have made but the Directors shall in either case have the same right decline or suspend registration as they would have had in the case of a transfer of the share by the deceased or insolvent person before the death or insolvency.

Nothing contained in these Articles shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by him with other persons.

APPLICATION TO BE MADE BY TRANSFEROR OR TRANSFEREE

16.

(a) An application for registration of the transfer of shares may be made either by the transferor or the transferee provided that where such application is made by the transferor no registration shall in the case of partly paid up shares be affected unless the company gives notice of the application to the transferee and subject to the provision of sub-clause (f) hereof the company shall, unless objection is made by the transferee within two week from the date of receipt of the notice enter in its register of members the name of the transferee in the same manner and subject to the same conditions as if the application for registration was made by the transferee.

NOTICE TO TRANSFEREE.

b) For the purpose of sub clause (a) notice to the transferee shall be deemed to have been duly given if sent by prepaid post to the transferee at the address given in the instrument of transfer and shall be deemed to have been delivered in the ordinary course of post.

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TRANSFER TO BE PRESENTED WITH EVIDENCE OF TITLE.

C) It shall not be lawful for the company to register a transfer of any shares unless proper instrument of transfer duly stamped and executed by the transferor or the transferee has been delivered to the company along with the shares, scripts provided on proof of loss to the satisfaction of the Directors of the Company of the instrument of transfer signed by the transferee and bearing the stamp required by an instrument of transfer on such terms as to indemnity and /or otherwise of the Directors may think fit.

NOTICE TO REFUSAL.

D) If the Company refuses to register the transfer of any shares, the Company shall within two months from the date on which the instrument of transfer was lodged with the Company send to the transferee and the transferor notice of refusal.

RESTRICTION TO REGISTER SHAREHOLDERS.

E) Nothing in clause (c) shall prejudice any power of the company to register as shareholder any person to whom the right to any share has been transmitted by the operation of law.

RETENTION OR RETURN OF INSTRUMENT.

F) Nothing in this article shall prejudice any power of the Company to refuse to register the transfer of any shares. The instrument of transfer shall after registration be retained by the Company and shall remain in its custody. All instruments of transfer which the Directors may decline to register shall on demand be returned to the person depositing the same.

RESTRICTED RIGHT OF TRANSFER.

17.

No person shall exercise any rights or privileges of shareholders until he shall have paid all sums whether in respect of call or otherwise for the time being due in respect of the shares held by him or due in any manner whatsoever to the Company. 36/82

:8:

CLOSURE OF TRANSFER BOOK.

18.

The transfer books and register of members and register of debenture holders may be closed during such time or times not exceeding in whole a period of forty-five days in each year as the Directors may think fit but in such manner that such a period does not exceed thirty days at a time.

TRANSFER OF DEBENTURES.

19.

The provisions of these articles shall mutatis mutandis apply to the transfer of or the transmission by operation of law or the right to debenture of the Company.

THE COMPANY NOT LIABLE FOR DISREGARD.

20.

The Company shall incurve no liability or responsibility whatsoever in consequence of its registering or giving effect to any transfer of shares made or purported to be made by any apparent legal owner thereof as shown or appearing in the register of members to the prejudice of persons having or claiming any equitable right, title or that the company may have had notice of such equitable right, title or interest, or notice prohibiting registration of such transfer and may have entered such notice or referred thereto in any book of the Company and the Company shall not be bound or required to attend or give effect to any such notice which may be given to it of any equitable right, title or interest, or be under any liability whatsoever for refusing or neglecting to do so, though it may have been entered or referred to in some book of the Company, but the Company shall nevertheless be at liberty to regard and attend to any such notice and give effect thereto if the Directors shall so think fit.

DIRECTORS

NUMBER OF DIRECTORS.

21.

The number of Directors shall not be less than 2(two) or more than 12 Twelve

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:9: FIRST DIRECTORS.

22.

1) The First Directors of the Company shall be :

1. Mr. xxxxxxxxxxxxxxxxxxxxxxxx 2. Mr. xxxxxxxxxxxxxxxxxxxxxxxx

OTHER DIRECTORS.

2) Any person appointed as Director of the Company under clause 72 of Table 'A' shall hold office for such period and upon such conditions as may be specified subject nevertheless to the provisions of Section 260 of the Act.

APPOINTMENT OF DIRECTORS OF CASUAL VACANCY.

3) Subject to the provisions of the Act the Directors shall have power to appoint any person as a Director to fill a casual vacancy. Any Director appointed to fill a casual vacancy shall hold office only upto the date upto which the Director in whose place he is appointed would have held office if it had not been vacated.

ALTERNATE DIRECTORS.

4) The Board of Directors may appoint any alternate Director in accordance with Section 313 of the Act.

SHARE QUALIFICATION.

23.

A director need not hold any shares in the Capital of the Company to qualify him to be a director of the Company.

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:10: MANAGING DIRECTOR.

24.

The Directors may from time to time appoint and/or remove any one or more of their body to be a Managing Director(s), Technical Director/Non Technical Director, for such period and upon such terms as they think fit and may vest in such Director or Directors such of their powers hereby vested in the Directors generally as they think fit and such powers may be made exercisable for such period or periods and upon such terms and conditions and subject to such restrictions and generally upon such terms as to remuneration and otherwise as they may determine. The remuneration of such Director may be by way of salary perquisites or commission or participation in profits or by any or all those modes.

REMUNERATION OF DIRECTORS.

25.

A Director shall be paid such sum for each meeting of the Board or Committee of the Board attended by him, as may be prescribed from time to time under the Companies Act 1956.The Directors shall also be paid their traveling, lodging and boarding expenses and such further remuneration if any as the Company in General Meeting may from time to time determine.

SPECIAL REMUNERATION OF DIRECTOR PERFORMING EXTRA SERVICE.

26.

If any Director be called upon to perform extra services or special exertions or efforts which expression shall include, work done by a Director as Member of any Committee formed by a Director, performing the Board may arrange with such Director, for such extra service special remuneration for such extra services or special exertions or efforts either by way of a fixed sum or otherwise as may be determined by the Board and such remuneration may be either in addition to or in substitution for his remuneration above provided.

RESOLUTION BY CIRCULAR.

27.

Subject to the provisions of Section 289 of the Act, a resolution passed without any meeting of Directors, or of a committee of Directors appointed under these articles and evidenced by writing under the hands of all Directors or members of such committee as aforesaid, for the time being in India, be as valid and effectual as a

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resolution, duly passed at a meeting of the Directors, or of such committee called and held in accordance with the provisions of these Articles.

BOARD MAY APPOINT ATTORNEY.

28.

The Board of Directors may at any time and from time to time by power of Attorney, appoint any person or persons to be the Attorney or Attorneys of the Company for such purposes and with such powers, authorities and discretions not exceeding those vested in or exercisable by the Directors under these presents and for such period and subject to such conditions as the Directors may from time to time think fit and any such appointment if the Directors think fit be made in favour of any Company or the members, directors, nominees, or managers of any company or firm or otherwise in favour of nay company or the members, directors, nominees or managers of any company or firm or otherwise in favour of any fluctuating body or persons whether nominated directly or indirectly by the Directors had any such power of attorney may contain any such powers for the protection or convenience of persons dealing with such attorneys, as the Directors may think fit ,and may contain powers enabling any such delegates or Attorney as aforesaid to sub delegate all or any of the powers authorities and discretions for the time being vested in them.

29

(1) The Board shall provide for the safe custody of the Seal.

(2) The seal of the Company shall not be affixed to any instrument except by the authority of a resolution of the Board or of a Committee of the Board authorized by it in that behalf and except in the presence of at least one Director and the Secretary or such other person as the Board may appoint for the purpose or in the presence of at least two Directors and the persons in whose presence the Seal of the Company is affixed in accordance with this instrument to which the Seal is so affixed.

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NOTICE OF GENERAL MEETING.

30

(1) Seven days notice of an Extra ordinary General meeting and twenty one days notice at the least of an Annual General Meeting Exclusive of the day on which the notice is served or deemed to be served and exclusive of the day for which the notice is given specifying the placing, the day and the hour of meeting shall be given in manner hereinafter mentioned or in such other manner, if any, as may be prescribed by the Company in General Meeting to the Members but the accidental commission to give notice to or non-receipt of notice by any member shall not invalidate the proceedings at any General Meetings.

2) A General Meeting may be called after giving shorter notice than that specified in clause (1), if consent is accorded therto.

i) In the case of an Annual General Meeting by all the members entitled to vote thereat and ii) In the case of any other meeting by members of the Company holding not less than 95 percent of such part of the paid up capital of the company as gives a right to vote at the meeting provided that where any member of the Company are entitled to vote only on some resolution to be moved at a meeting and not on the others, those members shall be taken into account for the purposes of this sub-clause in respect of the former resolutions and not in respect of the latter. CAPITALISATION 31.

Subject to the provisions of the Act,

1) Any General Meeting may resolve that any moneys, investments, or other assets forming part of the undivided profits of the Company including profits or surplus moneys arising from realization of any capital assets of the Company standing to the credit of the Reserve Fund or any other Fund of the Company or in hands of the Company and available for dividend or representing the premiums received on the issue of share, and standing to the credit of the share premium account be capitalized.:

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a) by the distribution among the holders of the shares of the Company or any of them on the footing that they become entitled thereto as capital in accordance with the respective rights and interests and in proportion to the amount paid or credited as paid thereon of paid up shares, debentures or debentures, stock, bonds or other obligation of the Company.

b) By crediting shares of the Company which may have been issued and are not fully paid up in proportion to the amount paid or credited as paid thereon, respectively with the whole or any part of the sums remaining unpaid thereon and the Directors shall give effect to such resolution and apply such portion of the profits or Reserve Fund or any other fund as may be required for the purposes of making payment in full or part for the shares, debentures, or debenture stock, bonds, or other obligations of the Company so distributed as the case may be for the purpose of paying in whole or in the part ,the amount remaining unpaid on the shares which may have been issued and are not fully paid up, or payment provided that no distribution or payment shall be made unless recommended by the Directors and if so recommended such distribution and payment shall be accepted by such share holders in full satisfaction of their interest in the said capitalized sum.

2) For the purpose of giving effect to any such resolution the Directors may settle any difficulty which may arise in regard to the distribution or payment as aforesaid as they think expedient and in particular they may issue fractional certificates and generally may make such arrangement for the acceptance, allotment and sale of such shares, debentures, debenture stock, bonds or other obligations and fractional certificates and generally may make such arrangement for the acceptance, allotment and sale of such shares, debentures, debenture stock bonds or other obligations and fractional certificates and may make cash payments to any holders of shares on the footing of the value so fixed in order to adjust rights and may vest any shares, debentures, debenture-stock, bonds or other obligations in trustees upon such terms for adjusting such rights as may seem expedient to the Directors .In cases where some of the shares of the Company are fully paid and others are partly paid, only such capitalization may be affected by the distribution of further shares in respect of the fully paid shares, by crediting the partly paid shares the sums with the whole or part of the unpaid liability thereon, but so that as between the holders of fully paid shares the sums so applied in the payment of such further shares and in the extinguishments or diminution of the liability on the partly paid shares respectively. When deemed requisite a proper contract shall be filed in accordance with the

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person to sign such contract on behalf of the holders of the shares of the Company which have been issued prior to such capitalization shall be effective.

INDEMNITY

DIRECTOR'S AND OTHERS RIGHT TO INDEMNITY.

32.

Every officer or Agent for the time being of the Company shall be indemnified out of the funds of the Company against any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he s acquitted or in connection with any application under section u/s 633 in which relief is granted to him by the court.

SECRECY CLAUSE

33.

No member shall be entitled to visit or inspect any works of the Company without the permission of the Directors or any other person authorized on that behalf by the Director to acquire discovery of or any information respecting any details of the Company's trading or any matter which is or may be in nature of a trade secret, mystery of trade secret process or any other matter which may relate to the conduct of the business of the Company which in the opinion of Directors, it would be inexpedient in the interest of the Company to disclose.

34.

Wherever in the Companies Act 1956, it has been provided that any Company shall have any right, privilege or authority, or that any company cannot carry out any transaction unless it is so authorized by its Articles, then and in that case this Article hereby authorizes and empowers this Company to have such rights, privileges or authority and to carry out such transactions as have been permitted by the Companies Act 1956 without there being any other specific Article in that behalf herein provided.

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We, the several persons, whose names addresses and occupations are hereunder subscribed below, are desirous of being formed into a Company in pursuance of this Articles of Association

Names, address, occupation description of Subscriber

and Signature of Subscriber

Signature of Witness, name, address, description and Occupation.

Mr. xxxxxxxxxxxxxxxxxxxxxxxx

Mr. xxxxxxxxxxxxxxxxxxxxxxxx

S/o. xxxxxxxxxxxxxxxxxxxxxxxx

S/o. xxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxx

Sd /-

xxxxxxxxxxxxxxxxxxxxxxxx

Occupation : Business

Occupation : Business Occupation : Service

Mr. xxxxxxxxxxxxxxxxxxxxxxxx S/o. xxxxxxxxxxxxxxxxxxxxxxxx

Sd/-

xxxxxxxxxxxxxxxxxxxxxxxx Occupation : Business

Sd/-

PLACE : MUMBAI DATE :

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Difference Between MOA and AOA • As can be seen with the above discussion, both AOA and MOA are important documents that are necessary to be submitted with the registrar at the time of incorporation of a company • MOA is the Charter of the company that outlines the nature of the , aims and objectives whereas AOA outlines the rules and regulations for internal management in doing the business. • While MOA is a must for all the companies, AOA is not so; it‟s not a must for companies limited by shares to have its own AOA • MOA is the supreme document for a company AOA shall not violate MOA • Alteration of MOA is restricted while AOA can be altered through a special resolution • Though both AOA and MOA reveal information about the company, it is AOA that is of particular interest for shareholders and potential investors • Taken together MOA and AOA are referred to as Constitution of the company.

 CERTIFICATE OF INCORPORATION After the duly stamped Memorandum of Association and Articles of Association, documents and forms are filed and the filing duly fees are paid, the ROC scrutinizes the documents and, if necessary, instructs the authorized person to make necessary corrections. The ROC will give the certificate of incorporation after the required documents are presented along with the requisite registration fee, (Annexure A) which is scaled according to the share capital of the company, which will be stated in its Memorandum of association. In case the Memorandum and Articles is to be signed by any of the promoters out side India, then the signatures are required to be made in the presence of Consul of India at the Indian Consulate. Minimum number of Directors and shareholders: a) For incorporating a Private Limited Company a minimum of two directors are required and minimum two shareholders. b) For incorporating a Public Limited Company a minimum of three directors are required and minimum seven subscribers. Thereafter, a Certificate of Incorporation is issued by the ROC, from which date the company comes in to existence. It takes about one to two weeks from the date of filing 45/82

Memorandum of Association and Articles of Association to receive a Certificate of Incorporation. A private company can commence business on receipt of its certificate of incorporation. A public company has the option of inviting the public for subscription to its share capital. Accordingly, the company has to issue a prospectus, which provides information about the company to potential investors. The Companies Act specifies the information to be contained in the prospectus. The prospectus has to be filed with the ROC before it can be issued to the public. In case the company decides not to approach the public for the necessary capital and obtains it privately, it can file a statement in lieu of prospectus with the ROC. On fulfillment of these requirements, the ROC issues a Certificate of Commencement of business to the public company. The company can commence business immediately after it receives this certificate.

 MISCELLANEOUS DOCUMENTS The documents/forms stated below are filed along with Memorandum of Association and Articles of Association on payment of filing fees (depending on the authorised capital of the company): 

Declaration of compliance, duly stamped



Notice of the situation of the registered office of the company



Particulars of Directors, Manager or Secretary



Authority executed on a non-judicial stamp paper, in favour of one of the subscribers to the Memorandum of Association or any other person authorizing him to file the documents and papers for registration and to make necessary corrections, if any



The ROC‟s letter (in original) indicating the availability of the name.

 TAX REGISTRATION Businesses liable for income tax must obtain a tax identification card and number [known as Permanent Account Number (PAN)] from the Revenue Department. In addition to this, businesses liable to withhold tax must necessarily obtain a Tax Deduction Account Number (TAN).

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Both the PAN and the TAN must be indicated on all the returns, documents and correspondence filed with the Revenue Department. The PAN is also required to be stated in various other documents such as the documents pertaining to sale or purchase of any immovable property (exceeding Rs. five lakh), sale or purchase of a motor vehicle, time deposit (exceeding Rs. 5 lakh), contract for sale or purchase of securities (exceeding Rs. 10 lakh), to name a few.

 RULES APPLICABLE Companies (Central Governments') General Rules and Forms,1956



FILING REGISTERING/APPROVING AUTHORITY

One copy has to be submitted along with a forwarding letter addressed to the concerned Registrar of Companies.



ENCLOSURES

The declaration must be submitted with the following annexures 

Document evidencing payment of fee



Memorandum and Articles of Association



Copy of agreement if any, which the proposed company wishes to enter into with any individual for appointment as its managing or whole-time director or manager



Form 18



Form 32 (except for section 25 company)



Form 29 (only in case of public companies)



Power of Attorney from subscribers



Letter from Registrar of Companies making names available



No objection letters from directors/promoters



Requisite fees either in cash or demand draft

Below is an example of Consent letter, Power of Attorney Letter and Cover letter for Submission 47/82

CONSENT LETTER FROM THE DIRECTOR

CONSENT TO ACT AS DIRECTOR FROM : xxxxxxxxxxxxxxxxxxxxxxxx

TO

THE REGISTRAR OF COMPANIES MUMBAI

I MR. XXXXXXXX SON OF MR. XXXXXXXX ADDRESS DO HEREBY GIVE MY CONSENT TO ACT AS A DIRECTOR OF THE COMPANY ___________________________________________ & CERTIFIED THAT I HAVE NOT BEEN DISQUALIFIED TO ACT AS A DIRECTOR U/S. 267 & 274 OF THE COMPANIES ACT, 1956.

YOURS FAITHFULLY,

____________________________________ (xxxxxxxxxxxxxxxxxxxxxxxx)

DATE : PLACE : MUMBAI

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POWER OF ATTORNEY LETTER

Mr. XXXXXXXX do hereby appoint Mr. XXXXXXXX residing at XXXXXXXX to represent SPECTRUM LIGHTS PROCESSING Pvt. Ltd. before the Registrar of Companies in connection with the incorporation proceedings under the Companies Act and authorize her to make necessary statements, explanations and changes on our behalf before the said authorities which will be binding on us.

Date :

xxxxxxxxxxxxxxxxxxxxxxxx

Accepted (xxxxxxxxxxxxxxxxxxxxxxxx)

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COVER LETTER FOR SUBMISSION Date :

To, Asst. Registrar of Companies Marine Drive, Mumbai-400 021

Ref.: SRN : ________________ SPECTRUM LIGHTS PROCESSING PRIVATE LIMTED

Sub.: Submissions for registration

Respected Sir,

With reference to the above mentioned subject we are submitting the following for Registration of the Company : 1. Memorandum & Articles of Association (Duly stamped) 2. Declaration on Form No. 1 (Compliance) 3. Form No. 18 (Particulars of proposed Registered Office) 4. Form No. 32 (Particulars of the proposed First Directors) 5. Original Letter of Availability of Name 6. Power of Attorney. Kindly do the needful at the earliest.

Thanking You

Yours faithfully,

(xxxxxxxxxxxxxxxxxxxxxxxx)

Encl. : As above 50/82



FEES

Fee payable depends on the nominal capital of the company to be registered and may be paid in one of the following modes. Cash/postal order (upto Rs.501-), demand draft favouring Registrar of Companies/Treasury Challan should be payable into specified branches.



TIME-LIMIT / PRACTICE NOTES

Time-Limit : It should be submitted before incorporation or within 6 months of the name being made available. Practice Notes : The declaration has to be signed by an advocate of Supreme Court or High Court or an attorney or pleader entitled to appear before the High Court or a secretary or chartered accountant in whole-time practice in India who is engaged in the formation of the proposed company or person named in the articles as director, manager or secretary. The Registrar of Companies has to be satisfied that not only the requirements of section 33(1) and (2) have been complied with but be also satisfied that provisions relating to number of subscribers, lawful nature of objects and name are complied with. The Registrar will check whether the documents have been duly stamped and also whether the requirements of other laws are met. Any defect in any of the documents filed has to be rectified either by all the subscribers or their attorney, or by any one subscriber holding the power of attorney on behalf of other subscribers. This form is to be presented to the Registrar of Companies within three months from the date of letter of Registrar allowing the name. This declaration is to be given on a non-judicial stamp paper of the requisite value . The stamp paper should be purchased in the name of the person signing the declaration. This declaration is to be given by all the companies at, the time of registration, public or private. The place of Registration No. of the company should be filled up by mentioning New Company therein.

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The Registrar of Companies will now accept computer laser printed documents for purposes of registration provided the documents are neatly and legibly printed and comply with the other requirements of the Act. This will be an additional option available to the public to use laser print besides offset printing for submitting the memorandum and articles for the registration of companies. Where the executant of a memorandum of association is illiterate, he shall give his thumb impression or marks which should be described as such by the subscriber or person writing for him. An agent may sign a memorandum on behalf of a subscriber if he is authorised by a powerof-attorney to do so. In the case of an illiterate subscriber to the memorandum and articles of association, the thumb impression or mark duly attested by the person writing for him should be given. The person attesting the thumb mark should make an endorsement on the document to the effect that it has been read and explained to the subscriber. The Registrar of Companies will not accept zerox copies of the memorandum and articles of association for the purposes of registration of companies.



PRESENTED BY

This declaration is to be presented by the person signing the declaration or by his bearer at the counter of the Registrar of Companies office.

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

MANAGERIAL REMUNERATION 

Any person in order to be appointed as the Managing Director of the company should be a resident of India. Any person, being a non-resident in India, must obtain an Employment Visa from the concerned Indian mission abroad at the time of their appointment as the Managing Director.



Whereas private companies are free to pay any remuneration to its directors, public companies can remunerate their directors only within the specified limits.



In case of public companies, in the event of absence or inadequacy of net profits in any financial year, managerial remuneration is limited to amounts varying from Rs 75,000 to Rs 2,00,000 per month, depending on the effective capital of the company. In case of an expatriate managerial person, perquisites in the form of children‟s education allowance, holiday passage money and leave travel concession provided to him would not form part of the said ceiling of remuneration.



In case of a managerial position in two companies, remuneration can be drawn from one or both companies provided that the total remuneration drawn from the companies does not exceed the higher maximum limit admissible from any one of the companies of which he is a managerial person.



WITH WHOM TO BE FILED

With the Registrar of Companies of the State in which the company is to be registered. Documents required to be submitted are as follow: 



A printed copy each of the Memorandum and Articles of Association of the proposed company filed along with the declaration duly stamped with the requisite value of adhesive stamps from the State/ Union Territory Treasury (For value of stamps to be affixed see Schedule printed in Part III Chapter 23). Below the subscription clause the subscribers to the Memorandum should write in his own handwriting his full name and father's, or husband's full name in block letters, full address, occupation, e.g.,'business executive, engineer, housewife, etc. and number of equity shares taken and then put his or her signatures in the column meant for signature. Similarly at the end of the Articles Of Association the subscriber should write in his own handwriting : his full name and father's full name in block letters, full address, occupation. The signatures of the subscribers to the Memorandum and the Article of Association should be witnessed by one person preferably by the person representing the subscribers, for registration of the proposed company before the Registrar of Companies. Under column 'Total number of equity shares' write the total of the shares taken by the subscribers e.g., 20 (Twenty) only. Mention date e.g. 5th day of August, 1996. Place-e.g. , 'New Delhi'. With the stamped copy, one spare copy each of the Memorandum and Articles of Association of the proposed company.

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

Original copy of the letter of the Registrar of Companies intimating the availability of name.



Form No. 18 - Situation of registered office of the proposed company.



Form No. 29-Consent to act as a director etc. Dates on the consent Form and the undertaking letters should be the same as is mentioned in the Memorandum of Association signed by the director himself. A private company and a wholly-owned Government company are not required to file Form No. 29.



Form No. 32 (in duplicate). Particulars of proposed, directors, manager or secretary.



Power of attorney duly typed on a non-judicial stamp paper of the requisite value. The stamp paper should be purchased in the name of the persons signing the authority.



No objection letter from the persons whose name has been given in application for availability of name in Form No. 1-A as promoters/directors but are not interested at a later stage should be obtained filed with the Registrar at the time of submitting documents, for registration



The agreements, if any, which the company proposes to enter with any individual for, appointment as managing or whole-time director or manager are also to be filed.

 FEE PAYABLE Cash or a bank draft/ pay order treasury challan should be drawn in the name of the Registrar of Companies of the State in which the Company is proposed to be registered as per Schedule X.



REPORTING REQUIREMENTS

Annual Accounts: The Indian company law does not prescribe the books of accounts required to be maintained by a company. It, however, provides that the same should be kept on accrual basis and according to the double entry system of accounting and should be such as may be necessary to give a true and fair state of affairs of the company.

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The Indian company law requires every company to maintain proper books of account with respect to the following: 

All sums of money received and expended and the matters in respect of which the receipt and expenditure take place



All sales and purchases of goods by the company



The assets and liabilities of the company



In case of companies engaged in manufacturing, processing, mining etc, such particulars relating to utilization of material or labour or other items of cost.

The first annual accounts of a newly incorporated company should be drawn from the date of its incorporation upto to the day not preceding the AGM date by more than 9 months. Thereafter, the accounts should be drawn from date of last account upto the day not preceding the AGM date by more than 6 months subject to the extension of the time limit in certain cases. The accounts of the company must relate to a financial year (comprising of 12 months) but must not exceed 15 months. The company can obtain an extension of the accounting period to the extent of 18 months by seeking a prior permission from the ROC. The annual accounts must be filed with the ROC within 30 days from the date on which the Annual General Meeting (AGM) of the company was held or where the AGM is not held, then within 30 days of the last date on which the AGM was required to be held. Books of accounts to be kept by company Every company is required to maintain proper books of account with respect to all sums of money received and expended, all sales and purchases of goods, the assets and liabilities. Central Government may also specifically require the maintenance of certain additional particulars with respect to certain classes of Companies. The books of account relating to eight years immediately preceding the current year together with supporting vouchers are required to be preserved in good order. Every profit and loss account and balance sheet of the company (together referred to as financial statements) is required to comply with the accounting standards issued by the Institute of Chartered Accountants of India. Any deviations from the accounting standards, including the reasons and consequent financial effect, is required to be disclosed in the financial statements.

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The responsibility for the preparation of financial statements on a going concern basis is that of the management. The management is also responsible for selection and consistent application of appropriate accounting policies, including implementation of applicable accounting standards along with proper explanation relating to any material departures from those accounting standards. The management is also responsible for making judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the entity at the end of the financial year and of the profit or loss of the entity for that period.

Annual Return: Every company having a share capital is required to file an annual return with the ROC within 60 days from the date on which the AGM of the company was held or where the AGM is not held, then within 60 days of the last date on which the AGM was required to be held.

 SOME ACCOUNTING RELATED ISSUES

Depreciation: The company law in India permits the use of depreciation rates according to the nature of the classes of assets. Assets can be depreciated either on the basis of straight-line method (based on the estimated life of the asset) or on the basis of reducing balance method. The law prescribes the minimum rates of depreciation. A company may, however, provide for a higher rate of depreciation, based on a bonafide technological evaluation of the asset. Adequate disclosure in the annual accounts must be made in this regard.

Dividend: There is no limit on the rate of dividend but there are certain conditions prescribed with regard to computation of profits that can be distributed as dividend. Generally, no dividend can be paid for any financial year except out of the profits of that year after making an adequate provision for depreciation subject to certain conditions. Dividends may also be distributed out of accumulated profits.

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Repatriation of profits: A company has to retain a maximum of 10% of the profits as reserves before the declaration of dividends. These reserves, inter alia, can be subsequently converted into equity by way of issue of bonus shares. Dividends are freely repatriable once the investment approval is granted. Imposition of taxes: Currently, domestic companies are taxable at the rate of 35.875% (inclusive of surcharge of 2.5%) on its taxable income. Foreign companies are taxed at a marginally higher rate of 41% (including surcharge of 2.5%). However, in case where the income tax liability of the company under the provisions of the domestic tax laws works out to less than 7.5% of the book profits (derived after making the necessary adjustments), a Minimum Alternate Tax of 7.6875% (including a surcharge of 2.5%) on the book profits, would be payable. Domestic companies are required to pay a dividend distribution tax of 12.8125% (including surcharge of 2.5%) on the dividends distributed during the year. Companies are required to withhold tax under the domestic law from certain payments including salaries paid to employees, interest, professional fee, payments to contractors, commission, winnings from games / lottery / horse races etc. Moreover, taxes have to be withheld from all payments made to non-residents at the lower of rates specified under the domestic law or under the applicable tax treaty, if any.

 PENALTY 

Imprisonment up to two years and fine



Person liable for default



Person signing the declaration.

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PROCEDURE TO ESTABLISH BUSINESS IN INDIA In India establishing a business takes some time. Besides incorporation there are many other formalities in establishing a business in India. The following chart contains typical formalities including incorporating a private limited company in India:

Nature of Procedure in India

Procedure Duration (days) Number

Obtain DIN for proposed Directors of the new Company

1

3*

Obtain DSC for proposed Directors of the Company

2

3*

Filing the proposed name of company for approval to the Registrar of Companies (ROC); Get the Memorandum and Articles of Association vetted by the ROC and printed

3

7

Make an application to the Superintendent of Stamps or an authorized bank requesting for stamping of the Memorandum of Association and Articles of Association.

4

1

Present the required documents along with the registration fee to the Registrar of Companies to get the certificate of incorporation

5

9

Obtain a company seal

6

3

Obtain a Tax Account Number (TAN) for income taxes deducted at source from the Assessing Office in the Income Tax Department

8

15*

Register under Shops and Establishment Act

9

2*

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Register for value added tax (VAT) before the Sales Tax Officer of the ward in which the company is located

10

12*

Register for Profession tax

11

2*

Register with Employees' Provident Fund Organization

12

2*

Register with ESIC (medical insurance)

13

1*

Filing for Government Approval before RBI/FIPB for Foreigners and NRI's

14

15*

Totals:

14

40

Note: Procedures sometimes take place simultaneously. Instances of this are marked with an asterisk (*). The above procedures and timings are indicative for a typical big city in India where all the required documents are ready with the promoters. The actual time and procedure may vary with city and state and the nature of business.

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REQUIREMENTS FOR A PRIVATE LIMITED COMPANY  Registered Business Name: This must be followed by the word „Limited' or „Ltd'. The Companies Registration Office exercises some control over the choice of name, it cannot be identical (or very similar to) the name of an existing company. It won't be considered if it is offensive or illegal and the use of certain words in a company (for example, `Institute', `National') can only be used in certain circumstances. The company name must be displayed in a conspicuous place at every office, or other premises where the company carries out business.  Registered Office: This need not necessarily be the same address as the business is conducted from. Quite frequently the address used for the registered office is that of the firm's solicitor or accountant. This is the address, through, where all official correspondence will go.  Shareholders: There must be a minimum of two shareholders (also described as `members' or `subscribers'). A private company can have up to fifty shareholders.  Share Capital: The company must be formed with a stated, nominal share capital divided into shares of fixed amounts. Small companies are frequently formed with a nominal share capital of Rs.100.  Memorandum of Association: The memorandum is the company's charter. It states the company's name; the situation of its registered office; its share capital; the fact that liability is limited and, most importantly, the object for which the company has been formed. In theory, the company can only operate in the areas mentioned in the objects clause but in practice the clause is drawn to cover as wide an area as possible, and anyway a 75 per cent majority of the members of the company can change the objects whenever they like. Nevertheless, it is worth bearing in mind that directors of the company will incur personal liability if the company engages in a type of business which is not authorized by the objects clause. The memorandum must be signed by at least three shareholders.  Articles of Association: The document contains the internal regulations of the company, the relationship of the company to its shareholders and the relationship between the individual shareholders. Many companies don't bother to draw up their own articles but adopt (sometimes with some modifications) articles set out in the Companies Act.  Certificate of Incorporation: This is the document, which the registrar of companies issues to you once he has approved your choice of name and your memorandum. When you receive this document your company legally exists and is ready to trade.

 Auditors: Every company must appoint a qualified auditor. The auditor's duty is to report to the treasurer whether or not the books of the company have been properly kept, and that the balance sheet and profit and loss account presents (or doesn't present) a true 60/82

and fair view of the company's affairs and complies with the Companies Act. Auditors are appointed or re-appointed at general meetings at which annual accounts are presented, and they hold office from the conclusion of the meeting until the next general meeting.  Accounts: The Companies Act lays down strict rules on accounting. Every company must maintain a set of records, which show the financial position at any one time with reasonable accuracy. The accounts comprise a profit and loss account and balance sheet with the auditors' and directors' reports appended. A new company's accounting reference period begins on its incorporation and runs until the following 31st March unless the company notifies the registrar of companies otherwise. Within ten months of the end of an accounting reference period, an audited set of accounts must be laid before the shareholders at a general meeting and a set delivered to the registrar of companies.  Registers, etc.: In addition to the accounts books, companies are required to have: a register of members and share ledger; a register of directors and secretaries; a register of share transfers; a register of charges; a register of debenture holders; a book can be purchased to hold all of the above. This will be provided automatically if you buy a running concern.  Company Seal: All companies must have an engraved seal. This must be impressed on share certificates and must be used whenever the company has to execute a deed. Again, this is included in the ready-made company package.

 Corporate Documents & Registration of a Company For incorporating a company in India, an application for registration should be submitted to the registrar of companies with the following documents: 1. Memorandum of Association; 2. Articles of Association; 3. a declaration signed by a person named in the articles of the proposed company as a director, manager, or secretary of the company, or by an advocate of the Supreme Court or High Court, or by an attorney entitled to appear before the High Court, or by a chartered accountant practicing in India stating that all the requirements of the Companies Act 1956 and the applicable rules with respect to the registration and other matters have been complied with;

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4. a list of persons who have consented to act as directors of the company. 5. if the proposed company is a public company, consent of very person prepared to act as a director must be submitted in a prescribed form; 6. information about directors, managing directors and managers and secretary must be submitted in a prescribed form; 7. information about the registered office in a prescribed form; 8. power of attorney in favor of one of the promoters or any other person, authorizing him/her to make corrections in the documents submitted to the registrar of the companies, if it becomes necessary; and 9. applicable registration fee payable to the registrar of the companies.

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REQUIREMENTS FOR A PUBLIC LIMITED COMPANY

A Public Limited Company, in addition to the steps followed by a Private Limited Company has to obtain a certificate of Commencement of Business before they can commence the business. To obtain Commencement of Business Certificate after incorporation of the company the public company has to:File a declaration of compliance with the provisions of Section 149(2)(b) of the Act in eForm 20 and attach the statement in lieu of the prospectus(schedule III) OR File a declaration of compliance with the provisions of Section 149 (1)(a),(b),(c) of the Act in eForm 19 and attach the prospectus (Schedule II) to it. Section 149 of the Act, explains the Restrictions on the commencement of Business:Where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, the company shall not commence any business or exercise any borrowing powers, unless (a)

shares held subject to the payment of the whole amount thereof in cash have been allotted to an amount not less in the whole than the minimum subscription;every director of the company has paid to the company, on each of the shares

(b)

taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares offered for public subscription;

(c)

no money is, or may become, liable to be repaid to applicants for any shares or debentures which have been offered for public subscription by reason of any failure to apply for, or to obtain, permission for the shares or debentures to be dealt in on any recognized stock exchange.

149(2)(b):- Where a company having a share capital has not issued a prospectus inviting the public to subscribe for its shares the company shall not commence any business or exercise any borrowing powers, unless every director of the company has paid to the company, on each of the shares taken or contracted to be taken by him and for which he is liable to pay in cash, a proportion equal to the proportion payable on application and allotment on the shares payable in cash.

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LOCATIONS OF REGISTRARS OF COMPANIES IN INDIA A company incorporated in any state of India can do business in all the states of India. The following are the locations of ROC's in India: States & U.T.'s of India

ROC Locations

Delhi & Haryana

Registrar of Companies Delhi & Haryana, Registrar of Companies Karnataka Registrar of Companies Maharashtra

NEW DELHI

Registrar of Companies Pune,

PUNE

Registrar of Companies Tamil Nadu Registrar of Companies Coimbatore

TAMIL NADU

Registrar of Companies Gujarat,

AHMEDABAD

Registrar of Companies Andhra Pradesh, Registrar of Companies Assam, Tripura, Manipur, Nagaland, Meghalaya, Arunachal Pradesh, Mizoram & Shillong

HYDERABAD

Bihar & Jharkhand

Registrar of Companies Bihar & Jharkhand

PATNA

Goa, Daman & Diu

Registrar of Companies Goa, Daman & Diu,

GOA

Jammu & Kashmir

Registrar of Companies Jammu & Kashmir Registrar of Companies Kerala Registrar of Companies Madhya Pradesh Registrar of Companies

JAMMU & SRINAGAR

Karnataka Maharashtra, Dadra & Nagar Haveli Pune, Kolhapur, Ratnagiri, Satara, Sindhudurga, Sangli, Sholapur & Ahmednagar districts in Maharashtra Tamil Nadu Coimbatore, Nilgiris, Periyar Salem, Dharmapuri & Dindigul, Quaid-e-Milleth districts in Tamil Nadu Gujarat

Andhra Pradesh Assam, Tripura, Manipur, Nagaland, Meghalaya, Arunachal Pradesh, Mizoram & Shillong

Kerala, Amindivi, Minicoy & Lakshadweep Islands Madhya Pradesh & Chhattisgarh Orissa

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CITY

BANGALORE MUMBAI ( Bombay )

COIMBATORE

SHILLONG

COCHIN GWALIOR CUTTAK

Orissa Pondicherry

Registrar of Companies Pondicherry

PONDICHERRY

Punjab, Himachal Pradesh & Chandigarh

Registrar of Companies Punjab, Himachal Pradesh & Chandigarh Registrar of Companies Rajasthan , Registrar of Companies Uttar Pradesh Registrar of Companies West Bengal

JALANDHAR

Registrar of Companies Andaman

PORT BLAIR

Rajasthan Uttar Pradesh & Uttaranchal West Bengal

Andaman

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JAIPUR KANPUR CALCUTTA (Kolkata)

NEW DIRECTOR REGISTRATION REQUIREMENTS IN INDIA

 DIN - Director Identification Number Directors for an Indian company, both Indian and foreigners, must register and get and identification number under the new requirements. It is called Director Identification NumberDIN.  DSC - Digital Signature Certificate for Directors Directors for an Indian company, both Indian and foreigners, are also required to get Digital Signature Certificate - DSC - under the new requirements. Digital Signature Certificate (DSC) is required for all Directors or authorized representatives of any company and professional who will require to sign ROC forms or documents. A DSC, like hand written signature, establishes the identity of the sender filing the documents through internet which sender cannot revoke or deny. A DSC is not only a digital equivalent of a hand written signature it adds extra data electronically to any message or a document where it is used to make it more authentic and more secured. There are various classes of DSC.

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BACKGROUND

 The Indian Companies Act 1956

1. THE COMPANIES ACT 1956  

Definition Various types of companies

2. Meaning of the term “Company” 

Company : [ section 3(1) ]



Formed & registered under the companies Act



Any existing company established under any previous Act.

3. COMPANY 

Company is an artificial person



It is considered as a separately legal entity for the purpose of law.

4. Various Types Of Companies 

5.

There are many types of company depending upon the Difference in the objects of it.

Various Types Of Companies Types of Company Incorporation Liability Control Chartered Company Registered Company Statutory Company Private Limited by shares Limited By Guarantee Unlimited Company Public Private Govt. or Non. Govt. Holding & Subsidiary Foreign or Domestic Public

6. On the basis of Incorporation Chartered Company 

A Company incorporated under a special charter granted by the Queen of England is called “Chartered Company”.



The Company is regulated by its Charter and Companies Act does not apply to this kind of company.



The Charter also prescribe the nature of Business and the power of the Company. 67/82



Examples : East India Company and Bank Of England

7. On the basis of Incorporation Statutory Company 

A Statutory Company is one which is created by a Special Act of Parliament or a state legislature.



For achieving the purpose of public utility.



The nature and the power of such companies are laid down in the special Act under which they are created.



Memorandum of Association is not required.



Not required to Use “limited” after its name.



Examples : RBI, UTI, LIC, State Bank of India.

8. On the basis of Incorporation Registered Company 

A Registered Company is one which is registered in accordance with the provisions of the Companies Act, 1956 and includes the existing Companies formed under any other law.



Comes into existence by receiving the certificate of Incorporation.



Governed by the Companies Act ,1956.



Registered Company may be PRIVATE OR PUBLIC COMPANY.

9. On the basis of Incorporation 

Section 3(1)(iii) :  A Private Company means a company which has a minimum paid up capital of Rs. 1,00,000/- or such higher paid up capital as may be prescribed by its articles– 

Restrict the right to transfer its shares, if any;



Limits the number of the member to fifty,



Prohibits any invitation to the public to subscribe for any shares in or debenture of the company.



Prohibits any invitation or acceptance of deposits from persons other than its members, directors or its relatives.

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

Section 3(1)(iv) :  Public company means a company which is Either –  not a private and has a minimum paid-up capital of Rs. 5,00,000 or such higher paid-up capital as may be prescribed;  Is a private company which is a subsidiary of public company

10. On the basis of Incorporation Public Company There is no restriction on the number of members. However, the maximum number of members depends upon the number of shares allotted. Public company may be  A company limited by shares  A company limited by guarantee  An unlimited company.  In case a public company is a limited company, then it must add the word “ Limited ” at

the end of its name.  It must have minimum at least 7 members.  It must have at least 3 directors.

11. On the basis of Incorporation Public Company



According to Section 25 , the Central Government may by license grant that an association may be registered as a company with limited liability, without using the words „limited‟ or „pvt ltd‟ as a part of its name.



An association must satisfy the following condition;



The association about to be formed as a limited company aims at the promotion of commerce, art, science, religion, charity, or any other useful objective ;



It intends to apply its profits, if any, for promoting its objects; and



It prohibits the payment of dividend to its members.



Company not for Profit Central Govt. has a power to revoke the license of such company.

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12. On the basis of Liability 

A company limited by shares is a company in which the liability of its members is limited by its Memorandum to the amount unpaid on the shares respectively held by them.



It may either public or private Company.



If member of the company pays a full amount on shares then his liability would be nil.

13. Limited by shares [Section 12(2)(a)] Features: 

The liability of its members is limited up to the amount remaining unpaid on the shares held by them. Such liability can be enforced either during the lifetime or during the winding up of the company.

14. On the basis of Liability A company in which the liability of its members is limited by its Memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up. For the purpose of Commerce, science, art, religion, charity or any other useful objects. Limited by Guarantee [Section 12(2)(b)] The liability of its members is limited up to the amount Guaranteed by them. Such liability can be enforced only after the commencement of winding up of the company and not during the lifetime of it.

15. For the purpose of Commerce, science, art, religion, charity or any other useful objects. Unlimited Company [Section 12(2)(c)] The liability of its members is limited up to the amount Guaranteed by them. Such liability can be enforced only after the commencement of winding up of the company and not during the lifetime of it.

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16. On the basis of Control A Government company means “any company in which at least 51% of the paid up share capital is held by the Central Government or by any state Government. Even a subsidiary company of Government is regarded as a government Company. Government Company [Section 617] 

Example: Indian telephone Industries,



Hindustan Aeronautics Ltd.

17. On the basis of Control A company which may not be termed as a a government company as defined in section 617 is regarded as a non – Government company.

A company which is incorporated outside India under the law of that country is known as a Foreign Company. After the establishment of Business in India, the following documents must be filed with the Registrar of companies within 30 days for the date of establishment. A certified copy of the charter or statutes under which the company is incorporated The full address of the registered office of the company. A list if directors & secretary of the company. The full address of the company‟s principal place of business in India.

A company which cannot be termed as foreign company under the Provisions of the Companies Act should be regarded as a Domestic company. Domestic Company If one company controls over the another company, the controlling company may be termed as a „Holding Company‟ and company so controlled may be termed as „Subsidiary Company‟.

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Holding & subsidiary Company Section 4(4) of the act defines a holding Company as “ a Company shall be deemed to be the holding company of another, if that other is its subsidiary. The Central Government by notification in the official Gazette is empowered to specify any other institution as public Financial Institutions if: Public Financial Institute It is constituted under any Central Act or is held or controlled by the Central Government. Not less than 51 percent of its paid up Capital is controlled or held by the Central Government. Under Section 4A of the Act, following institution are deemed to be Public Financial Institutions: Public Financial Institute 

The Industrial Credit and Investment Corporation of India Ltd.



The Industrial Financial Corporation of India.



The Industrial Development Bank of India.



The Life Insurance Corporation of India.



The Unit Trust of India.



The Infrastructure Development Finance Company Limited.

A Multinational Companies is huge Organisation which – Multi national Companies Operates in more than one country. Carries out production, marketing and research activities on international scale in those countries Attempts to maximize profit world over.

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METHODOLOGY

The discussion in the Introduction section elaborates all procedures and documents that are officially required for an entrepreneur to start up and formally operate an industrial or commercial business. These include obtaining all necessary licenses and permits and completing any required notifications, verifications or inscriptions for the company.

After a study of laws, regulations and publicly available information on business entry, a detailed list of procedures is laid out, along with the time and cost of complying with each procedure under normal circumstances and the paid-in minimum capital requirements. Subsequently, local incorporation lawyers and government officials complete and verify the data.

Information is also collected on the sequence in which procedures are to be completed and whether procedures may be carried out simultaneously. It is assumed that any required information is readily available and that all agencies involved in the start-up process function without corruption. If answers by local experts differ, inquiries continue until the data are reconciled.

To make the data comparable across types of companies, several assumptions about the business and the procedures are used.

Assumptions about the business

 

The business:

Is a limited liability company. If there is more than one type of limited liability company in the economy, the limited liability form most popular among domestic firms is chosen. Information on the most popular form is obtained from the statistical websites.



Operates in the economy‟s largest business city.



Is 100% domestically owned and has 5 owners, none of whom is a legal entity.



Has start-up capital of 10 times income per capita at the end of 2011, paid in cash.

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

Performs general industrial or commercial activities, such as the production or sale to the public of products or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily polluting production processes.



Leases the commercial plant and offices and is not a proprietor of real estate.



Does not qualify for investment incentives or any special benefits.



Has at least 10 and up to 50 employees 1 month after the commencement of operations, all of them nationals.



Has a turnover of at least 100 times income per capita.



Has a company deed 10 pages long.  Procedure

A procedure is defined as any interaction of the company founders with external parties (for example, government agencies, lawyers, auditors or notaries). Interactions between company founders or company officers and employees are not counted as procedures. Procedures that must be completed in the same building but in different offices are counted as separate procedures. If founders have to visit the same office several times for different sequential procedures, each is counted separately. The founders are assumed to complete all procedures themselves, without middlemen, facilitators, accountants or lawyers, unless the use of such a third party is mandated by law. If the services of professionals are required, procedures conducted by such professionals on behalf of the company are counted separately. Each electronic procedure is counted separately. If 2 procedures can be completed through the same website but require separate filings, they are counted as 2 procedures. Both pre- and postincorporation procedures that are officially required for an entrepreneur to formally operate a business.

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Procedures required for official correspondence or transactions with public agencies are also included. For example, if a company seal or stamp is required on official documents, such as tax declarations, obtaining the seal or stamp is counted. Similarly, if a company must open a bank account before registering for sales tax or value added tax, this transaction is included as a procedure. Shortcuts are counted only if they fulfill 4 criteria: they are legal, they are available to the general public, they are used by the majority of companies, and avoiding them causes substantial delays.

Only procedures required of all businesses are covered. Industry-specific procedures are excluded. For example, procedures to comply with environmental regulations are included only when they apply to all businesses conducting general commercial or industrial activities. Procedures that the company undergoes to connect to electricity, water, gas and waste disposal services are not included.



Time

Time is recorded in calendar days. The measure captures the median duration that incorporation lawyers indicate is necessary to complete a procedure with minimum follow-up with government agencies and no extra payments. It is assumed that the minimum time required for each procedure is 1 day. Although procedures may take place simultaneously, they cannot start on the same day (that is, simultaneous procedures start on consecutive days). A procedure is considered completed once the company has received the final document, such as the company registration certificate or tax number. If a procedure can be accelerated for an additional cost, the fastest procedure is chosen. It is assumed that the entrepreneur does not waste time and commits to completing each remaining procedure without delay. The time that the entrepreneur spends on gathering information is ignored. It is assumed that the entrepreneur is aware of all entry regulations and their sequence from the beginning but has had no prior contact with any of the officials.

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

Cost

Cost is recorded as a percentage of the economy‟s income per capita. It includes all official fees and fees for legal or professional services if such services are required by law. Fees for purchasing and legalizing company books are included if these transactions are required by law. The company law, the commercial code and specific regulations and fee schedules are used as sources for calculating costs. In the absence of fee schedules, a government officer‟s estimate is taken as an official source. In the absence of a government officer‟s estimate, estimates of incorporation lawyers are used. If several incorporation lawyers provide different estimates, the median reported value is applied. In all cases the cost excludes bribes.



Paid-in minimum capital

The paid-in minimum capital requirement reflects the amount that the entrepreneur needs to deposit in a bank or with a notary before registration and up to 3 months following incorporation and is recorded as a percentage of the economy‟s income per capita. The amount is typically specified in the commercial code or the company law. Many economies have a minimum capital requirement but allow businesses to pay only a part of it before registration, with the rest to be paid after the first year of operation.

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CONCLUSION

Registration is an important part without which the company does not come into existence. Registration process takes one or two days.

For the integration of the company one has to submit various documents which are discussed above to the registrar‟s office.

Registrar of Companies, India is a well known, the most demanding and perceptual organization to provide comprehensive information and advice on various types of smart new company registrations in India. The application form must be sent to the Registrar of Companies to form a company in India.

In drafting memorandum of association of the proposed company, care shall be taken (a) that main object is as per FIPB approval, if granted; (b) object which are incidental or ancilliary to the attainment of main object shall be carefully drafted to ensure that they are incidental to main object and not object clause by themselves; (c) other objects shall as fa as possible may be kept nil or minimum. In case of foreign company, ensure that other objects states "subject to approval of Governement and/or authorities, if any, as may be required" and (c) clause V i.e. capital clause shall only specify total authorised share capital and its division into nature of shares and value per share. Capital clause shall not contain authority to vary capital etc. as the same shall be covered in the articles of association. Capital clause shall also specify about minimum paid-up share capital.

No objection from applicants who do not sign memorandum & articles The Registrars of Companies have been advised to ensure at the time of registration of a new company that the subscribers to the memorandum and the articles of association tally with the list of promoters / first director stated in the application for availability of name and in case, one or more of the promoters are not interested to participate in the promotion of a new company at a later state. “No objection letter” from such promoter(s) is made available to the Registrar, while submitting the documents for registration.

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While drafting the object clause, amongst others, the following guidelines should be kept in mind so as to avoid protracted resubmission process while incorporating companies:

(i) The main object clauses are not drafted in consonance with the name as per guidelines issued by the Ministry of Corporate Affairs. The object clause is sometimes drafted very vaguely without specific activities. Abbreviations are not permitted to be used in the object clause and the expressions “etc.”, “and the like” should not be used in the object clause.

(ii) Incidental object (under Clause III - B) in the Memorandum of Association sometimes contain independent business activity, which is not permitted. The incidental objects stated (under Clause III - B) should be purely incidental or ancillary to the main object(s) (under Clause III - A) of Memorandum of Association.

(iii) Ministry has clarified that numerous objects should not be added under the "other objects" (in Clause III-C) of Memorandum of Association. The guidelines stipulate that the number of “other objects” (under clause III - C) should have a bearing upon the capital structure of the company. If the capital is less/low, the number of “other objects” should be less, say restricted to about 10 to 15.

(iv) It should be borne in mind that if the subscribers are Foreign Nationals / Foreign Companies / NRI, the restrictions laid down in Foreign Exchange Management Act, 1999 should be taken into account while drafting the object clause. Activities which are prohibited for Foreign Nationals / Foreign Companies / NRI should not be included in the main object (under clause III - A) and other objects (under clause III - C) of Memorandum of Association. Wherever, Sectoral Cap has been stipulated, it should be ensured that the subscription by Foreign Nationals / Foreign Companies / NRI, are kept within the 'Sectoral Cap' limit in the subscription clause (equity shares).

(v) In the case of Non-Banking Financial Companies, it should be borne in mind that no NBFC Activity can be carried on by any company without RBI permission / registration. Therefore, non-NBFC Companies should not have NBFC Activities included in the main object (under clause III - A) and other objects (under clause III - C) of Memorandum of Association.

Articles of Association constitute a set of rules regulating the internal affairs and management of the company.

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It is the second important document which must be registered in case of unlimited companies, companies limited by guarantee and a private company limited by shares together with the memorandum. In case of public company limited by shares, there is no obligation to register articles of association and if it is registered without articles, the regulations in Table A of Schedule I of the Companies Act 1961 are deemed to be the articles of the company. Articles deal with relation between the company and its shareholders, between the shareholders and the management, matters like shares and share capital, company meetings, directors, secretary etc. In addition, the public limited companies have also to include in their articles certain compulsory provisions which are designed to facilitate free transferability of shares. Private companies have also to include in their articles certain prescribed restrictions. The members of the company have full control over the articles of association and may alter them according to what they think fit in general meeting by special resolution. An important implication of articles is that their provisions amounts to a public notice, known as constructive notice, to all those who deal with the company. They are deemed to have notice of the manner in which the articles require the company to deal with a particular situation. That is why when articles are altered the same has to be recorded with the ROC. Any provisions in a company's article will be ineffective if it is in conflict with the memorandum, the Companies Act or any other law for the time being in force. Though the articles are subordinate to memorandum yet if there be any ambiguity in the memorandum, the article may be used to explain it but not so as to extend the objects. Articles are to be in a printed form and signed by the signatories to the memorandum. While drafting memorandum and articles of association, care shall be taken to ensure that the same does not contain any clause which is contrary to the Companies Act.

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RECOMMENDATION

The choice of entity depends on circumstance of each case. Private Limited Company has lesser number of compliances requirements. Therefore, generally where there is no requirement of raising of finances through a public issue and the ownership is intended to be closely held by limited number of persons, Private Limited Company is the best choice.

A limited company has following advantages: 

Members' (the directors and shareholders) financial liability is limited to the amount of money they have paid for shares.



The management structure is clearly defined, which makes it easy to appoint, retire or remove directors.



If extra capital is needed, it can be raised by selling more shares privately. It is simple to admit more members.



The death, bankruptcy or withdrawal of capital by one member does not affect the company's ability to trade.



The disposal of the whole or part of the business is easily arranged. High status.



A private company enjoys various exemptions under the companies act. It is free from strict control and supervision of the government.



Being a registered company it has stability, separate legal entity and perpetual existence.



Unlike a public limited company , a private limited company need not issue prospectus does not require minimum subscription and can start its business as soon as it gets the certificate of incorporation. It need not wait for securing the trading certificate.

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LIMITATIONS

The Formation and Incorporation of a company is a lengthy process. It involves various procedures which need to be taken as a legal entity recognized by law, which may be classified into two broad categories i.e. Industry and Commerce. Production of goods is the domain of 'Industry' and distribution comes under 'Commerce'. Every entrepreneur aims at starting a business and building it into a successful enterprise. The term 'entrepreneur' means to undertake and pursue opportunities and to fulfill needs and wants of people through innovation. He/she innovates and combines resources in the form of men, materials and money and brings them together to make the business venture profitable. He/she is prepared to take risk and face challenges.

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BIBLIOGRAPHY

Websites:

www.doingbusiness.org www.gandhis.com www.legalserviceindia.com www.companyformationindia.com www.legalserviceindia.com

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