iSTUDY MATERIAL

PROFESSIONAL PROGRAMME

ADVANCED COMPANYLAW AND PRACTICE

MODULE 1PAPER 1

ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003tel 011-4534 1000, 4150 4444 fax +91-11-2462 6727email info@icsi.edu website www.icsi.edu

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THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

TIMING OF HEADQUARTERSMonday to Friday

Office Timings 9.00 A.M. to 5.30 P.M.

Public Dealing TimingsWithout financial transactions 9.30 A.M. to 5.00 P.M.With financial transactions 9.30 A.M. to 4.00 P.M.

Phones41504444, 45341000

Fax011-24626727

Websitewww.icsi.edu

E-mailinfo@icsi.edu

Laser Typesetting by AArushi Graphics, Prashant Vihar, New Delhi, andPrinted at Tan Prints

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iii

ADVANCED COMPANY LAW AND PRACTICE

This study material has been published to aid the students in preparing for the Advance Company Law andPractice paper of the CS Professional Programme. Company Law has undergone radical changes over the pastfew years, so is the procedural requirements relating to compliance under various provisions of the CompanyLaw. As the Company Secretary plays an important role in ensuring compliance of various provisions of thecompany law thereby avoiding penal consequences, this study material has been prepared with a view toprovide an expert knowledge and understanding of the various procedural requirements of Company Law. Withthis objective in mind, a number of specimen notices, minutes, resolutions and forms have been included atrelevant places. However, the students are advised to study the various procedures relevant for the purpose ofthis paper, in the light of the provisions of the Company Law and Rules made thereunder.Company Secretaryship being a professional course, the examination standards are set very high, with emphasison knowledge of concepts, applications, procedures and case laws, for which sole reliance on the contents ofthe study material may not be enough. Besides, Company Secretaries Regulations, 1982 requires the studentsto be conversant with the amendments to the laws made upto six months preceding the date of examination.This study material may therefore be regarded as basic material and must be read alongwith the Bare Act,Rules, Regulations, Case Law, as well as suggested readings.The various changes made upto 30th June, 2013 have been included in this study material. However, it mayhappen that some developments might have taken place during the printing of the study material and its supplyto the students. The students are therefore advised to refer to the Student Company Secretary, CharteredSecretary and other publications for updation of study material. In the event of any doubt, students may write tothe Directorate of Academics and Perspective Planning in the Institute for clarification at aclp@icsi.edu andsudhir.dixit@icsi.edu.This study material also contains one CD containing the E-forms which is part of the syllabus. E-forms areupdated from time to time by the Ministry of Corporate Affairs (MCA). Hence, the students are advised to visitthe MCA Website i.e. www.mca.gov.in for updated e-forms.Although due care has been taken in publishing this study material, yet the possibility of errors, omissions and/or discrepancies cannot be ruled out. This publication is released with an understanding that the Institute shallnot be responsible for any errors, omission and/or discrepancies or any action taken in that behalf.

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SYLLABUSMODULE 1-PAPER 1: ADVANCED COMPANY LAW AND PRACTICE (100 Marks)

Level of Knowledge:Expert KnowledgeObjective: To acquire expert knowledge of the practical and procedural aspects of the Companies Act.

Detailed Contents:1. Company Formation and Conversion

Choice of Form of Business Entity; Conversion/ Re-conversion of One Form of Business Entity intoAnother

Incorporation of Private Companies, Public Companies, Companies Limited by Guarantee and UnlimitedCompanies and their Conversions/ Re-conversion/Re-registration

Formation of Nidhi Companies, Producer Companies and Mutual Benefit Funds Commencement of Business and New Business; Pre Incorporation Agreements and Contracts Formation of Non Profit Companies Procedure Relating to Foreign Companies Carrying on Business in India

2. Procedure for Alteration of Memorandum and Articles Alteration of Various Clauses of Memorandum: Name Clause, Situation of Registered Office Clause,

Objects Clause, Capital Clause and Liability Clause Effects of Alteration of Articles

3. Procedure for Issue of SecuritiesPart A: Shares Public Issue, Rights Issue and Bonus Shares, Issue of Shares at Par/Premium/Discount; Issue of

Shares on Preferential /Private Placement Basis Allotment, Calls on Shares and Issue of Certificates Issue of Sweat Equity Shares, Employees Stock Option Scheme (ESOPs), Employees Stock Purchase

Scheme (ESPS), Shares with Differential Voting Rights Issue and Redemption of Preference Shares Alteration of Share Capital - Forfeiture of Shares and Reissue of Forfeited Shares; Increase,

Consolidation, Conversion and Re-conversion into Stock, Subdivision and Cancellation and Surrenderof Shares

Buy Back of Shares Reduction of Share CapitalPart B: Debt Instruments Issue of Debentures and Bonds, Creation of Security and Debenture Redemption Reserve, Drafting of

Debenture Trust Deed, Redemption of Debentures, Conversion of Debentures into Shares

v Deposits4. Procedure relating to Membership, Transfer and Transmission

Induction of Members, Nomination of Shares, Variation of Shareholders Rights, Cessation ofMembership including Dispute Resolution

Transfer/Transmission/Transposition Admission of Securities in Electronic Mode Dematerialization/ Rematerialisation of Securities Compliances relating to Insider Trading and Takeovers

5. Directors and Managerial Personnel Obtaining DIN Directors and Managerial Personnel- Appointment, Reappointment, Resignation, Removal and

Varying Terms of Appointment/Re-appointment Payment of Remuneration to Directors and Managerial Personnel and Disclosures thereof;

Compensation for Loss of Office Waiver of Recovery of Remuneration Making Loans to Directors, Disclosure of Interest by a Director, Holding of Office or Place of Profit by

a Director/Relative Company Secretary - Appointment, Resignation and Removal Company Secretary in Practice - Appointment, Resignation and Removal

6. Meetings Collective Decision Making Forums - Authority, Accountability, Delegation and Responsibility Board Meetings - Convening and Management of Meetings of Board and Committees; Preparation of

Notices and Agenda Papers General Meetings - Convening and Management of Statutory Meeting, Annual and Extra-Ordinary

General Meetings, Class Meetings; Creditors Meetings; Preparation of Notices and Agenda Papers;Procedure for Passing of Resolutions by Postal Ballot; Voting through Electronic Means; Conducting aPoll and Adjournment of a Meeting

Post-Meeting Formalities - Preparation of Minutes and Dissemination of Information and Decisions7. Auditors

Auditors - Procedure for Appointment/Re-appointment, Resignation and Removal of Statutory Auditorsand Branch Auditors; Appointment of Cost Auditors

Special Auditors; CAG audit8. Distribution of Profit

Ascertainment of Distributable Profits and Declaration of Dividend; Payment of Dividend Claiming of Unclaimed/Unpaid Dividend; Transfer of Unpaid/Unclaimed Dividend to Investor Education

and Protection Fund9. Procedure relating to Charges

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Creation and Registration, Modification, Satisfaction of Charges Inspection of charges

10. Procedure relating to Inter-Corporate Loans, Investments, Guarantees and Security Making Inter-Corporate Loans, Investments, Giving of Guarantee and Security

11. Preparation & Presentation of Reports Preparation of Financial Statements, Auditors Report, Directors Report and Report on Corporate

Governance12. E- Filing

Filling and Filing of Returns and Documents(a) Annual Filing, i.e., Annual Accounts; XBRL Filing, Compliance Certificate, Annual Return(b) Event Based Filing

13. Striking off Names of Companies Law and Procedure

14. Recent Trends and Developments in Company Law15. Trusts and Non Profit Organisation

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LIST OF RECOMMENDED BOOKSMODULE 1

PAPER 1 : ADVANCED COMPANY LAW AND PRACTICEThe students may refer to the given books and websites for further knowledge and study of the subject :Readings:

1. M.C. Bhandari : Guide to Company Law Procedures; Wadhwa & Company, Agra & Nagpur2. K.V. Shanbhogue : Company Law Procedure; Bharat Law House, New Delhi-343. M.L. Sharma : Company Law Procedures, Taxmann Publishers, New Delhi.

V.S. Sowrirajan4. A.M. Chakraborti & : Company Notices, Meetings and Resolutions, Taxmann, New Delhi

B.P. Bhargava5. A. Ramaiya : Guide to the Companies Act, Wadhwa & Company, Nagpur6. R. Suryanarayanan : Company Notices, Meetings and Resolutions, Kamal Law House, Kolkata7. D.K. Jain : E-filing of Forms & Returns, Bharat Law House8. Taxmann : Guide to E-Company forms9. V.K. Gaba : Depository Participants (Law & Practice)10. Dr. K.R. Chandratre : Guide to Company directors11. ICSI Publication : Meetings12. B.K. Sengupta : Company Law13. D.K. Jain : Company Law Procedures, Bharat Law House14. Taxmann : Company Rules & Forms

References:1. M.C. Bhandari : Guide to Memorandum, Articles and Incorporation of Companies;

R.D. Makheeja Wadhwa & Company, Agra & Nagpur2. Taxmann : Company Law, Digest

Journals:1. Chartered Secretary : ICSI Publication2. Student Company : ICSI Publication

Secretary3. Corporate Law Adviser : Corporate Law Advisers, Post Bag No. 3, Vasant Vihar, New Delhi.4. Company Law Journal : L.M. Sharma, Post Box No. 2693, New Delhi - 110005

Note:The latest edition of all the books referred to above should be read.

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ARRANGEMENT OF STUDY LESSONSStudy Lesson No. Topic

1. Company formation and conversion2. Procedure for Alterations of the Memorandum and Articles of Association3. Issue of Securities4. Allotment of Securities5. Alteration of Share Capital6. Issue and redemption of Debentures and Bonds7. Acceptance of Deposits by companies8. Membership and Transfer/Transmission of Shares9. Directors and Managerial Personnel10. Company Secretary11. Meetings12. Auditors13. Preparation & Presentation of Reports14. Distribution of Profit15. Charges16. Inter-Corporate Loans, Investments, Guarantees and Security17. E-Filling18. Striking off Names of Companies19. Recent Trends & Developments in Company Law20. Trusts and Non-Profit Orginisation

TEST PAPERS

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CONTENTSADVANCED COMPANY LAW AND PRACTICE

LESSON 1COMPANY FORMATION AND CONVERSION

Learning Objectives/Lesson Outline 1Choice of Form of Business Entity 2Nature, Form and Types of Business Enterprises 2Non-Corporate Form of Business Enterprises 2Corporate Form of Business Enterprises 2Limited Liability Partnership (LLP) 3Forming a Choice 3Incorporation of Companies 3Promoters to take Steps for Formation of the Company 4Procedure for incorporation of public limited company having share capital 4Obtain Director Identification Number (DIN) 4Procedure for incorporation of private limited company having share capital 10Procedure for incorporation of company limited by guarantee 10Procedure for incorporation of company for charitable and other public utility purposeswithout addition of the words Limited or Private Limited to its name (Non Profit Companies) 14Procedure for issue of licence under section 25 to a company already registered 16Procedure for incorporation of a company as subsidiary of an existing company 17Unlimited Companies 18Procedure for incorporation of a Producer Company 18Procedure to Form a Nidhi Company 21Mutual Benefit Fund 24Procedure to register a foreign company in India 24Conversion of companies 25Re-registration of companies 26Conversion of private company into public company 26Status of deemed public company after commencement of Companies (Amendment) Act, 2000 28Consequences of Non-compliance of Section 3(1)(iii) of the Companies Act, 1956 28

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xPageConversion of public company into a private company 29Conversion of Sole Proprietor Concern into Limited Company 31Conversion of a Partnership Firm into a Limited Company 31Procedure for Conversion of a Sole Proprietor Concern or Partnership Firm into a Limited Company 32Conversion of Company into Limited Liability Partnership 33Conversion of an Inter-State Cooperative Society into a Producer Company 34Reconversion of Producer Company to Inter-State Co-Operative Society [Section 581ZS] 35Strike off Name of Producer Company 35Commencement of business by a company 36Commencement of new business by an existing company 37Procedure for Commencement of new business 38Pre-Incorporation agreements and contracts 40ANNEXURES 41LESSON ROUND-UP 51SELF-TEST QUESTIONS 52

LESSON 2PROCEDURE FOR ALTERATION OF MEMORANDUM AND ARTICLES

Learning Objectives/Lesson Outline 53Alteration of Clauses of Memorandum of Association of a Company 54Change of Name of a Company 54Effect of change of name of a Company 56Change of name by rectification 58Change of Objects of a Company 59Alteration of Memorandum of Producer Company 59Procedure for changing objects of a Company 60Change of Registered Office of a Company 61Extension of time by Regional Director for filing Documents with Registrar 65Liability of Directors etc. to be made Unlimited 70Alteration of Articles of Association of a Company 71Procedure for Altering Articles of Association 72Procedure for Alteration of Articles of Producer Company [Section 581 I] 73Effect of Alteration of Articles 73

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PageFinancial Year of a Company 73Authority to Determine and alter Financial Year of a Company 74Procedure for Changing the Financial Year of the Company 74ANNEXURES 75LESSON ROUND-UP 84SELF-TEST QUESTIONS 85

LESSON 3ISSUE OF SECURITIES

Learning Objectives/Lesson Outline 87Meaning of Public Issue of Securities 88Issue of Equity Shares 88Steps involved in issue of Equity Shares 89Issue of Shares at Discount 94Procedure for Issue of Shares at Discount 95Issue of Shares at a Premium 97Procedure for Issue of Shares at Premium 97Making Calls on Shares 99Procedure to Make Calls on Shares 100Rights Issue 100For Non-underwritten Rights Issue 101For Underwritten Rights Issue 102Steps involved in issue of Rights Shares 102Issue of Bonus Shares 105Steps involved in Issue of Bonus Shares 106Procedure for bonus issue by an Unlisted Company 108Procedure to Issue Equity Shares with Differential Voting Rights 108Issue of Shares on Preferential Basis/Private Placement 111Lock-in period as per SEBI (ICDR) Guidelines, 2009 113Employee Stock Options 114Procedure for issue of securities to employees through Employees Stock Option Scheme orEmployees Stock Purchase Scheme 115ESOS/ESPS through Trust Route 122

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PageSweat Equity Shares 123Procedure to Issue Sweat Equity Shares (In case of Listed Companies) [Section 79A] 123Procedure to Issue Sweat Equity Shares (in case of unlisted companies) [Section 79A] 125Issue and Redemption of Preference Shares 127Procedure to issue Redeemable Preference Shares under Section 80 128Procedure to redeem Redeemable Preference Shares 128ANNEXURES 129LESSON ROUND-UP 141SELF-TEST QUESTIONS 142

LESSON 4ALLOTMENT OF SECURITIES

Learning Objectives/Lesson Outline 145Meaning of Allotment 146Allotment of Shares 146Shares Allotted for Consideration otherwise than in Cash 147Return of Allotment of Bonus Shares 147Return of Allotment of Shares Issued at Discount 147Disposal of Forfeited Shares No Allotment Return to be Filed 147Return of Allotment to be Filed in Respect of Every Allotment 147Allotment of Fractional Shares 148Share Application Form 148Partial Allotment 148Time limit for allotment 149Irregular Allotments 149Voidable Allotment 149Void Allotment and its Effects 149Allotment Procedure 150Making Calls on Shares 152Procedure to Make Calls on Shares 153Issue of Share Certificates 153Procedure for Issue of Share Certificates 154Issue of Duplicate Share Certificates 155

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PageIssue of Share Certificates on Surrender of Letters of Allotment 155ANNEXURES 156LESSON ROUND-UP 159SELF-TEST QUESTIONS 159

LESSON 5ALTERATION OF SHARE CAPITAL

Learning Objectives/Lesson Outline 161Alteration of Share Capital of a Company 162Filing of (e-form 5) notice of change in share capital with ROC 162Procedure for increasing share capital 163Procedure for consolidation of share capital 164Procedure for sub-division of share capital 165Conversion of Shares into Stock 166Procedure for Conversion of Fully Paid Shares into Stock 167Effect of conversion of shares into stock 168Procedure for Re-conversion of Stock into Fully Paid Shares 169Forfeiture of Shares 169Notice for Payment of Call on Defaulting Members 169Effect of forfeiture 169Procedure for forfeiture of shares 170Sale, etc. of Forfeited Shares 171Cancellation of Shares 171Procedure for Cancellation of Shares 171Surrender of Shares 173Reduction of Share Capital 174Procedure for reduction of share capital 175ANNEXURES 179LESSON ROUND-UP 187SELF-TEST QUESTIONS 187

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LESSON 6ISSUE AND REDEMPTION OF DEBENTURES AND BONDS

Learning Objectives/Lesson Outline 189Debentures 190Kinds of Debentures 191Debenture Trust Deed and its Drafting 192Contents of a debenture trust deed 193Execution of trust deed and stamp duty 195Appointment and Duties of Debenture Trustees 196Liability of Company to Create Security a Debenture Redemption Reserve 197Debenture Redemption Reserve (DRR) 197Issue of Debentures 198SEBI Guidelines pertaining to Issue of debt securities 199Role of Company Secretary under Listing Agreement for Debt Securities 204Redemption and roll-over 204Re-issue of redeemed debentures 205Important aspects under SEBI (Issue and Listing of Debt Securities) Regulations, 2008 205Obligations of Intermediaries and Issuers 205Obligations of Debenture trustee 205Obligations of the Issuer, Lead Merchant Banker, etc. 206Power of SEBI to undertake inspection and to issue directions 206Issue of Convertible Debt Instruments 207Private Placement of Debt Securities 209SEBI (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008 212Procedure for issue of shares on conversion of debentures or loans into shares 213Conversion into Preference Shares 214Issue of Public Sector Bonds 214Issue of Bonus Bonds 215ANNEXURES 216LESSON ROUND-UP 249SELF-TEST QUESTIONS 250

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LESSON 7ACCEPTANCE OF DEPOSITS BY COMPANIES

Learning Objectives/Lesson Outline 251Meaning of Deposit 252Procedure to invite deposits by a non-banking non financial company 252Power to grant extension of time or exemption under Section 58A(8) of the Act 256Procedure to obtain an order of the Central Government for extension of time or exemptionunder section 58A(8) of the Act 256Procedure for accepting deposits by private placements and confidential offers 257Procedure for making complaint to the Company Law Board against failure by the companyto repay deposit 259ANNEXURES 260LESSON ROUND-UP 271SELF-TEST QUESTIONS 272

LESSON 8MEMBERSHIP AND TRANSFER/TRANSMISSION OF SHARES

Learning Objectives/Lesson Outline 273Who are Members 274Definition of Member 274Modes of Acquiring Membership 275Membership and Voting Rights of Producer Company 277Procedure for Cessation of Membership 278Dispute Regarding Title of Shares and its Resolution 283Rectification of Register of Members or Register of Debentureholders 283Procedure for obtaining a Direction from the CLB for the Rectification of the Registerof Members or Debentureholders 283Expulsion of a Member 285Procedure for Variation as well as Cancellation of the Variation of Members Rights 285Transfer of shares of a company 288Transfer of shares of a Private Limited Company 290Transferability of Shares of Producer Company 290Procedure for Registration of Transfer of Shares 290

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PageRegistration of Partly-Paid Shares 290Checklist for Share Transfers 292Forged Transfers 294Post Approval Processing 294Transfer of Debentures 295Transfer of Share Warrants 295Certification of Transfer 295Transposition of Names 295Death of Transferor or Transferee before Registration of Transfer 296Registration of Transmission of Shares 296Nomination of Shares 297Procedure for Transmission of Shares (in case nomination by member was not made) 298Procedure for Transmission of Shares to Nominee 300Transfer and Transmission of Debentures 300Secretarial Standard on Transmission of Shares and Debentures (SS-6) 300Dematerialisation of Shares of a Company 302Admission of Securities in Electronic Form 302Procedure for a Shareholder to get his Shares Dematerialised 303Procedure for a Company to have its Shares Dematerialised 303Transfer of Shares Held in Dematerialized Form 305Pledge or Hypothecation of Shares Held in a Depository 306Transfer-cum-Demat Scheme 306Phasing out of Transfer-cum-Demat Scheme 306Procedure for Rematerialisation 306Certain Compliances and Disclosures Relating to Insider Trading and Takeovers withregard to Transfer of Securities 307Concept of Insider Trading 307Certain Important Expressions used in the Regulations 308Restrictions with Respect to Execution by Directors/Officers etc. 310Requirement of Compliances by the Company 310Requirement of Compliances by Persons other than the Company 311Role of Company Secretary in Compliance Requirements 312Compliances Relating to Takeovers 315

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PageRole of the Target Company in the Open Offer Process 316Exemption from Making Open Offer 316Disclosures (Other than the ones given in Public Announcement/Detailed Public Statement/ Letterof Offer for the Open Offer) required to be made in terms of SAST Regulations, 2011 317ANNEXURES 318LESSON ROUND-UP 348SELF TEST QUESTIONS 348

LESSON 9DIRECTORS AND MANAGERIAL PERSONNEL

Learning Objectives/Lesson Outline 351Directors 352Maximum/Minimum Number of Directors in a Company 352Procedure for Appointment of Directors in a Company 352Appointment of First Directors 352Appointment of First Directors in Producer Company 353Appointment of Directors by Members at General Meeting 353Obtaining DIN 354Cancellation or Deactivation of DIN 355Appointment of a Person other than Retiring Director 356Appointment of Directors by Board 357Appointment of additional directors of Producer Company 358Procedure for Appointment of Additional Director 358Procedure for Appointing Directors in Casual Vacancy 359Procedure for Appointment of an Alternate Director 360Appointment of Directors by Central Government 360Appointment of Director by System of Proportional Representation 361Appointment of Nominee Directors 361Procedure for Appointment of Director to be Elected by Small Shareholders 362Procedure for Reduction in Number of Directors 363Procedure for Increase in Number of Directors 364Removal of Directors 365Removal of Director by Shareholders 365

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PageProcedure for Removal of Director 365Procedure for filling the vacancy caused by removal of a director 366Removal of Director by Central Government 367Removal of Director by Company Law Board 367Vacation of Office by a Director 367Vacation of office by Directors in case of Producer Company 368Managing Director 369Appointment of Managing Director 369Procedure for Managing Directors Appointment 370Appointment of a Person as Managing Director, who is Managing Director of Another Company 372Appointment of Managing Director/whole-time Director/Manager of a Private Companywhich is not a Subsidiary of a Public Company 372Variation of Provisions Regarding Appointment or Reappointment ofManaging Director/Whole-time Director/Non-Rotational Director 372Procedure for Varying the Terms of Appointment of Non-rotational Directors 373Remuneration of Managing Director/Whole-Time Director 373Procedure for Fixation of Remuneration to Managing Director/Whole-time Director/Manager 374Procedure for Payment of Remuneration to Part-time Directors 376Revision of Remuneration of Managing Director/Whole-time Director 377Procedure for Revision of Remuneration of Managing Director 377Provisions Applicable to Managerial Remuneration 378Waiver of Recovery of Remuneration 380Procedure for Removal of Managing Director/Whole-Time Director before the expiry of his term of Office 380Resignation by Managing Director 380Whole-time Director 380Appointment of Whole-time Director 381Procedure for Appointment of Whole-Time Director 381Resignation by Whole-time Director 383Remuneration of Whole-time Director 383Variation of Provisions Regarding Whole-time Director 383Procedure for Loans to Directors 383Procedure for Entering in Contracts in which Directors are Interested 384Disclosure of Interests by a Director 385

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PageProcedure for disclosure of interests by a director 386Procedure for a Director or Persons related to a Director to hold an Office or Place of Profit 386Manager 388Appointment of Manager 388Provisions Applicable to Manager 389Procedure for Appointment of a Manager 389Removal of a Manager 391Compensation for Loss of Office of Director and other Managerial Personnel 391Payment to a Director etc. for loss of office etc. in connection with transfer of undertaking or property 392Directors and Officers Liability Insurance 393Indian Scenario 395Recent Development in Asia Affecting D&O 395Filing of Agreements with Managerial Personnel 395ANNEXURES 396LESSON ROUND-UP 417SELF-TEST QUESTIONS 418

LESSON 10COMPANY SECRETARY

Learning Objectives/Lesson Outline 419Who can be a Company Secretary 420Functions of a Company Secretary An Officer of Company 420Relationship with the Board, Chairman and Managing Director 422Relationship with other Functionaries 422Appointment of a Company Secretary 425Penalty for Default 427Appointment of Secretary of Producer Company 427Procedure for Appointment of a Company Secretary 427Removal of a Company Secretary 428Procedure for Removal/Resignation of a Company Secretary 428Appointment as Compliance Officer 429Company Secretary in Practice 429Permissions granted by general or specific resolution of the Council under Regulation 168 ofCompany Secretaries Regulations, 1982 431

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PageAppointment of a Company Secretary in Whole-time Practice 434Issue of Compliance Certificate 434Procedure for Appointment of Company Secretary in Whole-time Practice forIssue of Compliance Certificate 435Penalty for non-compliance 436Signing of Annual Return 436Certification under Listing Agreement 436Removal of Company Secretary in Practice 436Functions of Company Secretary in Practice 436Designation to be used by Members in Practice 441Prefix of CS 441Logo for Members 442ANNEXURES 442LESSON ROUND-UP 445SELF-TEST QUESTIONS 446

LESSON 11MEETINGS

Learning Objectives/Lesson Outline 447Collective Decision Making Forums 448Division of Powers between Shareholders and Directors 448Responsibility and Accountability 449Delegation of Powers 449Powers to be exercised only at Board Meetings 449Meetings 451Board Meetings 451Procedure for holding first meeting of The Board of Directors 452Procedure for Holding Subsequent Board Meetings 454Meetings of Committee of Directors 454Committee of Directors of Producer Companies 455Audit Committee 455Preparation of Notices and Agenda Papers for Meetings of Board/Committees of Board 456Secretarial Standard on Meetings of the Board of Directors (SS-1) 457

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PageProcedure for Passing a Board Resolution by Circulation 459Secretarial Standard on Passing of Resolutions by Circulation (SS-7) 460Participation of Directors in Meetings of Board/Committee of Directors through Electronic Mode 461Procedure for Holding Statutory Meeting 462Procedure for Holding an Annual General Meeting 463Secretarial Standard on General Meetings (SS-2) 468Conduct of Poll 469Procedure for Passing of Resolutions By Postal Ballot 470Items of business to be transacted through postal ballot 471Procedure 472Voting through Electronic Means in General Meetings 477Adjournment of a Meeting 479Annual General Meeting of Producer Company 480Matters to be Transacted at General Meeting 481Procedure for Holding an Extraordinary General Meeting 481Procedure for Class Meetings 483Practical Aspects of Drafting Resolutions and Minutes 484Resolutions 484Minutes 485Minutes of Narration 485Minutes of Resolution 485Secretarial Standard on Minutes (SS-5) 485Matters Requiring Sanction by Ordinary Resolution (Unless otherwise specified in theArticles of Association) 487Matters Requiring Special Resolution 488Matters Requiring Special Notice 489ANNEXURES 490LESSON ROUND-UP 567SELF-TEST QUESTIONS 568

LESSON 12AUDITORS

Learning Objectives/Lesson Outline 571

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PageAppointment of Statutory Auditors 572Appointment of First Auditors 572Procedure where the first auditor is not appointed by the Board 573Subsequent Appointment of Auditors 573Re-appointment of Auditors 574Procedure relating to Re-appointment of Retiring Auditor at the Annual General Meeting 574Appointment of Auditor other than a Retiring Auditor (Section 225) 575Procedure for Appointing an Auditor who is not the Retiring Auditor 575Appointment of Auditors by Special Resolution 576Filling of Casual Vacancy [Section 224(6)] 576Procedure in Regard to Appointment of an Auditor in Casual Vacancy 576Procedure in Regard to Appointment of an Auditor in Casual Vacancy Caused Due to Resignation 577Internal Audit of Producer Company 577Power of Central Government to Appoint Auditors 577Remuneration of Auditors 577Removal of Auditors 578First Auditors 578Subsequent Auditors 578Procedure for Removal of an Auditor Before the Expiry of the Term 578Branch Auditor 579Exemption to Branch Office from applicability of Section 228 580Revocation of exemption 581Removal of Branch Auditor 581Statutory Auditor vis-a-vis Branch Auditor 581Intimation to the Registrar of Companies 581Cost Auditor 582Appointment of Cost Auditor 582Statutory Auditor not to be Appointed as Cost Auditor 583Procedure for Appointment of Cost Auditor 583Report of Cost Auditor 584Special Auditors 584CAG Audit and Procedure for Appointment of Auditors of Government Companies [Section 619] 585CAG Audit 585

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ANNEXURES 587LESSON ROUND-UP 589SELF-TEST QUESTIONS 590

LESSON 13PREPARATION AND PRESENTATION OF REPORTS

Learning Objectives/Lesson Outline 591Introduction 592E-filing 592Annual Accounts 592Annual Accounts of Producer Company 593Procedure for Preparation, Finalisation of Balance Sheet and Profit and Loss Account 593Procedure for Exemption from Attaching the Accounts of Subsidiary Companies 596Procedure for Preparing Abridged Balance Sheet and Profit and Loss Account by aListed Company 598Auditors Report 598Directors Report 599Report on Corporate Governance under Clause 49 of the Listing Agreement 600Form for voluntary reporting of Corporate Social Responsibility (CSR) 601Management Discussion and Analysis Report (MDAR) 601Directors Responsibility Statement 601Disclosure of Information about each Director 602Declaration from Independent Directors 602Particulars of Employees 602Procedure for Preparation of Directors Report 603Secretarial Standard on Boards Report (SS-10) 605Compliance Certificate under Section 383A 606Chairpersons Statement 608General pointers for preparing a speech for the Chairperson 608ANNEXURES 609LESSON ROUND-UP 642SELF-TEST QUESTIONS 643

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LESSON 14DISTRIBUTION OF PROFIT

Learning Objectives/Lesson Outline 645Meaning of Dividend 646Declaration of Dividend 646Procedure for Declaration and Payment of Interim Dividend 648Procedure for Declaration and Payment of Final Dividend 652Payment of Dividend without Providing for Depreciation 655Procedure for Declaration of Dividend out of Companys Reserves 656Claiming of Unclaimed/Unpaid Dividend 657Procedure for Transfer of Unpaid or Unclaimed Dividend to the Investor Education and Protection Fund 658Secretarial Standard on Dividend (SS-3) 659ANNEXURES 661LESSON ROUND-UP 664SELF-TEST QUESTIONS 665

LESSON 15CHARGES

Learning Objectives/Lesson Outline 667What is a Charge 668Charge as defined in Transfer of Property Act, 1882 668What is a Mortgage? 668Mortgage as defined in Transfer of Property Act, 1882 668Charge and Mortgage Distinguished 668Charge and Pledge Distinguished 669Need for Creating a Charge on Companys Assets 669E-Filing 669Register of Charges Maintained in RoCs Office 670Register of Charges under the E-governance Regime 670Inspection of Particulars of Charges 670Registration of Particulars of Charges 670Registrable Charges 671

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Notice of Charge 671Consequences of Non-Registration of Charge 671Registration of Charges on Properties Acquired Subject to Charge 672Particulars of Charge in Case of Series of Debentures 672Particulars in case of Commission, etc. on debentures 673RoC Empowered To Grant Extention of Time for Filing Particulars 673Any Interested Party may File Particulars of Charge with RoC 673Particulars of Charges 673Index to Register of Charges 674Procedure for Registration of a Charge 674Rectification by Central Government of Register Of Charges 675Procedure for Petition to Regional Director for Rectification of RoCs Register of Charges 676Register of Charges to be Maintained by Companies 677Companies to keep at Registered Office copies of instruments creating charges 678Inspection of Charges 678Inspection in electronic mode 678Modification of Charge 678Procedure for Modification of Existing Charge 679Satisfaction of a Charge 680Procedure for Satisfaction of a Registered Charge 680ANNEXURES 681LESSON ROUND-UP 688SELF-TEST QUESTIONS 688

LESSON 16INTER-CORPORATE LOANS, INVESTMENTS, GUARANTEES AND SECURITY

Learning Objectives/Lesson Outline 691Introduction 692Procedure for Inter-Corporate Loans/Investment/Giving Guarantee/Providing Security 694Loan to Members of Producer Company 696Investment in other companies, formation of subsidiaries etc., in case of producer company 697ANNEXURES 698LESSON ROUND-UP 702SELF-TEST QUESTIONS 702

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LESSON 17E-FILING

Learning Objectives/Lesson Outline 705E-Governance and MCA-21 706Scope of E-Governance 706Operational Aspects of MCA-21 706Launch of MCA-21 706Notification of e-forms 706E-forms 707Companies (Electronic Filing and Authentication of Documents) Rules, 2006 707Director Identification Number (DIN) 707Corporate Identity Number (CIN) 708Global Location Number (GLN) 708Digital Signature Certificate (DSC) 708Front Office and Back Office 709Back Office 709Service Request Number (SRN) 709Rectification of Mistakes 710Payment of Stamp Duty 710Introduction of e-stamping facility by MCA and dispensation of physical submission thereof 710STP Forms 711Regulation 17 of Companies Regulation, 1956 711For Non-STP documents 711For STP Documents 712Online Inspection of Documents 712Clarifications Issued by MCA From time to time 712Frequently Asked Questions on MCA-21 712Substantial benefits of MCA-21 713Elimination of Interface with the Offices of ROCs, RDs and the MCA 713Effective use of Database 713Better Supervision and Monitoring of Compliance 714Mutually Beneficial System 714Speed, Transparency and Efficiency 714

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Effective Due Diligence 714Efficient Services by Professionals 714Environment Friendly 714Filling and Filing of Forms 714Scope of Filing E-forms 715Adequate knowledge of Substantive Laws 715Prerequisites for E-filing on MCA-21 715Important terms used in E-filing 716Pre-fill 716Attachment 716Modify 716Radio Button 716Check Box 716Drop Down Box 716Text box 716Country Code 716Stock Exchange Code 717Check Form 717Pre-Scrutiny 717How to Affix Digital Signature? 717Submit 717Addendum to E-Form 717Re-submission of an E-Form 718Steps for E-Form re-submission 718Pre-certification of certain E-Forms 718Necessity of Pre-certification 719Guidelines for Filling and Filing E-Forms 719Flowchart of E-filing 720Important aspects to be considered at the time of Annual Filing 721XBRL Filing 722Steps for filing Financial Statements in XBRL mode 722Common Points for all the annual e-Forms 723E-Form 23AC 724

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E-Form 23ACA 725E-Form 23AC-XBRL 726E-Form 23ACA-XBRL 727E-Form 20B 728E-Form 21A 729E-Form 66 731Important aspects to be considered at the time of E-Filing of Forms (event based filing) 732E-Form 1 732E-Form 1A 733E-Form 1AA 734E-Form 1AD 734E-Form 1B 735E-Form 2 736E-Form 3 736E-Form 4 737E-Form 4C 738E-Form 5 739E-Form 8 739E-Form 10 741E-Form 17 742E-Form 18 742E-Form 19 743E-Form 20 744E-Form 20A 745E-Form 21 745E-Form 22 746E-Form 23 747E-Form 23AA 748E-Form 23AAA 748E-Form 23AAB 749E-Form 23AAC 750E-Form 23B 751E-Form 23C 751

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E-Form 24 752E-Form 24A 753E-Form 24AAA 754E-Form 24AB 755E-Form 24B 757E-Form 25A 758E-Form 25B 760E-Form 25C 761E-Form 32 761E-Form 37 762E-Form 39 762E-Form 44 763E-Form 61 764E-Form 62 765E-Form 65 765E-Form 66 766E-Form 67 766E-Form 68 767Pre-Requisites for Uploading an E-Form 768Defective Forms/Documents 771Penalty for Filing False Documents/Statements with the Registrar 771Mode of Payment of Fees 771Off-line Method of Payment of Fees 772Online Method of Payment of Fees 772Credit Card Payment Process 772Internet Banking Payment Process 772Online Payments Using NEFT 773Condonation of Delay 774Procedure for Condonation of Delay by Central Government in Relation to Filing ofDocuments with Registrar of Companies 774ANNEXURES 774LESSON ROUND-UP 800SELF-TEST QUESTIONS 801

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LESSON 18STRIKING OFF NAMES OF COMPANIES

Learning Objectives/Lesson Outline 803Introduction 804Meaning of Defunct Company 804Important Provisions of Law on Striking Off 804Power of Registrar to Strike off Names of Defunct Companies 804Position of Companys Creditors after Striking Off 805Courts Power to Wind Up the Company even after Dissolution Under Section 560(5) 805Restoration of Company within 20 years 805Procedure Involved in Striking Off Names of Companies by Registrar Under Section 560 806The Rights of Person Aggrieved by the Company having been Struck Off the Register [Section 560(6)] 807Effect of Restoration 808Relevant Case Laws on Striking Off/Restoration of Name 809Guidelines for Fast Track Exit Mode for Defunct Companies Under Section 560 ofthe Companies Act, 1956 809ANNEXURES 810LESSON ROUND-UP 818SELF-TEST QUESTIONS 818

LESSON 19RECENT TRENDS AND DEVELOPMENTS IN COMPANY LAW

Learning Objectives/Lesson Outline 821The Extension of Corporate Activity Beyond National Frontiers 822Growth of Multinationals and Transnationals 822Regulation of Multinationals 823Modernization of Company Law for Global Competitiveness 823Distinguishing Features of Company Law in Various Countries 824United Kingdom (U.K.) 824Salient features of Company Law in U.K. (Companies Act, 2006) 824The United States of America (USA) 833Salient features of RMBCA of U.S. Corporations 834Australia 840

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Salient features of Australian Corporations Act 841Canada 844Salient features of Canada Business Corporations Act 845Hongkong 853Salient features of Hong Kong Companies Ordinance 854Singapore 866Salient Features of Singapore Companies Act 866India 870Dr. J J Irani Committee Report 871New Concepts introduced by Dr. J J Irani Committee in its report 871The Companies Bill, 2012 (India) 879Highlights of the Companies Bill, 2012 880Salient and unique features of the Bill 880End Note 896LESSON ROUND-UP 897SELF-TEST QUESTIONS 897

LESSON 20TRUSTS AND NON PROFIT ORGINISATION

Learning Objectives/Lesson Outline 899Introduction 900Advantages of Registration 900Trusts 900Definition of Trust 900Classification of Trusts 901Simple and Special Trusts 901Oral and Written Trusts 901Charitable or Religious Trust 901Express and Implied Trusts 901Public and Private Trusts 901Revocable and Irrevocable Trusts 901Public-cum-Private Trust 902Constructive Trust 902

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Resulting Trust 902Executed and Executory Trust 902Procedure of Registration of a Trust 902Extinction of a Trust 902Revocation of a Trust 903Societies 903Registration 903Points to be kept in mind while forming a society 904Procedure for Registration 904Rules & Regulations 904Society may make bye-laws 905Working and Management of Society 906Dissolution of Society 907Consequences of Dissolution 909Non Profit Organisation under Section 25 of the Companies Act, 1956 909Procedure for Incorporation under Section 25 of the Companies Act, 1956 909Privileges and Exemptions of Non-Profit Organisations registered under Section 25 911LESSON ROUND-UP 912SELF-TEST QUESTIONS 912

TEST PAPERS 2013Test Papers 1/2013 917Test Papers 2/2013 920Test Papers 3/2013 923

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Lesson 1 Company Formation and Conversion 1

LESSON OUTLINE Choice of form of business entity

Procedure for Incorporation of companies

Procedure for Conversion of Companies

Procedure for Commencement ofbusiness

Procedure for ratification of pre-incorporation agreements and contracts

LESSON ROUND UP

SELF TEST QUESTIONS

LEARNING OBJECTIVESStarting a company requires a lot of planningand activities and more than that there are anumber of formalities which need to be compliedwith. Detailed procedures and paper works areinvolved in order to start or to register a companyin India. Registrar of Companies appointed bythe Ministry of Corporate Affairs, is vested withthe primary duty of registering companies.Ministry of Corporate Affairs (MCA) has startedthe process of filing or uploading of formscompletely online together with the attachmentof required documents to the Registrar ofCompanies for initiating the IncorporationProcess as a part of its MCA21 e-GovernanceProject.After completion of this lesson, students will bewell-acquainted with practical and proceduralaspects of company formation and conversionwhich include pre-registration requirements,name approval, acquiring digital signatures,preparation and submission of various e- formsand documents, stamping of memorandum andarticles of association, payment of stamp duty,payment of registration fees, obtaining certificateof incorporation, compliance requirementsrelating to conversion of companies, conversionof other entities into companies etc. Studentswill also be able to understand the proceduralaspects relating to commencement of businessand ratification of pre-incorporation contracts.

1

Lesson 1Company Formation and Conversion

2 PP-ACL&P

1. CHOICE OF FORM OF BUSINESS ENTITYSelection of the form of business entity is one of the most important decisions before starting a business. Thisdecision is required to be revisited periodically as the business develops. A business entity may exercise theoptions for conversion and re-conversion, as and when it seems appropriate. The choice amongst the variousforms of business entities depends upon many aspects such as objects of the proposed business, likely numberof members, amount to be invested, scale of operations, state control, legal requirements, tax implications,advantages of one form of business over another, etc.Nature, Form and Types of Business EnterprisesBusiness enterprises can be broadly divided into two broad categories, namely, one which is non-corporate inform and the other which has a corporate character. Enterprises which fall in the former category are soleproprietorship, partnership and Hindu Undivided Family. Business organisation which comprises the latter categoryare companies and co-operative undertakings. The basic difference between the corporate and the non-corporateform of organisation is that while a non-corporate form of business can be started without registration, corporatebodies cannot be set up without registration under the laws which govern their functioning.Non-Corporate Form of Business Enterprises(1) Sole proprietorship: In this form of business organisation, an individual normally uses his own capital, skilland intelligence to carry out some business activity. He is entitled to receive all the profits and gains of hisbusiness and also assumes all the risk of ownership. The sole proprietor exercises full control over the affairs ofhis business. As there is no legal obligation to supply any information regarding his business to anyone, he canmaintain maximum secrecy in conducting his business affairs. This type of organisation is particularly suitablefor businesses which are small in size and where risk and capital involved are not very large.(2) Joint Hindu Family/Hindu Undivided Family: In this form of business ownership, the business is generallymanaged by the father or some other senior member of the family called the Karta or the manager. Karta isbasically the senior most male member of the family. The joint Hindu family firm comes into existence by theoperation of Hindu Law and not by any contract.(3) Partnership: In this form of organisation, few like-minded persons pool up their resources to form a partnershipfirm. Section 4 of the Partnership Act, 1932, defines partnership as The relation between persons who haveagreed to share the profits of a business carried on by all or any of them acting for all. This definition chieflybrings out the following features of partnership:

(i) Contractual Relationship:- Since partnership arises out of agreement between persons, only thosepersons who are competent to contract can be partners.

(ii) Existence of business:- There can be no partnership without business. The persons who have agreedto become partners must carry out some business activity.

(iii) Sharing of profits:- The agreement to carry on business must be entered into, with the object ofmaking a profit and sharing it among all the partners.

(iv) Mutual agency:- The business must be carried on by all the partners or by any one or more of themacting for all the partners. Thus each partner is both an agent and a principal for all other partners.

Partnership is an ideal form of organisation for medium scale business operations which require greater amountof capital and risks than sole proprietorship or Hindu Undivided Family.Corporate Form of Business Enterprises(1) The Co-operative Organisation: Co-operative organisation is a voluntary association with unrestricted

Lesson 1 Company Formation and Conversion 3membership and collectively owned funds, organised on democratic principle of equality by persons of moderatemeans and incomes, who join together to supply their needs and wants through mutual action, in which themotive of production and distribution is service rather than profit. Besides being a form of ownership co-operativeorganisations are a means of protecting the interests of the relatively weaker sections of society against exploitationby big businesses operating for the maximisation of profits. The basic feature which differentiates the co-operativeorganisation from other form of business enterprises is that its primary motive is service to the members ratherthan making profits. A co-operative society is required to be registered under the Co-operative Societies Act,1912. The co-operative societies receive a number of special concessions from the law and the Government, inorder to encourage healthy development of Co-operatives.By virtue of Companies (Amendment) Act, 2002 effective from 6th February, 2003, a new Part IXA has beenadded to the Companies Act, 1956 in connection with Producer Companies, the incorporation of which hasnow become possible under the provisions of the Act. This part of the Act deals with the corporatisation of co-operative societies.(2) Company: This type of organisation is characterised by the fact that ownership and management are separate.The capital of the company is provided by a group of people called shareholders who entrust the managementof the company in the hands of persons known as the Board of directors. A company is an artificial legal personcreated by process of law which makes it an entity separate and distinct from its members who constitute it. Asa natural consequence of incorporation and transferability of shares, the company has perpetual succession.Thus, it can be said that this form of organisation is suitable when the capital requirements of a business arelarge, the liability of members is expected to be limited and the risks need to be spread among a larger numberof persons.Limited Liability Partnership (LLP)LLP is an alternative business vehicle that gives the benefits of limited liability company and flexibility of apartnership firm. Since, LLP contains elements of both a corporate structure as well as partnership firm structure;it is many a times termed as a hybrid of a company and a partnership. LLP is a separate legal entity which cancontinue its existence irrespective of changes in its partners. LLP is an incorporated partnership formed andregistered under the Limited Liability Partnership Act, 2008.Owing to flexibility in its structure and operation, LLP is useful for small and medium enterprises, in general, andfor the enterprises in services sector, in particular. LLP is also very suitable for professionals like companysecretaries, chartered accountants, cost accountants, advocates etc. as it helps them to form multi disciplinarylimited liability partnership firms.Forming a choiceThough there are some similarities between a limited company and other forms of associations, there are a greatnumber of dissimilarities as well. In both the cases individuals are the subjects, and pursuit of business activity isgenerally the object. Distinction between a limited company and a partnership firm, limited liability partnership, aHindu Joint family business and a registered society has been discussed in detail in the study of Company Law ofModule I of Executive Programme. Taking into account the requirement in each case and all the aspects of thevarious forms of business entities, the decision on the right type of business entity should be taken.2. INCORPORATION OF COMPANIESA company is an association of both natural and artificial persons incorporated under the existing law of acountry. In terms of the Companies Act, a company means a company formed and registered under theCompanies Act, 1956 (the Act) or under any of the previous laws relating to companies [Section 3(1) (i) & (ii)].In common law, a company is a legal person or legal entity separate from, and capable of surviving beyondthe lives of its members.

4 PP-ACL&PAny seven or more persons, or where the company to be formed will be a private company, any two or morepersons, associated for any lawful purpose may, by subscribing their names to a memorandum of associationand otherwise complying with the requirements of the Companies Act, 1956, in respect of registration, form anincorporated company, with or without limited liability [Section 12].Thus, Section 12 stipulates the existence of the following ingredients for the incorporation of a company:

(i) Promoters of the company at least seven in the case of a public company and at least two in the caseof a private company;

(ii) Lawful purpose for which they should associate themselves;(iii) Promoters must subscribe their names to the memorandum of association of the company;(iv) Promoters must comply with the requirements of the Companies Act, 1956 in respect of registration of

the company.The minimum paid-up capital must be rupees one lakh in case of a private company and rupees five lakh in caseof a public company. The Central Government is empowered to prescribe a higher paid-up capital.Registrar of Companies (ROC) appointed under Section 609 of the Companies Act, 1956 by the Ministry ofCorporate Affairs (MCA), is vested with the primary duty of registering companies and of ensuring that suchcompanies comply with the statutory requirements of the Act. A company shall be registered with the ROC of thestate under whose jurisdiction the proposed companys registered office will be situated.Promoters to take steps for formation of the CompanyPromoters are the persons, who conceive the idea or visualise a project and then take steps to transform theidea into a reality. They convey their idea to friends, relatives or business associates, make arrangements forcollecting equity and loan capital for the company, prepare a team of persons who would act as its directors andtake all other steps for compliancewith the requirements of the Companies Act, 1956 in respect of registrationof the company.The Companies Act does not define the expression promoter. This is because the term does not have anylegal connotation but contains a business element. Promotion is a term of wide import denoting the preliminarysteps taken for the purpose of registration and floatation of the company. The persons who assume the task ofpromotion are called promoters. A promoter may be an individual, association, partner or company.The word promoter is referred to in sub-section (6) of section 62 of the Act. However, it is restricted to and ismeant only for the purposes of a prospectus. It states that the expression promoter means a promoter who wasa party to the preparation of the prospectus or of the portion thereof containing the untrue statement, but doesnot include any person by reason of his acting in a professional capacity for persons engaged in procuring theformation of the company.3. PROCEDURE FOR INCORPORATION OF PUBLIC LIMITED COMPANY HAVING SHARECAPITALThe following procedural steps are required to be taken by the promoters for the incorporation of a public limitedcompany:(1) Obtain Director Identification Number (DIN)It is important to note that every person who is to be appointed as a director must have Directors IdentificationNumber (DIN). If the proposed director does not already have a DIN, he/she must obtain the same beforeincorporation of the company. This can be obtained by making an application on the MCA portal in formDIN-1.

Lesson 1 Company Formation and Conversion 5(2) Acquire Digital Signature Certificate (DSC)The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted inelectronic form in order to ensure the security and authenticity of the documents filed electronically. This is theonly secure and authentic way that a document can be submitted electronically. As such, all filings done by thecompanies under MCA21 e-Governance programme are required to be filed with the use of Digital Signaturesby the person authorised to sign the documents.Acquire DSC - A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) meansa person who has been granted a license to issue a digital signature certificate under Section 24 of the IndianInformation Technology Act, 2000.Register DSC - Role check for Indian companies is to be implemented in the MCA application. Role check canbe performed only after the signatories have registered their Digital signature certificates (DSC) with MCA.(3) Proposing the name of the Company and ascertaining its availability from the ROCPromoters are required to propose not more than six names for the proposed company and secure the nameavailability by making an application to the Registrar of Companies of the State in which they want to have theproposed company incorporated. The application is required to be made in e-form 1A as prescribed in theCompanies (Central Governments) General Rules and Forms (Amendment) Rules, 2006, for the purpose,along with the prescribed application fee of ` 1000/-. (For specimen of e-form No. 1A, application form foravailability or change of name, please refer the CD provided along with the Study Material or see the link http://www.mca.gov.in/MCA21/Download_eForm_choose.html ).While applying for a name in the prescribed e-form-1A, using Digital Signature Certificate (DSC), the applicantshall be required to verify that:

(i) he is a promoter (proposed first subscriber to the MoA) and is authorised by the other proposed firstsubscribers to sign and submit the application

(ii) he has used the search facilities available on the portal of the Ministry of Corporate Affairs (MCA) i.e.,www.mca.gov.in/MCA21 for checking the resemblance of the proposed name(s) with the companiesand Limited Liability Partnerships (LLPs) respectively already registered or the names already approved.

(iii) the proposed name(s) is/are not in violation of the provisions of Emblems and Names (Prevention ofImproper Use) Act, 1950 as amended from time to time;

(iv) the proposed name(s) is not such that its use by the company will constitute an offence under any lawfor the time being in force.

(v) the proposed name is not offensive to any section of people, e.g., proposed name does not containprofanity or words or phrases that are generally considered a slur against an ethnic group, religion,gender or heredity;

(vi) he has gone through the provisions of the Companies Act, 1956, the rules and prescribed guidelinesframed there under in respect of availability of name, understood the meaning thereof and the proposedname(s) is/are in conformity thereof

(vii) he has complied with all the mandated requirements of the respective Act/regulator, such as IRDA, RBI,SEBI, MCA etc. (applicable only in case proposed name includes words like Insurance, Bank, StockExchange, Venture Capital, Asset Management, Nidhi, Mutual Fund, Finance, Investment, Leasing,Hire purchase etc. or any combination thereof)

(viii) to the best of his knowledge and belief, the information given in the application and its attachments iscorrect and complete, and the proposed name does not infringe the registered trademark rights of any

6 PP-ACL&Pentity or person or a trademark which is subject of an application for registration, of any other personunder the Trade Marks Act, 1999.

(ix) he undertakes to be fully responsible for the consequences, in case the name is subsequently found tobe in contravention of section 20 and 21 of the Act and the prescribed guidelines.

There is an option in the e-form 1A for certification by the practicing Chartered Accountant, Company Secretaryand Cost Accountant, who will certify that he has used the search facilities available on the portal of the Ministryof Corporate Affairs (MCA) i.e., www.mca.gov.in/MCA21 for checking the resemblance of the proposed name(s)with the companies and LLPs respectively already registered or the name already approved and the searchreport is attached with the application form. The professional will also certify that the proposed name is not anundesirable name under the provisions of section 20 of the Companies Act, 1956 and also is in conformity withName Availability Guidelines, 2011. Where e-form 1A has been certified by the professional, the name will bemade available by the system online to the applicant without backend processing by the Registrar of Companies(ROC). This facility is not available for applications for change of name of existing companies. Further in such acase, only one name may be proposed and name availability obtained. However, it may be noted that if the formis so certified and later on it is found that the name ought not to have been allowed under the provisions ofSection 20 of the Act and the guidelines issued by the Central Government, the professional shall be liable forpenal action under the provisions of the Act in addition to penal action under the regulations of the respectiveInstitutes.Following documents have to be attached to e-form 1A:

(i) Copy of Board resolution of the existing company or foreign holding company as a proof of no objection(ii) Copy of approval from Central Government as a proof of no objection(iii) Trademark or authorisation to use trade mark, if the name of the company is based on trade mark or

application for deed of assignment.Where e-form 1A has not been certified by the professional, the proposed name will be processed at the backend office of ROC and availability or non availability of name will be communicated to the applicant.The name, if made available to the applicant, shall be reserved for sixty days from the date of approval. If, theproposed company has not been incorporated within such period, the name shall be lapsed and will be availablefor other applicants.Even after incorporation of the company, the Central Government has the power to direct the company tochange the name under section 22 of the Companies Act, 1956, if it comes to its notice or is brought to its noticethrough an application that the name is identical with or too nearly resembles that of another existing companyor a registered trademark.The Relevant Part of Name Availability Guidelines, 2011 is given at Annexure I at the end of Study. Since theseguidelines may change from time to time, students are advised to refer to the updated guidelines in the MCAportal.(4) Drafting and Printing of Memorandum and Articles of AssociationAfter ascertaining name availability from the Registrar of Companies steps should be taken to get the memorandumand articles of association for the proposed company drafted and printed. A public company limited by sharesneed not necessarily prepare and get its articles of association registered along with its memorandum ofassociation. In such a case, Table A of Schedule I to the Companies Act, 1956 shall apply. However, as amatter of practice, every company gets the articles prepared to suit its individual requirements, and registeredalong with the memorandum of association.

Lesson 1 Company Formation and Conversion 7The memorandum and articles shall be in conformity with the provisions of Section 15 and 30 of the Act.If the promoters plan to get the securities of the proposed company listed with one or more designated stockexchanges, it is advisable to send the draft of the memorandum and articles of association to those stockexchanges for their scrutiny and suggestion to the effect whether they would like to have certain articlesincorporated therein in compliance with the provisions of the Listing Agreements of the stock exchanges.(5) Stamping and Signing of Memorandum and ArticlesThe memorandum and articles should be got printed and stamped by the appropriate State Authority (Collectorof Stamps) under the Indian Stamp Act, 1899.Thereafter, the memorandum and the articles should be signed by at least seven subscribers.Each subscriber to the memorandum shall write in his/her own hand, his/her father/husbands name, occupation,address and the number of shares subscribed for by him/her. The signatures of all the subscribers shall also bewitnessed. The witness shall also sign and write in his own hand, his name, his fathers name, occupation andaddress.It is pertinent to note the Stamping is a subject matter of State Revenue and not a matter of the CentralGovernment. Hence the Stamp Duty payable on the Memorandum and/or the Articles of Association shall bedetermined according to the place of incorporation of the company.W.e.f. 1.04.2010 companies are required to make payment of stamp duty electronically in respect of thosestates which have authorised Central Govt. to collect stamp duty on their behalf. Stamp duty on e-Form 1,Memorandum of Association (MoA) and Articles of Association (AoA) can be paid electronically through theMCA portal and in such case submission of physical copies of the uploaded e-Form 1, MoA and AoA to the officeof RoC is not required. In case stamp duty is not paid electronically through MCA portal, it is required to deliversimultaneously the original stamped physical copies of the uploaded e-Form 1, MoA and AoA along with a copyof challan/ receipt in the concerned office of ROC.(6) Dating of Memorandum and Articles of AssociationThe memorandum and articles are then dated, but the date must be the date of stamping orlater than the dateof their stamping and not, in any event, a date prior to the date of their stamping.(7) Filing of Documents and Forms for RegistrationE-form 1 is required to be filed as an application and declaration for incorporation of a company with Memorandum,Articles of Association, and annexure containing details of subscribers (if the total number of subscribers is morethan seven) as attachments.The following forms and documents, which are prescribed under the Companies Act, 1956 and the Companies(Central Governments) General Rules and Forms (Amendment) Rules, 2006 are required to be prepared,signed and filed with the concerned Registrar of Companies for the purpose of incorporation::-Forms

(i) e-form 1 - Application and declaration for incorporation of a company filed pursuant to sections 33(1)and (2) of the Companies Act, 1956, containing the Service request number of form 1A (application foravailability of name), Name of the Company, Name of the State in which company is to be registered,name of office of the Registrar, Capital Structure, details of number of members, main division of industrialactivity of the company, No objection certificate in case there is any change in the promoters/firstsubscribers to MoA, details of promoters, particulars of payment of stamp duty, Memorandum andarticles of association (as attachments), details of subscribers (as attachment, if number of subscribersis more than seven ) along with the following declaration:

8 PP-ACL&PI , Son/daughter/wife of do solemnly declare as under:(a) That I am

An advocate of the Supreme Court or a High Court who is engaged in the formation of thecompany; or

An attorney or pleader entitled to appear before a High Court who is engaged in the formationof the company: or

A company secretary (in whole-time practice) in India who is engaged in the formation of thecompany: or

A chartered accountant (in whole-time practice) in India who is engaged in the formation of thecompany; or

A person named in the articles as a director, manager or secretary of the company.(b) And I, further declare that the particulars given above are true to the best of my knowledge and

belief;(c) Form 18 and 32 are also being filed simultaneously;(d) I further confirm that I am duly authorised to submit this application; and that all the particulars

mentioned above are as provided in the articles of association as subscribed by the subscribers ofthe company;

(e) That all the requirements of the Companies Act, 1956 and rules there under in respect of all thematters precedent in the registration of the company and incidental thereto have been compliedwith and I make this solemn declaration conscientiously believing the same to be true;

(f) That the company has paid correct stamp duty as per applicable Stamp Act.(g) That the subscribers have given declaration of details of his/her conviction by any court for any

offence involving moral turpitude or economic or criminal offences or for any offences in connectionwith the promotion, formation or management of a company.

(h) That the subscribers have given declaration that he/she has not been declared as proclaimedoffender by any Economic Offence Court or Judicial Magistrate Court or High Court or any othercourt.

(ii) e-form 18 relating to notice of situation or change of situation of Registered office pursuant to Section146 of the Companies Act, 1956. It has to be stated in this form whether Registered Office is Owned bycompany; or Owned by Director (not taken on lease by company) or Taken on Lease by Company orOwned by any other entity/Person (Not taken on lease by company. This form is to be pre certified byany one of these professionals - company secretary or chartered accountant or cost accountant (inwhole-time practice). Further the company secretary or chartered accountant or cost accountant (inwhole-time practice) has to personally visit the registered office address or premises of the companyand has to verify that the company actually exists at this address. In this context, he also has to certifythat he has personally visited the registered office address, verified it and is of the opinion thatthe premises are indeed at the disposal of the applicant company. Following documents have tobe attached to e-Form 18:(a) Proof of Registered Office address which is mandatory attachment;(b) No-objection certificate from director if registered office is owned by director (not taken on lease by

company);

Lesson 1 Company Formation and Conversion 9(c) A proof that the company is permitted to use the address as the registered office of the company if

the same is owned by any other entity/person (not taken on lease by company).(For specimen of e-form 18, notice of situation/change of situation of registered office, please refer theCD provided along with the Study Material or see the link http://www.mca.gov.in/MCA21/Download_eForm_choose.html).

(iii) e-form 32 filed pursuant to Section 303(2), 264(2) or 266(1)(a) and 266(1)(b)(iii) of the Companies Actcontaining prescribed particulars of directors including managing/whole-time director/manager/secretary,if any and the changes among them or consent of candidate to act as a managing director or director ormanager or secretary of a company and/or undertaking to take and pay for qualification shares. E-Form32 is also required to be pre-certified by company secretary or chartered accountant or cost accountant(in whole-time practice).A written signed consent on a plain paper of every person who is being appointed as a director is alsorequired to be attached with the e-form 32. (For specimen of e-form 32, please refer the CD providedalong with the Study Material or see the link http://www.mca.gov.in/MCA21/Download_eForm_choose.html).

E-Form 18 and e-Form 32 should be filed together at the time of filing of e-Form 1.Documents

(i) Where stamp duty is paid in physical mode, a physical copy of the printed memorandum and articles ofassociation duly stamped, signed and dated is to be sent separately to the ROC. It may be noted thatin the case of a public limited company, registration of articles of association with the Registrar is optional,but in the case of a private limited company, registration of articles of association with the Registrar iscompulsory [Refer Section 3(1)(iii)] of the Companies Act, 1956].

(ii) Any agreement, if any that the company on incorporation proposes to enter into with any individual forappointment as its managing director or whole-time director or manager, as an attachment (optional)with e-form 1.

(iii) General power of attorney on a non-judicial stamp paper of the appropriate value as applicable in therelevant state signed by all the subscribers, in favour of one of them or any other person, for makingalterations, corrections, amendments etc.; on their behalf, in the memorandum and articles of associationand other documents/forms filed with the Registrar of Companies, if so required by the Registrar.(Please see the specimen at Annexure XV).

(8) Pre-CertificationForm 18 and 32 are required to be pre-certified by a company secretary or chartered accountant or cost accountantin whole-time practice.(9) Registration and Filing FeePromoters must make sure to remit to the Registrar, alongwith theabove forms/ documents, the prescribedregistration fee and fee for filing of formsas per the rates contained in Schedule X to the Companies Act, 1956.(Schedule X is given at Annexure II at the end of this study).The fee payable for the purpose can be remitted either electronically (by using a Credit Card or by electronicBank transfer) or by cash/draft through challan generated electronically on submission of the e-form.(10) Minimum Paid-up CapitalEnsure that the minimum paid-up capital is 5 lakh rupees or such higher paid-up capital as may be prescribed.

10 PP-ACL&P

(11) Scrutiny of Documents and Forms by RegistrarOn receipt of the aforementioned documents, the office of the Registrar of Companies will scrutinise them andif they are found complete in all respects, the Registrar will register the company and generate a CIN. If theRegistrar finds any defect or deficiency in any of the documents or forms, the Registrar will send an electroniccommunication pointing out the defects and after the deficiencies are removed, the Registrar will register thecompany.(12) Issue of Certificate of Incorporation by RegistrarAfter the registration of the company, the Registrar will issue under his hand and seal of his office, the Certificateof Incorporation in the name of the company and send it electronically. One may also take printout of theCertificate of Incorporation generated online. The date mentioned by the Registrar in the Certificate of Incorporationshall be the date of incorporation of the company, on which date the company will be considered to have comeinto existence as a legal entity separate from its subscribers. (For specimen of Certificate of Incorporation,please see Annexure III at the end of this study).(13) Certificate of Commencement of BusinessOn registration, a public company cannot commence business or exercise any borrowing powers until it obtainsthe Certificate of Commencement of Business.4. PROCEDURE FOR INCORPORATION OF PRIVATE LIMITED COMPANY HAVING SHARECAPITALThe procedure for the incorporation of a private limited company is similar to that of a public limited company (asdiscussed above) with the following exceptions:

(i) The company must have a minimum paid-up capital of one lakh rupees or such higher paid-up capitalas may be prescribed.

(ii) There must be at least two subscribers in place of seven.(iii) There must be at least two directors in place of three.(iv) Registration of the articles of association is compulsory.(v) The provisions of Section 3(1)(iii) of the Companies Act, 1956 should, be included while drawing up the

memorandum and articles of association of a private limited company.5. PROCEDURE FOR INCORPORATION OF COMPANY LIMITED BY GUARANTEEA company having the liability of its members limited by the memorandum of association to such amount as themembers may respectively undertake by the memorandum to contribute to the assets of the company in theevent of its being wound up, is known as company limited by guarantee Section 12(2)(b).The procedure for incorporation of a company limited by guarantee is similar to the one required to be followedfor getting a public or a private limited company incorporated. However, the following distinctive features in thecase of a company limited by guarantee must be noted:

(i) A company limited by guarantee may or may not have a share capital.(ii) A company limited by guarantee may be a public company or a private company.(iii) According to sub-section (2) of Section 13 of the Companies Act, 1956, the memorandum of association

of a company limited by guarantee must state that the liability of its members is limited.The memorandum of association of a company limited by guarantee must also state that every member

Lesson 1 Company Formation and Conversion 11of the company undertakes to contribute to the assets of the company in the event of its being wound upwhile he is a member or within one year after he ceases to be a member, for payment of the debts andliabilities of the company, or of such debts and liabilities of the company as may have been contractedbefore he ceases to be a member, as the case may be, and of the costs, charges and expenses ofwinding up, and for the adjustment of the rights of the contributories among themselves, not exceedingspecified amount. [Refer to Sub-section (3) of Section 13 of the Companies Act, 1956].

(iv) Sub-section (2) of Section 27 of the Act lays down that the articles of a company limited by guaranteeshall state the number of members with which the company is to be registered.

(v) Section 37 (1) of the Act prohibits a company limited by guarantee and not having share capitalfrom inserting any provision in its memorandum or articles or in any resolution purporting to give anyperson a right to participate in the divisible profits of the company otherwise than as a member of thecompany.

(vi) Sub-section (2) of section 37 lays down that in the case of a company limited by guarantee, everyprovision in its memorandum or articles or in any resolution purporting to divide the undertaking of thecompany into shares or interests shall be treated as a provision for a share capital, notwithstanding thatthe nominal amount or number of the shares or interests is not specified thereby.

In the memorandum of association of a guarantee company, however, a clause stating the amount of guaranteeshall have to be inserted in addition to the other necessary conditions. Similarly, in the articles of association ofsuch a company, an article stating the number of members with which the company is proposed to be registeredmust be included.The following procedural steps are required to be taken for getting a company limited by guarantee registered:(1) Paid-up Capital: In case company to be formed is a private company it must have a paid up capital of onelakh rupees and in case the company to be formed is a public company it must have a paid-up capital of five lakhrupees or such higher paid-up capital as may be prescribed. However, if the company does not propose to havea share capital then this requirement is not required to be complied with.(2) Selection of Name of the Company and Ascertaining its Availability from ROC: Make an application tothe concerned Registrar of Companies in e-form 1A as prescribed in the Companies (Central Governments)General Rules and Forms (Amendment) Rules, 2006, for the purpose and also pay the prescribed applicationfee of ` 1000/- along with the application.The fee payable for the purpose can be remitted either electronically (by using a Credit Card or by electronicBank transfer) or by cash/draft through Challan generated electronically on submission of the e-Form.Not more than six names can be submitted to ascertain availability. The names of the proposed company are tobe given in e-form 1A in order of the promoters preference so that if the first name is not available, the Registrarmay consider the second name and if the second name is also not available, the Registrar may consider thethird name and so on. The proposed names should not be identical with, or too closely resemble, the names bywhich a company in existence has been previously registered.Before selecting the names, the promoters may be well advised to refer to the Name Availability Guidelines,2011 issued by Ministry of Corporate Affairs for making a name available for registration. It must also be ensuredthat the proposed names do not violate the provisions of Emblems and Names (Prevention of Improper Use)Act, 1950.(3) Drafting and Printing of Memorandum and Articles of Association: On receipt of name availability fromthe Registrar of Companies, get the memorandum and articles of association of the proposed company draftedby a competent professional.If the company does not propose to have a share capital and it is to be incorporated as a public company, Table C

12 PP-ACL&Pin Schedule I to the Act has to be taken into consideration while drafting the memorandum and articles of association.If the company proposes to have a share capital and it is to be incorporated as a public company, Table D inSchedule I to the Act has to be taken into consideration while drafting its memorandum and articles of association.(4) Stamping and Signing of Memorandum and Articles: Get the memorandum and articles stamped by theappropriate State authority (Collector of Stamps) under the Indian Stamp Act, 1899.After being stamped, get the memorandum and articles signed by at least two subscribers in case of a privatecompany and by at least seven subscribers in case of a public company. Each subscriber shall write in his/herown hand, his/her name, his/her father/husbands name, occupation, address and the number of sharessubscribed for by him/her, if the company has a share capital. At least one person shall witness the signaturesof all the subscribers. The witness shall also sign and write in his/her own hand, his/her name, his/her fathersname, occupation and address.Under the system of MCA21, the Stamp Duty is to be paid only through electronic mode for the States who haveagreed for e-stamping. The Ministry had decided to accept payments of value upto ` 50000/-, for MCA 21services, only in electronic mode. For the payments of value above ` 50,000, stakeholders have the option tomake payment either in electronic mode, or through paper challan.A scanned copy of the duly stamped and executed MOA and the AOA is also required to be attached with e-form1 and submitted electronically. Stamp duty on e-Form 1, Memorandum of Association (MoA) and Articles ofAssociation (AoA) can be paid electronically through the MCA portal and in such case submission of physicalcopies of the uploaded e-Form 1, MoA and AoA to the office of RoC is not required. In case stamp duty is notpaid electronically through MCA portal, the applicant is required to deliver simultaneously the original stampedphysical copies of the uploaded e-Form 1, MoA and AoA along with a copy of challan/ receipt to the concernedoffice of the ROC.(5) Dating of Memorandum and Articles: Thereafter the memorandum and articles will be dated. This datemust be the date of stamping or later than the date of the stamping and not, in any event, a date prior to the dateof the stamping.(6) Filing of Forms and Documents with Registrar:Forms:File the following forms with the concerned Registrar of Companies which are prescribed under the CompaniesAct, 1956 and the Companies (Central Governments) General Rules and Forms, 1956:

(i) e-form 18 containing notice of situation or change in situation of registered office of the company. (Forspecimen of e-form 18, notice of situation/change of situation of registered office, please refer the CDprovided along with the Study Material or see the link http://www.mca.gov.in/MCA21/Download_eForm_choose.html). It has to be stated in e-form 18 whether Registered Office is Ownedby company; or Owned by Director (not taken on lease by company) or Taken on Lease by Company orOwned by any other entity/Person (Not taken on lease by company. This form is to be pre certified byany one of these professionals - company secretary or chartered accountant or cost accountant (inwhole-time practice). Further the company secretary or chartered accountant or cost accountant (inwhole-time practice) has to personally visit the registered office address or premises of the companyand has to verify that the company actually exists at this address. In this context, he also has to certifythat he has personally visited the registered office address, verified it and that the premises are intendedat the disposal of the applicant company. Following documents have to be attached to e-Form 18:(a) Proof of Registered Office address which is mandatory attachment;(b) No-objection certificate from director if registered office is owned by director (not taken on lease by

company);

Lesson 1 Company Formation and Conversion 13(c) A proof that the company is permitted to use the address as the registered office of the company if

the same is owned by any other entity/person (not taken on lease by company).(ii) e-from 32 containing prescribed particulars of directors including managing/ whole-time director/manager/

secretary, if any and the changes among them or consent of candidate to act as a managing director ordirector or manager or secretary of a company and/or undertaking to take and pay for qualificationshares. e-form 32 is also required to be pre certified by company secretary or chartered accountant orcost accountant (in whole-time practice). (For specimen of e-form 32, particulars of appointment ofdirectors and manager and changes among them, see please refer the CD provided along with theStudy Material or see the link http://www.mca.gov.in/MCA21/Download_eForm_choose.html).e-Form 18 and e-Form 32 should be filed together at the time of filing of e-Form 1.

(iii) A statutory declaration in e-form 1 as prescribed in the Companies (Central Governments) GeneralRules and Forms (Amendment) Rules, 2006, executed by an advocate of the Supreme Court or of aHigh Court, an attorney or a pleader entitled to appear before a High Court, or a secretary, or a charteredaccountant in whole-time practice in India, who is engaged in the formation of the company, or by aperson named in the articles as a director, manager, or secretary of the company, that all the requirementsof the Act and the rules thereunder have been complied with in respect of registration of the companyand matters precedent and incidental thereto [Refer Section 33 (2)].(For specimen of e-form 1, declaration of compliance with the requirements of the Companies Act,1956, on application for registration of a company, please refer the CD provided along with the StudyMaterial or see the link http://www.mca.gov.in/MCA21/Download_eForm_choose.html).

Documents:Prepare, get signed and file the following documents with the Registrar of Companies for getting the proposedcompany registered, by way of e-filing:

(i) Stamped, signed and dated copy of the memorandum of association;(ii) Stamped, signed and dated copy of the articles of association;(iii) Any agreement, that the company on incorporation proposes to enter into with any person, for appointment

as its managing director or whole-time director or manager.(iv) General power of attorney on a non-judicial stamp paper of the appropriate value as applicable in the

State, signed by all the subscribers, in favour of one of them or any other person, for making alterations,corrections, amendments etc., on their behalf, in the memorandum and articles of association and otherdocuments/forms filed with the Registrar of Companies, if required by the Registrar.

(7) Registration and Filing Fee: Along with the above detailed documents and forms, pay the registration feeand filing fee for documents and forms as per the rates prescribed in Schedule X of the Companies Act, 1956.The fees is to be paid electronically as per the mode of payment discussed earlier.(8) Scrutiny of Forms and Documents by Registrar: On receipt of the aforementioned documents and forms,the office of the Registrar of Companies will scrutinise them and if they are found complete in all respects, theRegistrar will register the company and allot CIN. If the Registrar finds any defect or deficiency in any of thedocuments or forms, he shall send an electronic communication pointing out the defects and after the deficienciesare removed, the Registrar will register the company.(9) Issue of Certificate of Incorporation by Registrar: A Certificate of Incorporation will be issued by theRegistrar of Companies under his hand and seal of his office and sent electronically.One may take printout of Certificate of Incorporation which is generated online.

14 PP-ACL&PThe date mentioned by the Registrar in the Certificate of Incorporation shall be the date of incorporation of thecompany, on which date the company will be considered to have come into existence as a legal entity independentof its members.6. PROCEDURE FOR INCORPORATION OF COMPANY FOR CHARITABLE AND OTHER PUBLICUTILITY PURPOSES WITHOUT ADDITION OF THE WORDS LIMITED OR PRIVATE LIMITEDTO ITS NAME (NON PROFIT COMPANIES)The issue of licence and incorporation of companies to pursue charitable and other prescribed objects, withlimited liability without the addition to its name of the word Limited or the words Private Limited are regulatedby Section 25 of the Companies Act, 1956.Pursuant to the provisions of Section 25 (1), an association, desirous of being incorporated as a company withlimited liability without the addition to its name of the word Limited or the words Private Limited shall take thefollowing procedural steps for securing a Licence under Section 25 of the Companies Act, 1956 and for gettingitself registered under the Act:

1. To select not more than six names in the order of their preference, for obtaining availability of one ofthose names for adoption by the proposed company.

2. To make an application to the Registrar of Companies of the State in which the registered office of theproposed company is to be situated for seeking name availability. The application shall be in e-Form No.1A as prescribed in the Companies (Central Governments) General Rules and Forms (Amendment)Rules, 2006 and shall be accompanied by a fee of ` 1000/- to be paid electronically.