CORPORATE ADMINISTRATION INCORPORATION OF A COMPANY

1. CORPORATE STRUCTURE
AND ADMINISTRATION
By
Sridhara g
M.com, Net.

3. JOINT STOCK COMPANY
Definition
“A joint stock company is a voluntary association of individuals for profit, having its
capital divided into transferable shares, the ownership of which is the condition of
membership”
Or
“A company is an artificial person created by law having a separate legal entity with a
perpetual succession and a common seal”

4. FEATURES OF JOINT STOCK COMPANY
• Incorporated association
• Artificial legal person
• Separate legal entity
• Perpetual succession
• Limited liability
• Separate legal entity
• Transferability of shares

5. ADVANTAGES OF JOINT STOCK COMPANY
• Limited liability
• Continuity and stability
• Large capital
• Legal status
• Large membership
• Transferability of shares
• Employment
• Government revenue

6. DISADVANTAGES OF JOINT STOCK
COMPANY
• Lacks flexibility
• No business secrecy
• Excessive government regulation
• Difficult formation
• Delay in decision making
• Lack of contact with employees and customers

8. KINDS OF COMPANIES
Chartered company:
If a company is incorporated under a special monarch it is called a chartered company.
For eg: east India company, the chartered bank of Australia, china and India were
incorporated by the grant of a special royal charter. These companies are not there in
India at present.
Statutory company:
a company which is created by a special act of the legislature is called a statutory
company. For eg: The state bank of India, industrial finance corporation, life insurance
corporation of India etc are the examples of this kind.

9. KINDS OF COMPANIES
Registered company:
A company brought into existence by registration with registrar of companies under
the company’s act of 2013 is called registered company
Private company
A private company has been defined as a company which: 1) limits the numbers of
members 200 2) restricts the transfer of shares from one shareholder to another. 3)
prohibits an invitation to the public to subscribe to its shares and debentures

10. KINDS OF COMPANIES
Public Company: -
Public Company is a company which requires at least 7 members to form and
there is maximum limit. It can invite the public to subscribe its shares and
debentures and it does not restrict the transfer of its shares from one shareholder to
another. To commence its business, it must have at least 3 directors & also it should
obtain a certificate to commence business from the Registrar of companies.
Unlimited company:-
The company in which the liability of the members is Unlimited is called
unlimited company. The liability of members is unlimited ie members are liable for the
debts of the company to an unlimited extent in the event of its winding up. But this
type of company has become rare.

11. KINDS OF COMPANIES
Companies limited by guarantee:-
In these companies, each member gives a guarantee for the debts of a company
up to a certain extent. Eg: - Trade associations, clubs and societies which formed
to promote social and cultural Activities.
Companies limited by shares:-
In these companies, liability being limited by shares, the member is called
upon to pay only the unpaid amount on the shares held by him. Most of the
companies formed today are of this type & in the following discussion we will deal
mainly with this type of company

12. KINDS OF COMPANIES
Government company:-
A company in which not less than 51% of share capital is held by the central
government and or any state government or governments is called a Government
company. For Eg: - Hindustan Aeronautics Limited (HAL), Indian Telephone
Industries (ITI), Bharath Electronics Limited (BEL).
Foreign Company:-
A foreign company is that company which is incorporated in a foreign country,
but which has established a place of business in India. Under section 592 of
companies act, every foreign company must, within 30 days of the
Establishment of the business field with the registrar the following documents.
a) A certified copy of its memorandum and articles of association. d) The full
address of the registered office of the company. c) The list of directors and the
secretary of the company with required particulars. d) The name and address of the
person authorized to receive any notice or documents etc.

13. KINDS OF COMPANIES
Other companies
1) One Man Company
2) Associate company
3) Listed/quoted company
4) Small company as per the Companies Act 2013
5) Global company:

14. NECESSARY DOCUMENTS REQUIRED FOR THE
FORMATION OF JOINT STOCK COMPANY
• Memorandum of association
• Article of association
• Prospectus for registration

15. STEPS IN FORMATION OF JOINT STOCK
COMPANY
In the formation of a public limited company having share capital, mainly 4 stages are
involved viz,
(1) promotion
(2) incorporation
(3) capital subscription
(4) commencement of business
In case of formation of a private limited company, only the first 2 stages are involved

16. PROMOTERS
• Some people join together with the aim to start a company and are called promoters.
• They act as the first directors to formulate the company.
• The promoters collect all the information needed for the formation, promotion, and
financial requirement of the business.
• Promoters also prepare the important documents required for the formation of the
company.
• Promoters also follow up the process to get the certificate of incorporation.
• In case of public companies, promoters take the required steps to pool the share
capital

17. PROMOTION OF COMPANY:-
The steps which are taken to persuade / motivate a
number of persons to come together for the achievement
of a common objective through the company form are
called promotion. The person or the persons who
undertake the responsibility to bring the company into
existence are called promoters.

18. INCORPORATION
After taking all preliminary steps of for
registration an application along with the
necessary documents stamp duty, registration fees
etc. has to be made to the registrar for the issue
of certificate of incorporation. After reutilization
of the document, if the registrar is satisfied he
will issue a certificate of incorporation

19. MEMORANDUM OF ASSOCIATION
Definition
Section 2(56) of companies act 2013 , “memorandum of association of company as
originally framed or altered from time to time in pursuance of any previous companies
law or of this act”
• memorandum of association is the most important document of a company. It state
the objectives for which the company is formed. It contains the rights, privileges and
power of the company.
• It determines the relationship between the company and all the outsiders.
• A company cannot undertake any business or activity not stated in the
memorandum

20. PURPOSE OF MEMORANDUM OF
ASSOCIATION
• Memorandum of association is the constitution of a company.
• It is the charter which defines the limitations of the power of a company established
under the law.
• It is the foundation on which the structure of the company is based.
• It regulates the external affairs of a company.
• It enables the shareholders to know what is the permitted range of enterprise.
• It states that the company can not go beyond its memorandum.

21. CAPITAL SUBSCRIPTION
Public company having share capital has to undergo 2 additional stages:-
a) Subscription stage
b) Commencement of business In the capital formation stage the company has
to make necessary arrangements for obtaining necessary capital for the
company. For this purpose immediately after getting the certificate of
incorporation,
the company calls a meeting to deal with the following:- 1) Appointment or
confirmation of appointment of secretary if one has already been appointed by
the promoters at the promotion stage. 2) Adoptions of preliminary contracts which
include the promoters enter into contracts on behalf of the proposed company
such as contract for purchasing of properties, assets, existing business etc. 3)
Adoption of a draft of prospectus or the statement in view of prospectus. 4)
Appointment of banker‟s solicitors, auditors, legal advisor brokers etc. 5) Listing of
shares on stock exchange. 6) Adoption of undertaking contracts. 7) Number of
Shares to be issued. 8) Collection of share capital etc.

22. COMMENCEMENT OF BUSINESS:
The commence the business the business commencement certificate is required.
To obtain this the following conditions must be filled.
1. A prospectus or a statement in lieu of prospectus has to be filed with the
registrar of the company
2. The number of shares allotted should not be less than the minimum
subscription as mentioned in the prospectus.
3. If the directors have taken up and paid for any qualification shares, the
amount paid on such shares should not be less than the amount paid by other
member.
4. A declaration is that no money is refundable to the applicants of shares if
they fail to make full payment of shares.
5. A declaration of compliance by one of the directors or secretary that shares
have been allotted for the amount not less the minimum subscription and
also that all the conditions regarding the commencement of business have
been complied with.

23. CONTINUED….
6. The registrar after receiving the declaration of compliance with the
provisions of section 149 from the secretary or one of the directors along with
required filing fee, will scrutinize the declaration and if satisfied will issue a
certificate to commence the business. From the date of this certificate, the
company is entitled to commence its business.

24. DUTIES OF A COMPANY SECRETARY BEFORE
INCORPORATION
1) To help promoters in making detailed investigation of the proposed business.
2) To help the promoters in drawing up the financial plan for the approval of the business.
3) To attend all preliminary meetings of promoters and keep a record of proceedings of
their meetings.
4) To get the approval from the registrar for the proposed name of the business.
5) To help the promoters in drafting of memorandum of association and articles of
association
6) To follow the SEBI (Security Exchange Board of India).
7) To collect the certificate registration from the registrar.
8) To send a notice of the registered office of the company to the registrar within the 30 days
of the date of registration.