Companies Act 2013

COMPANIES ACT 2013 Chapter II – Incorporation of Company and Related Matters
COMPANIES ACT 2013

CHAPTER II – INCORPORATION OF COMPANY AND RELATED MATTERS
RULES – Companies (Incorporation) Rules, 2014
FORMATION OF COMPANY – Section 3 read with Rule 3, 4, 6, 7 and 7A

Requirement of Minimum Number of Subscribers to MOA –
Type of Company Minimum Subscribers Definition Section

Public Company 7 or more persons Section 2(71)
Private Company 2 or more persons Section 2(68)
One Person Company 1 person only Section 2(62)
ONE PERSON COMPANY

1. OPC is defined under Section 2(62). It has ONLY ONE PERSON as member.
2. OPC shall be construed as a PRIVATE COMPANY.
3. MOA shall indicate (IN 7TH CLAUSE) the name of the person who shall be the NOMINEE.
Such nominee shall also provide a WRITTEN CONSENT to the Company to act as a
nominee, which shall be FILED WITH REGISTRAR.
4. Only a NATURAL PERSON who is CAPABLE OF CONTRACTING, being an INDIAN
CITIZEN and RESIDENT IN INDIA shall be –
1. Eligible to form OPC;
2. Eligible to be a nominee for the member of OPC
5. No person shall be eligible to incorporate more than one OPC or become the nominee in
more than one OPC.
6. However, if a person, who is a member of an OPC, also happens to become a member of
another OPC, by virtue of his being a nominee in the other OPC, such person shall meet
the criteria for eligibility of OPC members WITHIN 180 DAYS.
7. The nominee of an OPC can be CHANGED AT ANY TIME by intimating ROC.
CA INTERMEDIATE 1 LAW – RR
Wishing you MOST and MORE always!

T0 T15 days T15+30 days

Member to intimate the Company
Nominee withdraws
company with details of new
consent or Nominee shall intimate
nominee along with written
is removed by the
consent of such nominee in the ROC in
Member. Form INC 3. Form INC 4.
8. OPC to convert into Public Company or Private Company

1. Mandatory Conversion on satisfaction of conditions –
i. Paid up share capital exceeds 50 lakhs, AND
ii. Average Annual Turnover for the immediately preceding 3 financial years
exceeds 2 crores.
2. Conversion shall be completed within 6 months of such date of meeting above
conditions.
T0 T60 days T0 + 6 months

PSC and Average OPC shall file Form INC 5 Company shall
Turnover limits as informing ROC that it has
provided above is ceased to be an OPC and that it complete
exceeded. is required to be converted. conversion.
9. Conversion of Private Company to OPC

1. The primary condition for conversion is that limits as provided above shall not be
exceeded. (Point No. 8)
2. Special Resolution shall be passed by Private Company.
T0 Before passing T30 days Application for

Private the Resolution, Form MGT 14 conversion
Company to the Company shall be filed shall be filed in
ensure Rule 6 is shall obtain with the ROC Form INC 6
not exceeded NOC from its intimating the with the ROC
and Special members and details of by Private
Resolution is to creditors. Special Company.
be passed. Resolution.
10. One Person Companies CANNOT CONVERT into a Section 8 Company.

11. One Person Companies CANNOT CONVERT into any other form of Company
VOLUNTARILY before the expiry of 2 years from its incorporation.

12. If an OPC has only one director, and in cases where Board Resolution is necessitated
under the Act, it SHALL BE SUFFICIENT if the director APPROVES THE RESOLUTION
and makes note of the same in the MINUTES BOOK of the Company.
13. Provisions of General Meeting shall not apply to an OPC. In cases where Ordinary
Resolution or Special Resolution is necessitated under the Act, it SHALL BE SUFFICIENT
if the member APPROVES THE RESOLUTION and makes note of the same in the
MINUTES BOOK of the Company.
14. Other provisions relating to QUORUM, PROXY and VOTING MECHANISMS does not
apply to OPC.
SEVERAL LIABILITY OF MEMBERS – Section 3A
If the number of members FALL BELOW the minimum requirement under Section 3 and
such other members WHO CARRY ON THE BUSINESS and IS COGNISANT OF THAT
FACT for MORE THAN 6 MONTHS, such members shall be SEVERALLY LIABLE for the
payment of the WHOLE DEBTS of the Company contracted DURING THAT TIME.
Practice Questions –
3 marks – A public limited company has only 7 shareholders, all the shares being fully paid-up. All the
shares of one such shareholder is sold by the court in an auction and purchased by another shareholder.
The company continues to carry on the business thereafter. Discuss the liabilities of the shareholders
of the company under Companies Act 2013.
5 marks – UMC Limited has only 7 shareholders having fully paid-up shares. On 30th April 2020, all the
shares of X (a shareholder of UMC Limited) are sold to Y (another shareholder of UMC Limited) in an
auction by the order of court. Z (a shareholder of the company) was in USA for a business trip from
January 2020 and thus he was not aware of the developments. The company continues to carry on its
business thereafter. In July 2020, the company borrowed a sum of Rs. 5 lakhs from XYZ Bank. Later
UMC Limited was wound up and XYZ Bank filed a suit against the company for recovery of loan. Discuss
the liabilities of the shareholders of the company under Companies Act 2013.
MEMORANDUM OF ASSOCIATION – Section 4 read with Rule 8, 8A, 8B and 9

The following suffix shall be added in the Name of the Company –
S No. Type of Company Suffix

1 Public Company “Limited”
2 Private Company “Private Limited”
3 One Person Company “(OPC) Private Limited”

Note: In case of Government Company, the word “Limited” shall always apply irrespective
of the company being Public or Private.
Note: In case of Section 8 Company (Public or Private), no suffix shall be added.
Note: In case of IFSC Companies (Public or Private), the following shall be added
“International Financial Service Company”.
CONTENTS OF MOA
Table A to Table E provides for Model Memorandum of Association.
S No. Clause Title Brief of Content

1 Name Clause It provides for the NAME by which the Company is
registered.
2 Registered Office Clause It provides the NAME OF THE STATE at which the
Registered Office of the Company shall be located.
3 Objects Clause It provides the EXHAUSTIVE DETAILS of the objects
to be carried out by the Company.
4 Liability Clause It states the LIABILITY OF MEMBERS of the company,
whether limited or unlimited.
5 Share Capital Clause It states the MAXIMUM SHARE CAPITAL that the
Company is legally authorised to raise.
6 Association Clause It provides details of the subscribers (FIRST
MEMBERS) to the MOA.
Note: In case of IFSC Companies, a SPECIFIC CLAUSE shall also be mentioned in the Objects
Clause of MOA.
NAME RESERVATION – EXISTING COMPANY
T0 T60 days
Approval for Reservation of Maximum time limit for alteration
Unique Name (RUN) has been of MOA to change name of
obtained. Existing Company.
PROHIBITION ON NAMES
The NAME of the Company shall satisfy the following conditions –
1. The name shall not be IDENTICAL WITH OR RESEMBLE too nearly to the name of an
existing company registered under this Act or any previous company law; or

2. The name shall not CONSTITUTE AN OFFENCE under any law for the time being in
force; or
3. The name shall not be UNDESIRABLE in the opinion of the Central Government.
RESTRICTION ON NAMES
However, after obtaining PREVIOUS CENTRAL GOVERNMENT APPROVAL, a Company
may be incorporated with any name having any word or expression which is likely to give
the impression that the company is in ANY WAY CONNECTED with the Central
Government or any State Government or any local authority or any corporation/body
constituted by the Central Government or any State Government under any law for the time
being in force. (Eg. National, Board, Commission, Republic, Prime Minister, Chief Minister etc.)
PUNISHMENT
If the RUN has been applied by FURNISHING WRONG or INCORRECT INFORMATION,
then –
1. If the Company HAS NOT BEEN INCORPORATED, the reserved name shall be
cancelled and the person making the application shall be subjected to punishment.
2. If the Company HAS BEEN INCORPORATED, the Registrar may –
a. Either direct the Company to change its name within a period of 3 months, or
b. Strike off the Company, or
c. Make petition for winding up of Company.
DOCTRINE OF ULTRA VIRES

Whatever is not stated in the MOA as the objects or powers is PROHIBITED by the Doctrine
of Ultra Vires. As a result, an act which is ultra vires is VOID and DOES NOT BIND the
company. Neither the company nor the contracting party can sue on it. An act which is ultra
vires the company is INCAPABLE OF RATIFICATION. The company cannot make it valid,
even if all members give their assent (consent to ratify) to it.
Nowadays the object clause CAN BE EASILY ALTERED, by passing a special resolution by
the shareholders.

ARTICLE OF ASSOCIATION – Section 5 read with Rule 10 and 11

AOA shall contain the REGULATIONS FOR MANAGEMENT of the Company. AOA is also
known as the Doctrine of Indoor Management.
Entrenchment
AOA may contain provisions which RESTRICT ALTERATION of specified provisions of

AOA which are MORE RESTRICTIVE than that of Special Resolution. Such provision can be
added to AOA –
1. At the TIME OF FORMATION of Company, or

2. On approval by ALL THE MEMBERS, in case of Private Company, or
3. On approval by SPECIAL RESOLUTION, in case of Public Company.
File Form INC 32 (SPICe) with File Form MGT 14 within 30

Entrenchment provisions for or days of Resolution for Existing
New Companies. Companies.
The entrenchment provisions are usually compelled by the minority to make the majority
responsible.
Example – Mr. Tarun promoted an education start up and got it registered as a private limited
company. Initially he and his family are holding all shares in the company. In the AOA of
company, it is written that Mr. Tarun will remain director of the company for lifetime. But
he has a fear that tomorrow if 75% or more shares in the company are held by non-family
members then by passing a special resolution article may be changed and he may be removed
from the post of director. Therefore, it was incorporated in the AOA that he can be removed
from the post of director only if 95% votes are cast in favour of the resolution. This is known
as “Entrenchment of AOA”.
Note: Table F to Table J provides for Model Articles of Association.
4 marks – Yadav dairy products Private limited has registered its articles along with memorandum at
the time of registration of company in December, 2014. Now directors of the company are of the view
that provisions of articles regarding forfeiture of shares should not be changed except by a resolution
of 90% majority. While as per section 14 of the Companies Act, 2013 articles may be changed by
passing a special resolution only. One of the directors said that they cannot make a provision against
the Companies Act. You are required to advise the company on this matter.

TABLES OF SCHEDULE I
Table Particulars
A MOA of Company Limited by Shares
B MOA of Company Limited by Guarantee and not having Share

Capital
C MOA of Company Limited by Guarantee and having Share Capital
D MOA of Unlimited Company and not having Share Capital
E MOA of Unlimited Company and having Share Capital
F AOA of Company Limited by Shares
G AOA of Company Limited by Guarantee and having Share Capital
H AOA of Company Limited by Guarantee and not having Share

Capital
I MOA of Unlimited Company and having Share Capital
J MOA of Unlimited Company and not having Share Capital
DOCTRINE OF INDOOR MANAGEMENT

The Doctrine of Indoor Management is THE EXCEPTION to the Doctrine of Constructive
Notice. The aforesaid Doctrine of Constructive Notice does not in ANY SENSE MEAN that
outsiders are deemed to have NOTICE OF THE INTERNAL AFFAIRS of the company.
According to this doctrine, persons dealing with the company cannot be assumed to have
knowledge of internal problems of the company.
The doctrine helps PROTECT EXTERNAL MEMBERS from the company and states that the
people are ENTITLED TO PRESUME that internal proceedings are as per documents
submitted with the Registrar of Companies.

EXCEPTIONS TO DOCTRINE OF INDOOR MANAGEMENT

a. KNOWLEDGE OF IRREGULARITY
In case this ‘outsider’ has ACTUAL KNOWLEDGE of irregularity within the company.
The benefit under the rule of indoor management would no longer be available. In fact,
he/she may be considered part of the irregularity.
b. NEGLIGENCE
If the irregularities within a company COULD BE DISCOVERED with minimum efforts,

the benefit of the rule of indoor management would not apply. The protection of the rule
is also not available where the outsider does not make proper inquiry.
c. FORGERY
The rule does not apply where a person relies upon a document that turns out to be forged
since NOTHING CAN VALIDATE FORGERY. A company can never be held bound for
forgeries committed by its officers.
SECTION 6
Companies Act 2013 shall be applicable in cases where provisions under MOA and AOA of
a Company are INCONSISTENT with the Act.
SECTION 7 (Read with Rule 12, 13, 14, 15, 16, 17, 18 and 38)
INCORPORATION OF COMPANY
The following documents shall be SUBMITTED TO THE REGISTRAR for Incorporation –
1. MOA and AOA duly signed by ALL THE SUBSCRIBERS.

2. Declaration that the REQUIREMENTS OF THE ACT have been complied with by –
a. CA/CS/CMA/Advocate in practice; AND
b. Director/Manager/Secretary as named in AOA.
3. Declaration by the Subscribers and First Directors that –
a. NOT CONVICTED of ANY OFFENCE relating to Company Incorporation;
b. NOT FOUND GUILTY of any FRAUD OR BREACH OF DUTY under any
company law during preceding 5 years; AND
c. All DOCUMENTS FILED with Registrar ARE TRUE to their knowledge.
4. ADDRESS FOR CORRESPONDENCE, if registered office is yet to be established.
5. Particulars of SUBSCRIBERS TO MOA.

6. Particulars of FIRST DIRECTORS as named in AOA.

7. Particulars of INTERESTS of First Directors in other Firms or Body Corporates
ALONG WITH CONSENT TO ACT as First Directors.
Registrar shall VERIFY

Registrar shall issue a Certificate of
THE DOCUMENTS and
Incorporation in Form INC 11 mentioning
information provided
CIN and PAN of the company.
above.
2 marks – What is the meaning of “Certificate of Incorporation” as per Companies Act 2013?
Where a Company HAS BEEN INCORPORATED, and if any false or incorrect information
was provided to the Registrar at the time of incorporation, the following persons shall be
liable under Section 447 –
1. Promoters;
2. First Directors;
3. CA/CS/CMA/Advocate in practice; AND
4. Manager/Secretary as named in AOA.
The following shall be powers of NCLT (TRIBUNAL) on incorporation of a company with

false or incorrect information –
1. Pass such orders for MANAGEMENT OF COMPANY in public interest; or

2. Direct UNLIMITED LIABILITY for members; or
3. Direct REMOVAL OF NAME of company; or
4. Pass such order for WINDING UP of the company; or
5. Pass such other order as it deems fit.
Note: PRINCIPLE OF NATURAL JUSTICE shall be available for the Company.
NCLT shall pass orders ONLY AFTER PROVIDING SUFFICIENT OPPORTUNITY OF

BEING HEARD to the interested parties.
5 marks – A and B want to form a private limited company to start a textile business. They approached
an auditor to assist in incorporating a company in the name of AB Trading Private Limited. Explain in
brief what documents are required to be filed with the Registrar of Companies for the purpose of
incorporation.

SIMPLIFIED PROFORMA FOR INCORPORATING COMPANIES

ELECTRONICALLY – PLUS (SPICe+)
Application for incorporation of a new company shall comprise of –
a. INC 32 (SPICe+) – Incorporation Application

b. INC 33 (eMOA) – Memorandum of Association
c. INC 34 (eAOA) – Articles of Association
d. INC 35 (AGILE-Pro) – Other Registrations (GST/EPF/ESI etc.)
However, in case of a SECTION 8 COMPANIES or Companies having MORE THAN 7

SUBSCRIBERS or Companies having ANY ONE SUBSCRIBER SIGNING AT A PLACE
OUTSIDE INDIA, it shall comprise of –
a. INC 32 (SPICe+) – Incorporation Application

b. INC 13 – Memorandum of Association
c. INC 31 – Articles of Association
The following are the FEATURES OF INC 32 SPICe+ –
a. Up to 3 persons can apply as First Directors without having a valid DIN; instead of
separately filing for DIN.
b. PAN and TAN can be obtained for along with Incorporation of Company.
c. Registered Office can be verified instead of separately filing Form INC 22.
ROC shall permit 2 TIMES RESUBMISSIONS of the Form, giving 15 days each for correction.
PRE-INCORPORATION CONTRACTS
A pre-incorporation contract means a contract entered into by the promoters on behalf of the
proposed company, i.e. before incorporation of a company. These contracts are usually made by
promoters to acquire some property or right for the proposed company.
As per the provisions of Indian Contract Act 1872, a valid contract requires the existence of
parties at the time of entering the contract. In case of pre-incorporation contracts, the proposed
company is not yet incorporated at the time of contract, thus making the contract void-ab-initio.
However, as per SECTION 15 and SECTION 19 OF SPECIFIC RELIEF ACT 1963, a company
as well as other party to the contract is bound by pre-incorporation contract, provided the
COMPANY HAS ACCEPTED the contract after its incorporation and HAS
COMMUNICATED SUCH ACCEPTANCE to the other party to the contract.
4 marks – What are pre-incorporation contracts? Can the company enforce such contracts on the other
party to the contract? Discuss.

SECTION 8 (Read with Rule 19, 20, 21, 22 and 23)
FORMATION OF COMPANIES WITH CHARITABLE OBJECTS

This section deals with the formation of companies which are formed to PROMOTE THE
CHARITABLE OBJECTS of commerce, art, science, sports, education, research, social
welfare, religion, charity, protection of environment etc.
Such company intends to APPLY ITS PROFIT IN PROMOTING ITS OBJECTS and
PROHIBITS THE PAYMENT OF ANY DIVIDEND TO ITS MEMBERS.
OTHER POINTS RELATING TO SECTION 8 COMPANY
1. Central Government shall provide a SPECIAL LICENSE to such companies for its
operation.
2. NEED NOT USE the word “PRIVATE LIMITED OR LIMITED” in its name.
3. It CANNOT be incorporated as a COMPANY LIMITED BY SHARES.
4. License CAN BE REVOKED BY CENTRAL GOVERNMENT if the company –
i. Contravenes any requirements or conditions provided under Companies Act 2013; or
ii. Affairs of the company is conducted fraudulently; or
iii. Violates the objects; or
iv. Operates in a manner which is prejudicial to the public interest.
5. AFTER REVOCATION, the Central Government may direct any of the following –
i. Converts its status and change its name; or
ii. Wind-up the company; or
iii. Amalgamate with another company having similar objects.

EFFECT OF REGISTRATION – Section 9
Company shall come into existence

and shall be capable of exercising all
Date of Incorporation functions under the Act as a Seperate
Legal Entity.
EFFECT OF MOA, AOA – Section 10
Treated as a contract between the

company and each member. It binds
MOA and AOA both the parties and all monies
payable by member shall be a debt
due from him to company.
COMMENCEMENT OF BUSINESS – Section 10A
T0 T180 days
File declaration by Directors in
Incorporation of Company
Form INC 20A.
No company shall commence business or exercise borrowing powers UNLESS THE ABOVE
FORM IS FILED WITH REGISTRAR.

SECTION 12 (Read with Rule 25, 26, 27 and 28)

REGISTERED OFFICE OF THE COMPANY
Every Company shall have a registered office WITHIN 30 DAYS OF INCORPORATION and
shall intimate ROC regarding the same in Form INC 22. (Applies also for change in situation of
Registered Office)
Conditions w.r.t Registered Office of the Company –
1. Name of the Company shall be printed outside every office of the Company in
LEGIBLE LETTERS and in CONSPICUOUS POSITION.
2. Name of the Company shall be ENGRAVED IN COMPANY SEAL, if any.
3. Name, address shall be printed in all business letters, invoices etc.
4. Name, address shall be printed in all promissory notes, bills of exchange etc.
Note: In case of change of name, FORMER NAME shall be stated for a PERIOD OF 2 YEARS
along with new name.
Note: In case of OPC, the words “ONE PERSON COMPANY” shall be mentioned below the
name of the company in brackets.
SCENARIO 1 – CHANGE WITHIN THE SAME LOCALITY/CITY

Alteration of MOA is not needed. Notice to ROC in Form INC 22 after PASSING BOARD
RESOLUTION is sufficient.
SCENARIO 2 – CHANGE WITHIN THE SAME JURISDICTION BUT NOT

SAME LOCALITY/CITY
Alteration of MOA is not needed. Notice to ROC in Form INC 22 after PASSING SPECIAL
RESOLUTION is sufficient.
Note: In case the ROC feels that the Company is not carrying on any business or the
Company is formed for fraudulent purposes, the ROC may inspect and physically verify at
the given address.
SCENARIO 3 – CHANGE WITHIN THE SAME STATE BUT NOT WITHIN

SAME JURISDICTION

Apply for approval Approval of RD Application to ROC in
of Regional Director. received. Form INC 28.

The following documents shall be attached along with the above application –
1. BOARD RESOLUTION for shifting of registered office.

2. SPECIAL RESOLUTION of the members approving the shifting of registered office.
3. Declaration by the company of the following –
a. DUES TO WORKMEN has not been defaulted
b. Intimation has been given to EVERY CREDITOR and obtained their consent or
made sufficient provisions in the books.
Note: Declaration shall be authorised by KMP or 2 Directors of which 1 Director
shall be the Managing Director.
4. Declaration that the Company shall NOT SEEK CHANGE IN JURISDICTION OF
COURTS for pending cases.
5. Acknowledgement copy of intimation given to Chief Secretary of State regarding SAFETY
OF EMPLOYEES’ INTERESTS.
4 marks – XY Ltd. has its registered office at Mumbai in the State of Maharashtra. For better
administrative conveniences the company wants to shift its registered office from Mumbai to Pune
(within the State of Maharashtra, but from Mumbai ROC to Pune ROC). What formalities the company
has to comply with under the provisions of the Companies Act, 2013 for shifting its registered office as
stated above? Explain.
SCENARIO 4 – CHANGE BETWEEN TWO STATES
IF ANY
T0 OBJECTION has
IF NO OBJECTION
has been received
been raised by the
Apply along with all from the creditors,
creditors, the
the supporting
Central Govt. shall or the Central Govt.
documents for shall have 15 Days to
have 60 Days to
approval of Central decide on the
decide on the
Govt. in Form INC 23. matter.
matter.
1. BOARD RESOLUTION and SPECIAL RESOLUTION of the members approving the

shifting of registered office.
2. ALTERED MOA along with certified copy of MINUTES OF GENERAL MEETING.

3. List of creditors/debenture holders with their name, address and due amounts.
Note: The amount must be taken as on the latest practicable date not being more than one
month before the date of applying Form INC 23.
4. Every creditor shall be sent a NOTICE INDIVIDUALLY through registered post with
acknowledgement due.
5. The company shall also advertise in 2 NEWSPAPERS (English and Vernacular) not earlier
than 30 days before the date of filing of application with Central Govt.
6. Obtain “NO OBJECTION CERTIFICATE” from Sectoral Regulators and Secured
Creditors, if any.
7. Declaration by the company of that –
a. The dues to workmen have not been defaulted.
b. A full enquiry into the affairs of the company has been made and there are NO
FURTHER DEBTS or claims on the company to their knowledge.
Note: Declaration shall be authorised by CS or 2 Directors of which 1 Director shall be the

Managing Director.
8. Acknowledgement copy of intimation given to Chief Secretary of State regarding SAFETY

OF EMPLOYEES’ INTERESTS.
9. Declaration that the Company shall NOT SEEK CHANGE IN JURISDICTION OF
COURTS for pending cases.
Note: Alteration of MOA on account of change of Registered Office shall not be allowed
if an inquiry, inspection or investigation is PENDING AGAINST the company.
SECTION 13 (Read with Rule 29, 30, 31 and 32)

ALTERATION OF MEMORANDUM OF ASSOCIATION (MOA)
Any alteration of MOA requires SPECIAL RESOLUTION.
NAME CLAUSE
After obtaining the necessary Special Resolution, application is to be made to ROC for change
of name by APPLYING FOR PROPOSED NAME through RUN. On obtaining approval, the
name shall stand altered.

In case of change of name, FORMER NAME shall be stated for a PERIOD OF 2 YEARS along
with new name.
Note: No such approval shall be necessary where the only change in the name of the
company is the deletion therefrom or addition thereto, of the word "Private", CONSEQUENT
ON THE CONVERSION of company.
REGISTERED OFFICE CLAUSE

Alteration shall be completed in the manner as provided in Section 12.
OBJECTS CLAUSE
SCENARIO 1 – MONEY NOT RAISED FROM PUBLIC THROUGH PROSPECTUS
Special Resolution shall be passed and on approval of ROC, objects shall stand altered.
SCENARIO 2 – MONEY RAISED FROM PUBLIC THROUGH PROSPECTUS
Special Resolution shall be passed for alteration after which application is made to Central
Govt. giving DETAILED BREAK-UP OF MONEY RAISED AND ITS UTILISATION for
obtaining approval.
Also details of the same shall be published in –
a. Publish in the TWO NEWSPAPERS (One Vernacular and one English); and
b. The DISSENTING SHAREHOLDERS shall be given an opportunity to exit.
On obtaining approval from Central Govt., the objects shall stand altered.
5 marks – Anushka Security Equipments Limited is a manufacturer of CCTV cameras. It has raised 100
crores through public issue of its equity shares for starting one more unit of CCTV camera
manufacturing. It has utilized 10 crores rupees and then it realized that its existing business has no
potential for expansion because government has reduced customs duty on import of CCTV camera
hence imported cameras from china are cheaper than its own manufacturing. Now it wants to utilize
remaining amount in mobile app development business by adding a new object in its memorandum of
association. Does the Companies Act 2013 allow such change of objects? If not, then what advise will
you give to company. If yes, then give steps to be followed.
AUTHORISED CAPITAL CLAUSE

Special Resolution is to be passed and Form SH 7 shall be filed with ROC.
LIABILITY CLAUSE
As per provisions of Section 18 read with relevant rules under the Act.

SECTION 14 (Read with Rule 33)
ALTERATION OF ARTICLES OF ASSOCIATION (AOA)

AOA shall be altered by passing a Special Resolution.

Alteration to be stated in EVERY COPY of MOA and AOA.
SECTION 16
RECTIFICATION OF NAME OF COMPANY
If through inadvertence, a company is registered by a name (either on incorporation or on name
change) –
a. In the opinion of the Central Govt., the name is IDENTICAL WITH OR RESEMBLES TOO
nearly to the name of an EXISTING COMPANY registered under this Act or any previous
company law, the Central Govt. may give directions to the company to change its name
WITHIN 3 MONTHS after adopting an ORDINARY RESOLUTION; or
b. On application made to Central Govt. made within 3 years of name registration by
proprietor (holder of trademark) that the name is IDENTICAL WITH OR RESEMBLES TOO
nearly to a REGISTERED TRADEMARK. In such a case, the Central Govt. may give
directions to the company to change its name WITHIN A PERIOD OF 6 MONTHS from
the issue of such direction.
5 marks – Manglu and friends got registered a company in the name of Taxmann advisory private
limited. Taxmann is a registered trade mark. After 5 years When the owner of trade mark came to know
about the same, it filed an application with relevant authority. Can the company be compelled to
change its name by the owner of trade mark? Can the owner of registered trade mark request the
company and then company changes its name at its discretion?
SECTION 17
COPIES OF MOA AND AOA TO BE GIVEN TO MEMBERS
On payment of requisite fee, every company shall send to him WITHIN SEVEN DAYS of
the request a copy of the following documents –
a. MOA, AOA; and

b. Every agreement and every resolution under Section 117(1). (Eg. – Special Resolutions)

SECTION 18 (Read with Rule 37 and 39)
CONVERSION OF COMPANIES
A company of any class registered under this Act MAY CONVERT ITSELF as a company of
other class under this Act by alteration of MOA and AOA of the company.
Where the conversion is required to be done under this section, the Registrar shall on an
application made by the company, after satisfying himself that the provisions of the Act have
been complied with, CLOSE THE FORMER REGISTRATION of the company and ISSUE A
FRESH CERTIFICATE OF INCORPORATION.
SCENARIOS OF CONVERSION
I. CONVERSION OF UNLIMITED LIABILITY COMPANY

Every Unlimited Limited Company may convert itself into Company Limited by Shares or
Company Limited by Guarantee by adopting the below procedures.
T0 T7 T0+45 days T45+30 days

Company Issue public notic in two ROC shall
Application to
passes Special newspapers and website to
Resolution for creditors to raise objections,
ROC in Form issue fresh
INC 27. COI.
conversion. if any.
1. BOARD RESOLUTION for conversion of Company.

2. NOTICE OF GENERAL MEETING for passing of special resolution.
3. SPECIAL RESOLUTION of the members approving conversion of Company.
4. ALTERED MOA and AOA along with certified copy of MINUTES OF GENERAL
MEETING.
5. Declaration that the conversion of a company shall NOT AFFECT ANY DEBTS, liabilities,
obligations or contracts incurred or entered into, by or on behalf of the company before
conversion.
6. List of Creditors/Debenture-Holders with their name, address and due amounts.
7. Declaration that a full enquiry into the affairs of the company has been made and there are
NO FURTHER DEBTS or claims on the company to their knowledge.
8. Declaration that a full enquiry into the affairs of the company has been made and that the
Company shall NOT BECOME INSOLVENT WITHIN A PERIOD OF ONE YEAR.

9. Certificate by Auditor that company is SOLVENT and is a GOING CONCERN.

10. “NO OBJECTION CERTIFICATE” from Sectoral Regulators and Secured Creditors, if
any.
11. Declaration that no investigation or inquiry or inspection is pending against the Company.
Note: ALL DECLARATIONS shall be authorised by 2 Directors of which 1 Director shall
be the Managing Director, if any.
12. IF ANY OBJECTION has been raised by the Creditors, the ROC shall ensure that the
objection is addressed by the Company and then further proceed to decide on the matter.
CONDITIONS AFTER CONVERSION
1. Company shall NOT CHANGE ITS NAME for a period of one year after the date of
conversion.
2. Company shall NOT DISTRIBUTE DIVIDEND without satisfying the past debts, claims
and liabilities entered into by the Company before conversion.
COMPANIES INELIGIBLE FOR CONVERSION

An Unlimited Company shall not be eligible for conversion in the following cases –
a. Company’s NET WORTH IS NEGATIVE; or

b. An application is PENDING for STRIKING OFF ITS NAME, or
c. The company has DEFAULTED IN FILING its Annual Returns or Financial Statements; or
d. A petition for WINDING UP IS PENDING against the company, or
e. The company has not received amount due on calls in arrears, FROM ITS DIRECTORS,
for a period of NOT LESS THAN SIX MONTHS from the due date; or
f. An inquiry, inspection or investigation is PENDING AGAINST the company.

II. CONVERSION OF COMPANY LIMITED BY GUARANTEE

Every company limited by guarantee may convert itself into company limited by shares by
adopting the below procedures.
Note: A company registered under Section 8 of Companies Act 2013 (Section 25 of

Companies Act 1956) shall not convert itself into company limited by shares.

Company passes Special Application to ROC in ROC shall issue
Resolution for conversion. Form INC 27. fresh COI.
1. BOARD RESOLUTION for conversion of Company.

2. NOTICE OF GENERAL MEETING.
3. SPECIAL RESOLUTION of the members approving conversion of Company.
4. ALTERED MOA and AOA along with certified copy of MINUTES OF GENERAL
MEETING.
Note: The share capital of the company limited by shares after conversion SHALL BE
EQUIVALENT to the amount of guarantee undertaken by the members in company limited
by guarantee before conversion.

SECTION 19
SUBSIDIARY COMPANIES TO NOT HOLD SHARES IN HOLDING
COMPANY
No company shall hold shares in its holding company and no holding company shall allot
shares to its subsidiary companies EXCEPT in the following scenarios –
1. Subsidiary company is holding shares as a LEGAL REPRESENTATIVE of a deceased

member of the holding company; or
2. Subsidiary company holds shares as a TRUSTEE; or
3. Subsidiary company is a shareholder EVEN BEFORE it became a subsidiary company of
the holding company.
Note: Right to vote for the Subsidiary Company at a meeting of Holding Company shall exist
only with respect to 1st two points.
SERVICE OF DOCUMENTS
A document may be served on the Company by sending it to –
a. REGISTERED OFFICE of the Company; or

b. OFFICER AT THE REGISTERED OFFICE of the Company by –
i. Registered Post; or
ii. Speed Post; or
iii. Courier Service; or
iv. Such other electronic means.
A member may be served any document by sending it by –
a. Registered Post; or
b. Speed Post; or
c. Courier Service; or
d. Such other electronic means.
Note: A member may request for delivery of any document through a PARTICULAR MODE,
for which he shall pay such fees as maybe determined by Company in AGM.
Note: In case of delivery by post, it shall be DEEMED to be SERVICED AT THE EXPIRY OF

48 HOURS after the letter is posted.
Note: Electronic transmission means a communication that creates a record that is capable of
RETENTION, RETRIEVAL AND REVIEW and that which can be rendered into CLEARLY
LEGIBLE TANGIBLE FORM (capable of printing out).

SECTION 21
AUTHENTICATION OF DOCUMENTS, PROCEEDINGS AND CONTRACTS
Unless otherwise provided in Act, a document or proceeding or contract requiring
authentication by a Company, may be signed by –
a. KMP; or
b. Officer; or
c. Employee of the Company
Note: Duly authorised by the Board. (Common point for above 3 points)
SECTION 22
Bill of Exchanges or Promissory Notes, shall be deemed to have been approved duly if it is
approved BY A PERSON ACTING UNDER THE AUTHORITY of the Company.
The company shall authorise such person using the COMMON SEAL, if available. In case, the
company does not have a common seal, the authorisation for such person shall be made by
Two Directors and Company Secretary.
5 marks – Parag Constructions Limited is a leading infrastructure company. One of the directors of the
company Mr. Parag has been singing all construction contracts on behalf of company for many years.
All the parties who ever deal with the company know Mr. Parag very well. Company has got a very
important construction contract from a renowned software company. Parag constructions will do
construction for this site in partnership with a local contractor Firoz bhai. Mr. Parag signed partnership
deed with Firoz bhai on behalf of company because he has an implied authority. Later in a dispute
company denied to accept liability as a partner. Can the company deny its liability as a partner?

Companies Act 2013

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Companies Act 2013

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COMPANIES ACT 2013 Chapter II – Incorporation of Company and Related Matters

COMPANIES ACT 2013

RULES – Companies (Incorporation) Rules, 2014

FORMATION OF COMPANY – Section 3 read with Rule 3, 4, 6, 7 and 7A

Type of Company Minimum Subscribers Definition Section

ONE PERSON COMPANY

Wishing you MOST and MORE always!

T0 T15 days T15+30 days

8. OPC to convert into Public Company or Private Company

T0 T60 days T0 + 6 months

9. Conversion of Private Company to OPC

T0 Before passing T30 days Application for

10. One Person Companies CANNOT CONVERT into a Section 8 Company.

Wishing you MOST and MORE always!

MEMORANDUM OF ASSOCIATION – Section 4 read with Rule 8, 8A, 8B and 9

S No. Type of Company Suffix

Wishing you MOST and MORE always!

Note: In case of Section 8 Company (Public or Private), no suffix shall be added.

S No. Clause Title Brief of Content

NAME RESERVATION – EXISTING COMPANY

Wishing you MOST and MORE always!

DOCTRINE OF ULTRA VIRES

Wishing you MOST and MORE always!

ARTICLE OF ASSOCIATION – Section 5 read with Rule 10 and 11

AOA may contain provisions which RESTRICT ALTERATION of specified provisions of

1. At the TIME OF FORMATION of Company, or

File Form INC 32 (SPICe) with File Form MGT 14 within 30

Note: Table F to Table J provides for Model Articles of Association.

Wishing you MOST and MORE always!

B MOA of Company Limited by Guarantee and not having Share

D MOA of Unlimited Company and not having Share Capital

E MOA of Unlimited Company and having Share Capital

F AOA of Company Limited by Shares

G AOA of Company Limited by Guarantee and having Share Capital

H AOA of Company Limited by Guarantee and not having Share

J MOA of Unlimited Company and not having Share Capital

DOCTRINE OF INDOOR MANAGEMENT

Wishing you MOST and MORE always!

EXCEPTIONS TO DOCTRINE OF INDOOR MANAGEMENT

If the irregularities within a company COULD BE DISCOVERED with minimum efforts,

1. MOA and AOA duly signed by ALL THE SUBSCRIBERS.

Wishing you MOST and MORE always!

6. Particulars of FIRST DIRECTORS as named in AOA.

Registrar shall VERIFY

The following shall be powers of NCLT (TRIBUNAL) on incorporation of a company with

1. Pass such orders for MANAGEMENT OF COMPANY in public interest; or

Note: PRINCIPLE OF NATURAL JUSTICE shall be available for the Company.

NCLT shall pass orders ONLY AFTER PROVIDING SUFFICIENT OPPORTUNITY OF

Wishing you MOST and MORE always!

SIMPLIFIED PROFORMA FOR INCORPORATING COMPANIES

a. INC 32 (SPICe+) – Incorporation Application

However, in case of a SECTION 8 COMPANIES or Companies having MORE THAN 7

a. INC 32 (SPICe+) – Incorporation Application

The following are the FEATURES OF INC 32 SPICe+ –

Wishing you MOST and MORE always!

SECTION 8 (Read with Rule 19, 20, 21, 22 and 23)

FORMATION OF COMPANIES WITH CHARITABLE OBJECTS

OTHER POINTS RELATING TO SECTION 8 COMPANY

Wishing you MOST and MORE always!

EFFECT OF REGISTRATION – Section 9

Company shall come into existence

EFFECT OF MOA, AOA – Section 10

Treated as a contract between the

COMMENCEMENT OF BUSINESS – Section 10A

Wishing you MOST and MORE always!

SECTION 12 (Read with Rule 25, 26, 27 and 28)

Conditions w.r.t Registered Office of the Company –

SCENARIO 1 – CHANGE WITHIN THE SAME LOCALITY/CITY

SCENARIO 2 – CHANGE WITHIN THE SAME JURISDICTION BUT NOT

SCENARIO 3 – CHANGE WITHIN THE SAME STATE BUT NOT WITHIN

T0 T15 days T15+30 days

Wishing you MOST and MORE always!

1. BOARD RESOLUTION for shifting of registered office.

SCENARIO 4 – CHANGE BETWEEN TWO STATES

1. BOARD RESOLUTION and SPECIAL RESOLUTION of the members approving the

Wishing you MOST and MORE always!