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Unit 4: Formation of Company

2. Promoters have been described to be in ................................. with the company. Notes
3. A ................................. is not forbidden to make profit but to make secret profit.
4. Promoter is liable to the original ................................. of shares for the mis-statements
contained in the prospectus.

4.2 Availability of Company Name

Section 20 states that a company cannot be registered by a name, which in the opinion of the
Central Government is undesirable. Therefore, it is advisable that promoters find out the
availability of the proposed name of the company from the Registrar of Companies. For the
purpose, three names in order of priority should be filed.

The following two documents, though not required to be filed for the purpose of registration,
are usually delivered along with the aforesaid documents.
1. The address of the registered office of the company (s.146).

2. Particulars regarding directors, manager and secretary, if any (s.303).
These two documents are required to be submitted within thirty days of registration of the
company.

4.3 Certificate of Incorporation/Consequences of Incorporation

When the aforesaid documents have been filed with the Registrar and the necessary fees paid,
the Registrar will, if he is satisfied, enter the name of the company on the Register of Companies
maintained by him (s.33) and then will issue a Certificate of Incorporation under his signature
in token of registration of the company on the date noted on it (s.34). This certificate serves the
same purpose in the case of a company which a birth certificate does in the case of a natural
person.
On registration, the company comes into existence as a legal person distinct from its members
who constitute it from the earliest moment of the day of incorporation stated in the certificate of
incorporation, with rights and liabilities similar to a natural person, competent to enter into
contracts (s.34).
The certificate of incorporation is conclusive evidence that all the requirements of the Companies
Act in respect of registration and of matters precedent and incidental thereto have been complied
with. Accordingly, if memorandum is found to be materially altered after signature but before
registration (Peel’s case), or is signed by only one person for all the seven subscribers or the
signatories be all infants (Moosa Goolam Ariff v. Ebrahim Gulam Ariff), the certificate would be
nevertheless conclusive and would not affect the status and existence of the company as a legal
person although such irregularities might give rise to claim between the subscribers.
This provision prevents the reopening of matters prior and contemporaneous to the registration
and essential to it and it places the existence of the company as a legal person beyond doubt.
In the case of Moosa v. Ebrahim, the memorandum was signed by two adult persons and by a
guardian of the other five members, who were minors. The Registrar, however, registered the
company and issued a certificate of incorporation. The court held the certificate to be conclusive
for all purposes.
In another case of Jubilee Cotton Mills Ltd. v. Lewis, the Registrar issued a certificate of
incorporation on January 8th, but dated it January 6th, which was the date he received the
documents. On January 6th, the company made an allotment of share to Lewis. Held, that the

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