Companies Act Section 7 — Incorporation of company
CHAPTER II INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO
Commercial / Corporate
Summary
Sub-section (1) lists the documents and information that must be filed with the Registrar of Companies in whose area the company's registered office is proposed to be located. These include the memorandum and articles of association signed by all subscribers, a declaration from a professional (advocate, chartered accountant, cost accountant, or company secretary) and from a person named in the articles as director, manager, or secretary confirming that all registration requirements have been met, and a declaration from each subscriber and first director stating they have not been convicted of certain offences or found guilty of fraud or breach of duty in the preceding five years, and that the filed documents are correct and complete.
Under clause (a) of sub-section (1), the memorandum and articles must be signed by all subscribers in the manner prescribed.
Under clause (b) of sub-section (1), a declaration in the prescribed form must be made by a practicing professional involved in forming the company and by a person named in the articles as a director, manager, or secretary, stating that all requirements of the Act and its rules regarding registration and related matters have been complied with.
Under clause (c) of sub-section (1), each subscriber and each person named as a first director must declare that they have not been convicted of any offence related to company promotion, formation, or management, and have not been found guilty of fraud, misfeasance, or breach of duty to any company under this Act or previous company law in the last five years, and that all filed documents contain information that is correct, complete, and true to their knowledge.
Under clause (d) of sub-section (1), an address for correspondence must be provided until the registered office is established.
Under clause (e) of sub-section (1), the particulars of each subscriber, including name, surname or family name, residential address, nationality, and other prescribed details with proof of identity, must be provided; for a subscriber that is a body corporate, such particulars as prescribed must be given.
Under clause (f) of sub-section (1), the particulars of persons named as first directors in the articles must be provided, including their names, surnames or family names, Director Identification Number, residential address, nationality, and other prescribed details with proof of identity.
Under clause (g) of sub-section (1), the particulars of the interests of the first directors in other firms or bodies corporate must be provided, along with their consent to act as directors, in the prescribed form and manner.
Sub-section (2) states that the Registrar, based on the documents and information filed under sub-section (1), will register all those documents and information and issue a certificate of incorporation in the prescribed form, confirming that the proposed company is incorporated under this Act.
Sub-section (3) states that from the date mentioned in the certificate of incorporation, the Registrar will allot a corporate identity number to the company, which will be a distinct identity for the company and will also be included in the certificate.
Sub-section (4) requires the company to maintain and preserve at its registered office copies of all documents and information as originally filed under sub-section (1) until the company is dissolved under this Act.
Sub-section (5) states that if any person furnishes false or incorrect particulars of any information, or suppresses any material information that they are aware of, in any document filed with the Registrar for company registration, they will be liable for action under section 447.
Sub-section (6) states that, without prejudice to sub-section (5), if at any time after incorporation it is proved that the company was incorporated by furnishing false or incorrect information or representation, or by suppressing any material fact or information in any document or declaration filed for incorporation, or by any fraudulent action, then the promoters, the persons named as first directors, and the persons making the declaration under clause (b) of sub-section (1) will each be liable for action under section 447.
Sub-section (7) states that, without prejudice to sub-section (6), where a company has been incorporated by furnishing false or incorrect information or representation, or by suppressing any material fact or information, or by any fraudulent action, the Tribunal may, on an application and if satisfied that the situation warrants it, pass orders for regulating the management of the company, including changes to its memorandum and articles, in public interest or in the interest of the company, its members, and creditors, or direct that the liability of members shall be unlimited, or direct removal of the company's name from the register of companies, or pass an order for winding up the company, or pass such other orders as it deems fit.
Under the proviso to sub-section (7), before making any order, the company must be given a reasonable opportunity of being heard, and the Tribunal must take into consideration the transactions entered into by the company, including any obligations contracted or payment of any liability.
Official Text
(1) There shall be filed with the Registrar within whose jurisdiction the registered office of a company is proposed to be situated, the following documents and information for registration, namely:—
(a) the memorandum and articles of the company duly signed by all the subscribers to the memorandum in such manner as may be prescribed;
(b) a declaration in the prescribed form by an advocate, a chartered accountant, cost accountant or company secretary in practice, who is engaged in the formation of the company, and by a person named in the articles as a director, manager or secretary of the company, that all the requirements of this Act and the rules made thereunder in respect of registration and matters precedent or incidental thereto have been complied with;
(c) 1[a declaration] from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief;
(d) the address for correspondence till its registered office is established;
(e) the particulars of name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed;
(f) the particulars of the persons mentioned in the articles as the first directors of the company, their names, including surnames or family names, the Director Identification Number, residential address, nationality and such other particulars including proof of identity as may be prescribed; and
(g) the particulars of the interests of the persons mentioned in the articles as the first directors of the company in other firms or bodies corporate along with their consent to act as directors of the company in such form and manner as may be prescribed.
(2) The Registrar on the basis of documents and information filed under sub-section (1) shall register all the documents and information referred to in that sub-section in the register and issue a certificate of incorporation in the prescribed form to the effect that the proposed company is incorporated under this Act.
(3) On and from the date mentioned in the certificate of incorporation issued under sub-section (2), the Registrar shall allot to the company a corporate identity number, which shall be a distinct identity for the company and which shall also be included in the certificate.
(4) The company shall maintain and preserve at its registered office copies of all documents and information as originally filed under sub-section (1) till its dissolution under this Act.
(5) If any person furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the registration of a company, he shall be liable for action under section 447.
(6) Without prejudice to the provisions of sub-section (5) where, at any time after the incorporation of a company, it is proved that the company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company, or by any fraudulent action, the promoters, the persons named as the first directors of the company and the persons making declaration under clause (b) of sub-section(1) shall each be liable for action under section 447.
(7) Without prejudice to the provisions of sub-section (6), where a company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company or by any fraudulent action, the Tribunal may, on an application made to it, on being satisfied that the situation so warrants,—
(a) pass such orders, as it may think fit, for regulation of the management of the company including changes, if any, in its memorandum and articles, in public interest or in the interest of the company and its members and creditors; or
(b) direct that liability of the members shall be unlimited; or
(c) direct removal of the name of the company from the register of companies; or
(d) pass an order for the winding up of the company; or
(e) pass such other orders as it may deem fit:
Provided that before making any order under this sub-section,—
(i) the company shall be given a reasonable opportunity of being heard in the matter; and
(ii) the Tribunal shall take into consideration the transactions entered into by the company, including the obligations, if any, contracted or payment of any liability.