Incorporation Of Co.

Incorporation of Company

Incorporation of A Private Company
The
incorporation of a Company is governed by the Companies Act 1956. The
Companies Act is an Act to consolidate and amend the law relating to
companies and certain other associations. It extends to the whole of
India. Chapters I and II deal with the incorporation of a company and
matters matters incidental thereto.

PRIVATE COMPANY / PUBLIC COMPANY

Private company
means a company which has a minimum paid-up capital of one lakh rupees
or such higher paid-up capital as may be prescribed and by its
articles

(a) restricts the rights to transfer its shares if any;

(b) limits the number of its members to fifty not including-

(i) persons who are in the employment of the company and

(ii) persons who
having been formerly in the employment of the company were members of
the company while in that employment and have continued to be members
after the employment ceased; and

(c) prohibits any invitation to the public to subscribe for any shares in or debentures of the company ;

(d) prohibits any invitation or acceptance of deposits from persons other than its member directors or their relatives;

Provided that where
two or more persons hold one or more shares in a company jointly they
shall for the purposes of this definitions be treated as a single
member;

Public company means a company which -

(a) is not a private company;

(b) has a minimum paid-up capital of five lakh rupees or such higher paid-up capital as may be prescribed;

(c) is a private company which is a subsidiary of a company which is not a private company.

Every private
company existing on the commencement of the Companies (Amendment) Act
2000 with a paid-up capital of less than one lakh rupees shall
within a period of two years from such commencement enhance its
paid-capital to one lakh rupees.

Every private
company existing on the commencement of the Companies (Amendment) Act
2000 with a paid-up capital of less than five lakh rupees shall
within a period of two years from such commencement enhance its
paid-capital to five lakh rupees.

Where a private
company or a public company fails to enhance its paid-up capital in the
manner specified in sub-section (3) or sub-section (4) such company
shall be deemed to be a defunct company within the meaning of section
560 and its name shall be struck off from the register by the Registrar.

A company
registered under section 25 before or after the commencement of
Companies (Amendment) Act 2000 shall not be required to have minimum
paid-up capital specified in this section.

Incorporation of A Private Company

FORMATION OF A PRIVATE LIMITED COMPANY

A private Company
can be formed either by incorporation of a new company for doing a new
business or conversion of existing business of a sole proprietary
concern or partnership firm into a company.

A sole proprietary or partnership business can be converted into a company in any of the following ways:

1.
By outright sale of the business as a going concern. It may be a block
sale where the following takes over all the assets and liabilities of
the firm or it may be partial take over of certain assets and
liabilities. The consideration may be based on itemized sale or it may
be on slump sale basis.

2. A company
becoming a partner of the firm which will be dissolved thereafter by
making partners of the firms the only shareholders of the newly
incorporated company for which the following steps should be taken:

Form a private company as per the procedure.The proprietor of the existing business along with
some other persons (generally family members and friends) or the
partners of the existing firms are the subscribers to the Company
Memorandum of AssociationMake the newly formed company a partner with the
sole-proprietor or the partners of the existing business. For this
purpose a fresh partnership deed is to be executed.Make a provision in the new partnership deed for
the transfer of all assets and liabilities of the firm to any one of
the partners who will pay off to the other partners.Dissolve the partnership with the whole business going to the company as the sole continuing partner.
Every
other partner of the firm (or the proprietor) gets shares in the
company in lieu of his interest in the firm on dissolution.