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Steps in Company Formation

Info: 4308 words (17 pages) Dissertation
Published: 12th Dec 2019

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Tagged: Business


A company is a group of persons associated together for the attainment of a common end, social or economic. Or we can say a company is an association of individuals formed for some common purpose.

The company incorporated under the section 3 (1)(i) of the Companies Act 1956 or some earlier company Acts. Companies incorporated under the companies Act 1956 are mostly business companies but they may also be formed for promoting art, research, charity, commerce, or any other useful purpose.

A company, formed and registered under the Company Act, is regarded by law as a single person, having specified rights and obligations. The law confers on a company a distinct legal personality, with perpetual succession and a common seal.


  • The objective of the company formation is
  • To know, grasp the application of the corporate business law.
  • To know about the essential step to company formation
  • To know what are the essential documents regarding to the company formation.
  • To know about the legal formalities that is required for the formation of company.



We are forming PUBLIC COMPANY, section 3(1) (iv) of the companies Act 1956. We establish a steel industry. It is basically the manufacturing industry of steel.


For the selection of name for the company following measures are taken by my team members:-


GENERAL CIRCULARS which are issued by the GOVERNMENT OF INDIA, MINISTRY OF FINANCIAL AND CORPORATE AFFAIRS. It is send or issued to all the registrars of the company and it is also issued to the regional and board of directors of the company. We have kept in all the parameters regarding the formation and naming of the steel company in steel sector. For example, we have kept in mind what all things and legal aspects are important for the formation of company and what all are its requirements.


After we had finished up with the circulars and other legal formalities under company bill we then move to billing part. Under this various clauses are involved such as:-

  • Short title
  • Commencement and application
  • Memorandum
  • Articles of association
  • Company’s register charges
  • Removal of board of director




Contents of Memorandum:

The memorandum of association of every company must contain the following clauses given below:-

Name clause-

The name of the company is mentioned in the name clause. A public limited company must end with the word ‘Limited’

Name of company:-

Gandhi Telecom ltd.

Gupta Telecom ltd.

Prashant Telecom ltd.

Sham Telecom ltd.

Dines Telecom ltd.

  • Gupta telecom name is already registered
  • Prashant is not suitable for the company
  • Sham and Dines not agreed by the members.

So we decided the name GANDHI TELECOM LTD

Registered Office clause- 176, urban estate, Industry area, Phagwara, pin code: 144401

Object clause- This clause is the most important clause of the company. It specifies the activities which a company can carry on and which activities it cannot carry on. The company cannot carry on any activity which is not authorized by its MOA. This clause must specify:-

  • To provide communication service as like local calls, S.T.D calls, local and National SMS across India and I.S.D calls.
  • To provide value added service.
  • To provide internet services.
  • To provide broadband services.
  • TO increase the market share.
  • To provide the wider range network.


  • To enter into arrangement for sharing profit, union of interest, cooperation or joint venture with any person firm or company.
  • To appoint to deal with or to act as agents, sub agents, dealers, sub-dealers, Distributors for selling or purchasing or dealing with the product s or services related to the business of the company.
  • To do all such acts and things as may be necessary to carry out business of the Company.

Liability clause:-

The word company in this memorandum when company applied otherwise then to this company shall whenever the context so required or admits be deemed to include any authority, partnership or other body of person whether domiciled in India or elsewhere.

  • The liability of the member is limited by share.
  • The authorized share capital of company is Rs. 50, 00,00000

Submission of document of the Company: –

For the registration of the company, it is essential to ascertain from the Registrar Of Companies if the proposed name of the company is approved. Then the following documents duly stamped together with the necessary fees are to be filled with the Registrar.

    • Memorandum of association, prepared according to the company act 1956, and signed by at least 7 persons in the case of public company. And duly signed by subscribers.
    • The Articles of association, the public ltd company is limited by guarantee and private companies are limited by shares.
    • The agreement, if any, which the company proposes to enter into with any individual for appointment as its managing or whole time director or manager [sec. 33(1)].
    • The list of the directors who have agreed to become the first directors of the company and their written consent to act as director and take up qualification shares.
    • A declaration by any of the following persons, an advocate, an attorney or a pleader, a chartered accountant , or a person named in the articles as director, manager, or secretary of the company.
    • The registration fees of a company are fixed on the graduated scale on the amount of nominal capital or the number of members. There is also a filing fee per document.

If the Registrar is satisfied that all the required documents of the act have been compiled with, he will register the company and issue a certificate called the Certificate of Incorporation.


Registration No. of Company ……14456…. Nominal Capita: Rs50crore .


Declaration of compliance with the requirements of the Companies Act, 1956 on application for registration of a company

[Pursuant to section 33(2)]

Name of Company GANDHI TELECOM LTD Limited/Private Limited


Presented by Sham sunder Gandhi

I, ., of do solemnly and sincerely

Declare that I am [1] major who is engaged in the formation of the company, or a person

Named in the articles as a director/manager/secretary of the Limited/Private Limited.

And that all the requirements of the Companies Act, 1956, and the rules thereunder in respect of matters precedent to the registration of the said company and incidental thereto have been complied with.

And make this solemn declaration conscientiously believing the same to be true.

Date 25-11-2009 Sham sunder

Place phagwara Signature

Witness Rajesh Sham Sunder


1. An advocate of the Supreme Court of the …NOA ………………. High Court, an attorney or a pleader entitled to appear before the …..NOA…………………. High Court or a chartered accountant practicing in India.

2. State whether director, manager / secretary /advocate/ chartered account.


Registration No. of the Company 14456 Nominal Capital: Rs50crore


Notice of the situation/change of situation of registered office

[pursuant to section 146]

Name of the company GANDHI TELECOM LTD

Notice is hereby given that —-

  1. (a) the registered office of the company is situated .with effect from 22-11-2009


(b) the situation of the registered office of the company of was changed from NOA to with effect form .


  1. Situation of registered office falls under the jurisdiction of

    (name of the police station).*

    Dated this Day of 19

Sham sunder




(In Block Capitals)

Sham Sunder




Registration No. of Company ..14456 Nominal Capital Rs. 50crore.


Consent to act as director of a company and/or undertaking to take and pay for qualification shares

[pursuant to section 264(2)/266(I)(a) and 266(1)(b)(iii)]

Name of company …….GANDHI TELECOM………………………………… Limited ……………………………………

Presented by ………..SHAM SUNDER………………………………………………………………………………………….

To the Registrar of Companies NOA. …………………………………………………………….

I, the undersigned, hereby testify my consent to act as director of the …………………….. limited, ………………………….. pursuant to section 264(2)/266(1)(a) of the Companies Act, 1956 and certify that I have not been disqualified to act as a director under sections 267 and/or 274 of the Companies Act, 1956.

I, the undersigned having consented to act as director of the ………………………… Limited, also hereby undertake to take from the said company and pay for ……………….. shares of Rs. …………….. each, being the number/value of the shares prescribed as the qualification shares for the office of director of the said company.

Name and surname in full and father’s names



Date of birth









Vijay Kumar

Mehli gate,






Signature: SHAM SUNDER……………………..

Designation .Sham Sunder…………………..

Dated the ……………………… day of ……………….. 19

Notes: (1) Delete the portion not applicable.

(2) If a director signs through his agent authorised in writing, the authority must be produced

before the Registrar.

(3) In case of undertaking to take and pay for qualification shares, the from should be

accompanied by the necessary stamp duty.


Registration No. of Company ……14456………. Nominal Capital Rs. 50CRORE


Particulars of appointment of directors and manager and changes among them

[Pursuant to section 303(2)]

Name of Company .GANDHI TELECOM LTD Presented by …SHAM SUNDER………………

Note: — If a company has no particulars to be included in one or two of the headings ‘A’ ‘B’ and ‘C’ the parts containing those headings (in respect of which the company has no particulars to be included) need not be filed.

A. Appointment of and changes among directors.

Name or names and surname in full

Father’s/ husband’s name

Usual residential address


Date of appointment or change

Brief particulars of changes







1. vijay kumar

Madan Baanga

Mehli Gate





Notes: (1) A note of changes should be made in column 6 e.g. by inserting against the name of new

director, etc. the words “in place of …………………… and by indicating against the name of the

former director, the cause for the change, e.g. by death, resignation, retirement by rotation,

disqualification etc.

(2) In case of managing director, his designation should be stated with his name in columan1.

B. [***]

C. Appointment of and changes in manager ship and secretary ship.

Name or names and surname in full

Father’s/ husband’s name

Usual residential address


Date of appointment or change

Brief particulars of changes







Rajesh Kumar

Pardeep kumar





Dated the …………………………………… day of …………..19

Signature .SHAM SUNDER…….

Designation……Sham Sunder……..

Notes: (1) For the purposes of this form, particulars of a person appointed as manager within the

meaning of section 2(24) of the Companies Act, 1956 need be given.

(2) A note of change as also the cause of change e.g. by death, resignation, removal,

disqualification, etc. should be stated in column 6.

Article of Association

The Gandhi telecom Limited contains following rules and regulations and also bye-laws for the internal management of the affairs of a company.

The articles are next in importance to the Memorandum of Association which contains the fundamental conditions upon which alone a company is allowed to be incorporated. They are as such subordinate to, and controlled by, the Memorandum.

Contents of Articles

Share capital

The Share capital of the company is Rs. 50, 00, 00,000 (Rupees fifty crore only). They have been divided into 10 crore Equity shares of Rs.100 each (Twenty rupees only), with the provision of the company Act, 1956

Capital of the company

The capital of the company may increase from time to time, by the creations of the new shares. This increase in the amount is to be divided among all the shares holders.

Reduction of capital

The Company may subject from time to time by special promise will reduce its capital or Share Premium Account in any manner for the time being authorized by law and capital may be paid off in the future.

Share and certificate

The share certificates will be issued free of cost to all the shareholders of the company. The shares in the capital shall be numbered progressively according to their value. Any share forming part of any increased capital of the company shall be under the control of the Directors who may issue and allot or otherwise dispose of the same or any one of them to such persons n such proposition and on such terms and conditions.

Acceptance of shares

Any application signed by or on the applicant for shares in the company followed by an allotment of any share there in shall be an acceptance of shares within the meaning of these Articles.

Renewal of Share Certificate

No fee shall be charged for the issue of new shares certificates in the replacement of the old ones.

Calls on shares

Company may from time to time, subject the terms on which any shares may have been issued and subject to the conditions o allotment which is passed at a meeting of the Board.

Share warrant

The company may issue share warrants subject to and in accordance with the provisions of sections 114and 115.

The Board may in its discretion with respect to any share which is fully paid up on applications in writing signed by the persons registered as holder of the shares.

Transfers of shares

The transfer of shares from one person to the other person will be made but with the information of the company. This change will be also made in the company’s shareholders Catalogue.

Forfeiture of the shares

The shares of any shareholder can be cancelled if he or she is not able to pay the payment. The forfeiture of a share shall involve extinction, at the time of the forfeiture, of all claims and demands against to the Company in respect of the share and all other rights incidental to the share, except only such of those right as by these Articles are expressly saved.

Surrender of shares

The Directors may subject to the provisions of the Act, accept a surrender of any from or by any member desirous of surrendering them on such terms as they think fit.

Lien on shares

The company shall have a first lien upon all the shares, not being fully paid up shares registered in the name of each member and upon the proceeds of the sale thereof for all money called or payable at a fixed time in respect of such shares and no equitable interest in any share shall be created except upon the footing and condition here of is to have full effect.

Winding up

At the time of winding up the company is going to liquidate all its assets and the amount from the liquidation of the assets will be distributed to the debentures holders and preference share holders first and then afterwards the rest of the amount to the equity share holders.


  • General information: –

Address: 176, Model Town, Industrial Area, Phagwara.

    • Name of stock exchange:
      • Ludhiana Stock Exchange
      • Jalandhar Stock Exchange
      • Chandigarh Stock Exchange
      • Amritsar Stock Exchange
    • Provision of Sub section (1) of section 68 A of the companies Act, 1956 relating to punishment for fictitious Applications.
    • Statement/ declaration about refund of the issue if minimum subscription 90% is not received within 90 days from closure of the issue.
    • Declaration about the issue of allotment letters/refund with in a period of 10 weeks and interest in case of any delay in refund at the prescribed rate under section 73(2) (2a)
    • Date of opening of the issue: 12-december-2009

Date of closing of the issue: 18-12-2009

Date of earliest closing of the issue: 16-12-2009

  • Name and address of auditors: Vijay deep, Jalandhar.
  • Capital structure of company
    • Authorized Capital: 50 crore
    • Issued capital: 40 crore
    • Subscribed capital:
    • Paid up Capital:
  • ii. Size of present issue giving separately reservation for preferential allotment to promoters and others.
  • Paid up capital: a. after the present the issue b. after conversion of Debentures
  • Term of the present issue
  • Term of present issue
    • Terms of Payments.
    • Right of the instruments holders
    • How to apply-availability of forms, prospectus and mode of payment
    • Any Special tax benefits of the company and its shareholders.
  • Particulars of the issue: –
    • Objects
    • To provide communication service as like local calls, S.T.D calls, local and National SMS across India and I.S.D calls.
    • To provide value added service.
    • To provide internet services.
    • To provide broadband services.
    • TO increase the market share.
    • To provide the wider range network.
    • To provide telecom networks and to run and maintain telecom services like basic/fixed line services, cellular/mobile services, paging, video-text, voice mail & data systems, private switching network services, transmission networks of all types, computer networks like local area network, wide area network, Electronic Mail, Intelligent network, Multimedia communication systems or the combinations thereof.
    • To promote & establish Companies, Funds, Associations or Partnerships for providing telecom networks and/or to run and maintain telecom services like basic/fixed line services, cellular/mobile services, paging, videotext, voice mail and data systems, private switching network services, transmission network of all types, computer networks i.e. local area network, wide area network, Electronic Mail, Intelligent network.
    • To guarantee/ counter guarantee the obligations of any of its subsidiary/ associate/ group companies and/or other companies in which the company has equity interest under any agreements/ contracts/ debentures, bonds, stocks, mortgages, charges and securities.
    • Project cost
    • Means of financing (including contribution of promoters)
  • Company management and project
    • History and main objects and present business of the company.
    • Promoters and their background
    • Name, addresses and occupation of manager, managing director
    • Location of the project
    • Collaboration,
    • The products
  • Following particulars in regard to the company and other listed companies under the same management within the meaning of section370(IB),which made any capital issue during the last 3 years.

Name of the company: Gandhi Telecom limited

Year of issue: 2009

Type of issue: Public (Public/Rights/composite)

Amount of issue:

Date of closure of issue

Date of completion of delivery of share/debenture certificates.

Date of completion the project

Where object of the issue was financing of a project

Rate of dividend paid

  • Outstanding litigation pertaining to-
    • Matters likely to affect operation and finances of the company including disputed tax liabilities of any nature; and
    • Criminal prosecution launched against the company and the directors for alleged offences
  1. Management perception of risk factors (example: sensitivity to foreign exchange rate fluctuations difficulty in availability of raw material in marketing of product cost/time over run etc.


Now therefore in consideration of the mutual covenants set forth herein and intending to be legally bound , the parties here to agree as follows.

1. Terms of agreement :

This agreement will be begin [13-11-09] and will end [13-11-2010]. Either party may cancel the agreement in between [15 days] notice to other party in writing by certified personal delivery or by mail.

2.Time needed by them :

It is Needed that your company employee will spend approximately [150] hours in these three months contract with the obligation of this contract. In a week a employee must devote minimum of [10] hour by taking care of their personal problems.

3. Place of services :

According to the Contract at a location of consultanats’s only be considered. The consultant will perform services on seminar halls, auditorium, or any other places as necessary to perform these services according to this agreement.

4. Payment made :

We perform services on the rate of Rs 400/hr for work performed in accordance with this agreement extra time will be charged, on services provided. Payment must occurred on first three days of every month.

5. Confidential information :

The [Gandhi Telecom ltd] agrees that any information recived during their contract period which concerts to personal, Confidence and will not be revealed to any other persons, firms and organizations.

6. In Witness Where of :

The parties here to have excuted this Agreement as of the day and year First above written………….


  • www.mca.gov.in
  • www.vakeel.com
  • www.roc.com

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