The formal procedure of company formation

1. Application and reservation of name.

Under section 48 of the Act, the Registrar may, on written application, reserve a name pending registration of a company or change of name by a company.
The reservation of a name remains in force for a period of thirty (30) days

2. Preparation of Registration Documents

In order to successfully complete  registration, a company must register the following documents with the registrar of companies:

 Application for registration (FormCR1)

 Memorandum of association (Form CR2-Limited companies by shares, Form CR3-limited companies by guarantee, Form CR4-Unlimited companies)

 Articles of association (this is the company’s constitution)

 Notice of residential address of directors (Form CR8)

 A statement of nominal capital
3. Presentation of documents

Under section 15 of the Act, the constitutive and other documents must be presented to the Registrar for registration of the company. The Registrar must satisfy himself that the documents have been prepared in accordance with the provision of Companies Act.

4. Registration and issue of certificate of incorporation

The Registrar registers the memorandum and issues a certificate of incorporation under his hand thereby certifying that the company is duly incorporated. The company comes into existence on the date mentioned in the certificate of incorporation.
The company seal is formally prepared after the Certificate of incorporation has been issued Differences between Limited companies and partnerships
Section 3 of the partnership Act defines a partnership as a relationship between two or more persons carrying on business together with the view of making profit. The partnership can be distinguished from a limited company as follows:
1. Formation: a company undergoes elaborate legal procedures to come into existence, for example, a company requires registration with the registrar of companies whereas for a partnership registration is not compulsory.
2. Legal personality. A company has legal personality and is distinct from its members whereas a partnership has no legal personality and is made up of the members who compose it.
3. Membership.The minimum number of members in a partnership is two and a maximum of twenty whereas the minimum number in a private company is two and maximum of fifty. In a public company minimum of seven and an unrestricted maximum.
4. Transfer ability of shares. Shares in a company are freely transferable whereas a partner cannot transfer his shares without consent of the other partners.
5. Scope of business.The scope of business of the company is limited to the object clause of the memorandum of association whereas scope of business of a partnership is not restricted.
6. Management. The business of the company is run by the board of directors whereas every member of a partnership firm is involved in the business of the firm.

7. Agency. Partners are agents to each other in the carrying of business of the firm, whereas members of a limited company are not agents to each other.
8. Dissolution. An act of the parties. For example, agreement, notice etc, render the partnership dissolved whereas dissolution of the company requires elaborate legal procedures.

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