Procedure of Incorporation and Commencement of Business — Company Law Notes

Procedure of Incorporation and Commencement of Business

A company is not “born” when the founders shake hands — it is born the instant a government official, the Registrar of Companies, enters its name in the register and issues a certificate. Until that entry, there is no company; the moment after, there is a legal person that can own a factory.

The stages of incorporation

Forming a company under the Companies Act 2013 moves through clear stages. Think of it as promotion → registration → certificate → (for some) commencement.

A. Promotion. The promoter (Unit 1) conceives the business, assembles subscribers and directors, and prepares the documents.

B. Registration (s.7). An application is filed with the Registrar of Companies (ROC) with:

The Memorandum and Articles, signed by the subscribers.
A declaration by a professional and by the subscribers/directors that the Act’s requirements are complied with (s.7(1)(b)).
Details and consent of the first directors, address for correspondence, and DIN (Director Identification Number).
Prescribed fees.

C. Certificate of Incorporation (s.7(2)). If satisfied, the Registrar registers the documents and issues the Certificate of Incorporation with a Corporate Identity Number (CIN). On this date the company is born (topic 2).

D. Commencement of business (s.10A). A company having a share capital cannot start business or borrow until:

Every subscriber has paid the value of shares agreed to be taken, and the company files a declaration to that effect within 180 days; and
The company has filed verification of its registered office (s.12).

Only then may it commence business. (A private company faces no separate “certificate of commencement” — the s.10A declaration is the modern gate for all companies with share capital.)

Section 7(2): “the Registrar shall… register [the memorandum and articles] and issue a certificate of incorporation… that the company is incorporated.”

In Simple Terms: File the two documents plus declarations with the Registrar; he issues a certificate; the company now exists. But before it trades, a company with share capital must first prove its capital is paid and its office is real (s.10A).

flowchart LR
    A["Promotion"]:::leaf --> B["File MOA + AOA + declarations (s.7)"]:::leaf
    B --> C["Certificate of Incorporation + CIN (s.7(2))"]:::root
    C --> D["Company is BORN"]:::mid
    D --> E["s.10A declaration + s.12 office"]:::leaf
    E --> F["Commence business / borrow"]:::mid
    classDef root fill:#FFF8DC,stroke:#000,color:#000;
    classDef mid fill:#DCFCE7,stroke:#166534,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

🧩 WORKED EXAMPLE — commence business from incorporation?

Facts. A public company is duly registered and issues a prospectus. Can it start business from the date of incorporation?

Rule. Incorporation (s.7) creates the company, but a company with share capital may commence business/borrow only after the s.10A declaration (capital paid) and s.12 office verification.

Apply. Being incorporated makes it a person, but it has not yet filed the s.10A declaration.

Conclusion. It cannot lawfully commence business merely from incorporation; it must first satisfy s.10A.

Case Laws

Jubilee Cotton Mills v Lewis (1924) — the certificate’s date is conclusive as to the moment of incorporation.

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