Formation and Incorporation of Companies

• (a) the memorandum and articles, duly signed by all the subscribers to the memorandum in the prescribed manner;
• (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, that all the requirements of this Act and the rules in respect of registration and matters precedent or incidental thereto have been complied with;
• (c) a declaration from each subscriber and from each person named as a first director that he is not convicted of any offence in connection with the promotion, formation or management of any company, or 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 contain information that is correct and complete and true to the best of his knowledge and belief;
• (d) the address for correspondence till the registered office is established;
• (e) the particulars of every subscriber: name including surname or family name, residential address, nationality and such other particulars as may be prescribed, with proof of identity, and for a body corporate subscriber, such particulars as may be prescribed;
• (f) the particulars of the first directors named in the articles: names, Director Identification Number, residential address, nationality and other prescribed particulars including proof of identity; and
• (g) the particulars of the interests of those first directors in other firms or bodies corporate, along with their consent to act as directors.

Notice the pattern. Clause (b) is a professional's certificate that the law has been followed. Clause (c) is a personal declaration by each individual about his own past and about the truth of the papers. Clauses (e) to (g) are identification: who these people are, where they live, what else they are involved in. The register exists so that a stranger can answer those questions later.

Step three: what the Registrar does, section 7(2), (3) and (4)

Section 7(2). The Registrar, on the basis of the documents and information filed, shall register them and issue a certificate of incorporation in the prescribed form to the effect that the proposed company is incorporated under this Act.

Section 7(3). On and from the date mentioned in the certificate, the Registrar shall allot a corporate identity number, which shall be a distinct identity for the company and shall also be included in the certificate.

Section 7(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. So the company keeps its own copy of its founding papers for its whole life.

And then section 9 operates, which is set out in [What a Company Is]: from the date on the certificate the members are a body corporate with perpetual succession and the power to hold property, contract and sue.

Step four: what happens if the filings were false

Section 7(5). If any person furnishes 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 registration, he shall be liable for action under section 447.

Note the breadth of "any person": it is not limited to subscribers or directors.

Section 7(6). Without prejudice to sub-section (5), where at any time after incorporation it is proved that the company has been got incorporated by furnishing false or incorrect information or representation, by suppressing any material fact or information, or by any fraudulent action, then the promoters, the persons named as first directors, and the persons making the declaration under section 7(1)(b) shall each be liable for action under section 447.

So the professional who certified compliance under clause (b) is personally exposed. That is deliberate: the certificate is the gatekeeping mechanism and it would be worthless if signing it carried no risk.

Section 7(7). The Tribunal's powers, which include directing that the liability of the members shall be unlimited, are set out in [Lifting the Corporate Veil].

A worked example

Nikhil, Asha and five others want to form a public company to manufacture solar inverters in Pune.

Formation. They are seven, so section 3(1)(a) is satisfied for a public company. They subscribe their names to a memorandum stating the name, the State of Maharashtra, the objects, the liability clause and the capital clause, and each indicates the number of shares he takes.

Filing. Because the registered office is proposed to be in Pune, the papers go to the Registrar with jurisdiction there, under section 7(1). They file the memorandum and articles signed by all seven; a declaration by their company secretary in practice and by Nikhil, who is named in the articles as a director, that all requirements have been complied with; a declaration by each of the seven and by each first director about convictions, fraud and the truth of the papers; an address for correspondence; the personal particulars and identity proof of all seven; and the particulars, Director Identification Numbers and consents of the first directors, with their interests in other firms.

Registration. The Registrar registers the documents and issues a certificate of incorporation stating that Sunveer Inverters Limited is incorporated under the Act, bearing the date 3 August 2026, and allots a corporate identity number which appears in the certificate itself.

Effect. From 3 August 2026 the company exists as a body corporate under section 9. It must keep copies of everything filed at its registered office until it is dissolved, under section 7(4).

Change one fact. Suppose Asha had been found guilty of a breach of duty to another company four years ago, and her declaration under section 7(1)(c) said otherwise. That is a false particular in a document filed for registration, so section 7(5) exposes her to action under section 447. If it is later proved that the company was got incorporated by that suppression, then under section 7(6) the promoters, the first directors and the company secretary who signed the clause (b) declaration are each liable under section 447, and under section 7(7) the Tribunal may regulate the company's management, make the members' liability unlimited, strike it off, or wind it up.

What this does NOT mean

It does not mean the company can start trading on the day it is incorporated. A company with a share capital must first satisfy section 10A, which is the next chapter but five and is the trap of this module.

It does not mean the certificate cures every defect. Sections 7(5), (6) and (7) exist precisely to reach back behind a certificate that was obtained by lying.

It does not mean the Registrar verifies the truth of what is filed. He registers on the basis of the documents and information filed, section 7(2). The truth is guaranteed by the declarations and by the penalties, not by an investigation.

It does not mean the first directors are appointed by the Registrar. They are named in the articles, and their particulars and consents are filed under section 7(1)(f) and (g).

Quick revision

• Section 3(1): seven, two or one person, by subscribing to a memorandum and complying with the registration requirements.
• Section 7(1), seven items: (a) signed memorandum and articles; (b) professional's and officer's declaration of compliance; (c) each subscriber's and first director's declaration on convictions, fraud and truth; (d) correspondence address; (e) subscriber particulars with proof of identity; (f) first directors' particulars with DIN; (g) their other interests and consents.
• Filed with the Registrar in whose jurisdiction the registered office is proposed to be.
• Section 7(2): registration and certificate of incorporation. 7(3): corporate identity number, included in the certificate. 7(4): keep copies at the registered office till dissolution.
• Section 7(5): false particulars or suppression by any person, section 447.
• Section 7(6): incorporation got by fraud, promoters, first directors and the clause (b) declarants each liable under section 447.
• Section 9: the effect of the certificate.

Test yourself

1. With which Registrar are the incorporation documents filed? The Registrar within whose jurisdiction the registered office of the company is proposed to be situated: section 7(1).

2. Who must make the declaration of compliance under section 7(1)(b)? Two people: an advocate, chartered accountant, cost accountant or company secretary in practice who is engaged in the formation of the company, and a person named in the articles as a director, manager or secretary.

3. What must each subscriber declare under section 7(1)(c)? That he is not convicted of any offence in connection with the promotion, formation or management of any company; or has not been found guilty of any fraud or misfeasance or breach of duty to any company under this or any previous company law during the preceding five years; and that all the documents filed contain information that is correct, complete and true to the best of his knowledge and belief.

4. How long must a company keep copies of its incorporation documents? Till its dissolution, at its registered office: section 7(4).

5. A chartered accountant certifies compliance knowing that a subscriber's declaration is false. What is his exposure? He is a person making the declaration under section 7(1)(b), so if it is proved that the company was got incorporated by the false information he is liable for action under section 447: section 7(6). He may also be caught by section 7(5) in his own right.

6. What does the Registrar allot besides the certificate? A corporate identity number, which is a distinct identity for the company and is included in the certificate: section 7(3).