Let us discuss about the procedures to be followed after incorporating a company.
As soon as a company is incorporated, whether public or private limited, it becomes a juristic person. It has its own name and property. It is a separate legal entity distinct from its members who incorporate it.
A company does its business through its Directors. The directors are also called the ears, eyes and hands of the company. The directors of a company are in fiduciary position. On the one hand, they run the company as its owner (Policy maker) and on the other hand, they are merely a servant of the company and take remuneration. They are entitled to do any work on behalf of the company, what a company can do in ordinary course of business. There are certain items for which Board is not empowered to do any thing. Such items are carried out by the company in General Meeting. Any action done by the directors in the ordinary course of business are treated as done by the Company. But wrong doings by the Directors (criminal action) are the responsibilities of the Directors and not of the Company.
On incorporation, a Company is required to the file with the Registrar annually:
1. Balance Sheet and
2. Annual Return.
There are some periodic forms and other documents which need to be filed with ROC, as and when the occasion arises.
Non filing or late filing of documents attracts penal provisions.
CONSTITUTION OF THE FIRST BOARD:
First Directors are named in the articles and they constitute the first board of Directors. A new member can be inducted in the Board at any time in the Board meeting. A director on his will can resign from the Board. A form 32 is required to be filed with the Registrar of Companies within 30 days of such event.
BUSINESS TO BE TRANSACTED IN FIRST BOARD MEETING WITHIN THIRTY DAYS OF INCORPORATION
One should elect a Chairman of the board, if not already named in the articles. The Chairman conducts the meeting and sign the minutes of the meeting.
Within one month of incorporation of a Company, the Board appoints first auditors of the Company. In case the first auditors are not appointed by the Board of Directors within one month of the incorporation of the company, then they can only be appointed by the shareholders in a general meeting. It means the first Board meeting should be held within one month from the date of its incorporation.
The first board should decide the financial year of the Company. Generally, 1st financial year commences from the date of incorporation to approaching 31st March. Generally, 2nd financial year commences from 1st April to 31st March.
There should be at least four Board meetings are required to be held in a year or there must be one board meeting in every quarter (three months) of a year.
The quorum of a Board meeting shall be one third of its total strength of the Board or two directors, whichever is higher.
At the first meeting of the board of Directors, it is also necessary to record the particulars and description of the Directors and also the notices of interest from the Directors.
There should be one meeting of the Company shall be held at each year, which is called Annual General meeting (shareholder’s meeting). In such a meeting annual accounts are adopted by the Members of the Company, auditors are re-appointed.
ISSUE OF SHARE CERTIFICATE
In the first Board meeting, share certificates to be issued to those persons who has subscribed the Memorandum of Association and have undertaken to subscribe for a minimum number of shares. At this stage, the Company may also allot further shares to existing members or it may make new members.
Share certificates are signed by at least two Directors. It should also be properly stamped and common seal be affixed on it.
COMMON SEAL
One Common Seal is also required by the Company as per Act. A Company may, in writing under its common seal, empower any person, either generally or in respect of any specified maters, as its attorney, to execute deeds on its behalf in any place either in or outside India. A deed signed by such an attorney on behalf of the Company and under his seal where sealing is required, shall bind the Company and have the same effect as if it where under its common seal. A common seal is required to be used on share certificates, bonds, debentures and other formal contracts, power of attorney, etc. to authenticate them. A common seal is also adopted by the directors in first Board meeting. The seal should be kept in safe custody.
ADOPTION OF FIRST ANNUAL ACCOUNTS
The Balance Sheet and Profit and Loss Account, Auditor’s reports and Director’s report are required to be placed before the shareholders in the annual general meeting for their adoption, as required under section 210. The first annual general meeting can be held within eighteen months of incorporation.
Generally, second and subsequent AGMs are held within 6 months from the last day of the financial year. A financial year may be extended from 12 to 18 months with the permission of ROC.
The gap between the last day of the financial year and date of holding the first annual general meeting should not, however, exceed nine months.
FILING WITH THE REGISTRAR
Do not forget to file with the registrar concerned, within thirty days of their adoption, copies of the balance sheet, profit and loss account, and auditor’s report.
FILE ANNUAL RETURN
File with the Registrar every year a return in the form given in part II of schedule V to the Act along with all the information as required to be furnished in accordance with part I of the said schedule. This return is called the ‘annual return’, which is required to be prepared and file with the Registrar under section 159 of the Act. It is made as on the day of the annual general meeting. If the annual general meeting is not held, then it is to be made as on the day when the annual general meeting ought to have been held. It is to be filed within sixty days of the annual general meeting or on the day on which it ought to have been held, as the case may be.
REGISTERED OFFICE
A Company should paint or affix its name and the address of its registered office, and keep the same painted or affixed, on the outside of the every office or place in which its business is carried on, in a conspicuous position, in letters easily legible. Such affixing of name the outside of the Registered office shall be within thirty days of its incorporation.
STATUTORY BOOKS AND REGISTERS WHICH A COMPANY MUST MAINTAIN
A Company should maintain statutory books and registers listed below. Non-maintenance of these registers attracts penal provisions of the relevant sections of the Act. Most of these registers are also required to be made available for inspection to any member / debenture holder and, in some cases, to other persons as well, during business hours. Subject to such other restrictions as the company may impose by its articles or in general meeting, not less then two hours in each working day must be allowed for inspection.
This entry was posted on Friday, October 24th, 2008 at 2:24 pm and is filed under Statutory Matters. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.