Certificate of Incorporation

When all the formalities necessary for the formation of a company are complied with and the Registrar is satisfied, the company is entitled to be registered under the Act. The Registrar shall retain and register the memorandum articles, and other documents. [Sec. 33(3)] On registration, the Registrar shall issue a certificate of incorporation to the company. [Sec. 34(1)]

Certificate is a Conclusive Evidence of Incorporation: A certificate of incorporation in respect of any association is a conclusive evidence of the following matters:

1.All requirements of the Act have been complied with in respect of registration and matters precedent and incidental thereto.

2. The association is a company authorised to be registered and duly registered under the Act. [Sec. 35]

3.The company has come into existence from the earliest moment of the day of incorporation stated therein.

Once the certificate of incorporation is issued, the validity of registration cannot be impeached or challenged. This is so even if all the signatures of the subscribers are forged or all the signatories are minors.

Effects and Consequences of
Incorporation

The following shall be the effects of incorporation of the company as per Section 34 of the Act:

1. Emergence of corporate personality- A new corporate personality or body corporate (company) emerges from the date of incorporation of a company. From the date of incorporation, the company acquires a separate legal existence independent of the members forming it. The law recognises it as a separate and distinct entity from its members.

Under the law, an incorporated company is a distinct legal entity even when almost all the shares are held by one person.
[Saloman v. Saloman & Co. Ltd:]

2. Definite name- From the date of incorporation mentioned in the certificate of incorporation, it shall be known by the name contained in the memorandum.

3. Capacity to exercise all functions- A company from the date of its incorporate shall be capable of exercising all the functions of an incorporated company.

It may be pointed out that an incorporated company may exercise every function within the scope of its memorandum and articles. It will have power to exercise all those functions which can be exercised by any other person. Therefore, it can buy and sell goods and property, open bank account, sue others and can be sued by others etc. However, a company cannot exercise the functions of a citizen and has no fundamental rights granted to a citizen of the country.

4. Perpetual succession- An incorporated company has perpetual succession.

5. Common seal- An incorporated company shall also be entitled to have a common seal.

6. Limited liability- On the registration of memorandum of a limited company, the liability of its members shall be limited in terms of the memorandum., Every member shall be liable to contribute to the asset of the company in the event of its being wound up as is mentioned in the Act. [Sec. 34]
In addition to these direct effects certain consequential effects will also follow: SETE

7. Can sue and be sued- An incorporated company can sue-others including its members. Similarly, the outsiders and members of the company can also sue the company for their rights.

8. Separate property- A company can have its own property. No member has either individually or jointly a right to the assets of the company. The Supreme Court of India has held that a shareholder is not a part owner of the company or its property. The contract arises by registration of the company.

9. Binding contract between company and members From the date of incorporation of a company, there comes into existence a binding contract between the company and its members. [Sec. 36(1)] It comes into existence in terms of the memorandum and articles of the company registered by the Registrar.

10. Validity of incorporation cannot be questioned- A certificate of incorporation issued by the Registrar to a company is a conclusive evidence as to the compliance of all legal formalities in respect of registration of a company.[Sec. 35]. Nothing can be inquired into as to the regularity of the prior proceedings in respect of its incorporation.

11. Certificate of incorporation cannot be cancelled A certificate of incorporation cannot be declared void even if all the signatures of subscribers are forged or all the signatories are minor. It cannot be cancelled even if the objects for which it is registered are unlawful.