Business Laws and Management · Elements of Company Law

Formation and Incorporation of a Company under Companies Act 2013

Updated 11 October 2026 · Fact-checked

Incorporation is the legal birth of a company. Promoters file the memorandum, articles, declarations and director particulars with the Registrar under Section 7. The Registrar registers them and issues a certificate of incorporation with a corporate identity number. From that date the company is a body corporate under Section 9.

Understand Formation and Incorporation of a Company

A company does not exist just because people agree to start a business. It becomes a legal person only when it is registered. The steps before registration are called formation. The registration itself is called incorporation.

A promoter is the person who takes the idea forward. He decides to form the company, arranges the documents, finds the first directors and gathers the money and people needed. The Act's text supplied here does not set out promoter duties, so remember the general rule in plain words: a promoter stands in a position of trust towards the company and should not make a secret profit.

Under Section 7, the documents go to the Registrar within whose jurisdiction the registered office is proposed to be situated. They include the signed memorandum and articles, a declaration of compliance, a declaration by each subscriber and first director, an address for correspondence, and particulars of subscribers and first directors. The Registrar then registers the documents and issues a certificate of incorporation.

The certificate gives a date of incorporation. The Registrar also allots a corporate identity number (CIN), a distinct identity for the company, and it is included in the certificate. Under Section 9, from that date the subscribers and later members form a body corporate by the name in the memorandum. It has perpetual succession and can acquire and dispose of property, contract, and sue and be sued in its own name.

False information is dangerous. If a company is got incorporated by false information or suppression of material facts, the persons concerned face action under Section 447. The Tribunal may also regulate management, make members' liability unlimited, remove the name from the register, or order winding up.

Key formulas to remember

Where to file (Section 7(1)): Documents → Registrar within whose jurisdiction the registered office is proposed to be situated; Filing is with the Registrar of the proposed registered office's area.
Declaration of compliance (Section 7(1)(b)): By an advocate, chartered accountant, cost accountant or company secretary in practice engaged in formation + by a person named in the articles as director, manager or secretary; Both must declare that all requirements for registration have been complied with.
Declaration by subscribers and first directors (Section 7(1)(c)): Not convicted of offence in connection with promotion, formation or management; not found guilty of fraud, misfeasance or breach of duty in the preceding five years; documents are correct and complete; Earlier an affidavit; now a declaration (substituted in 2018).
Certificate and CIN (Section 7(2) and 7(3)): Registrar registers documents → issues certificate of incorporation → allots CIN; CIN is allotted from the date mentioned in the certificate and is included in it.
Preservation of documents (Section 7(4)): Copies of documents as originally filed kept at registered office till dissolution; The company must maintain them for its whole life.
Effect of registration (Section 9): Body corporate by name in memorandum + perpetual succession + power to hold property, contract, sue and be sued; The words 'and a common seal' were omitted in 2015, so a common seal is no longer part of the section.
False information (Section 7(5) and 7(6)): False or suppressed information → action under Section 447; Section 7(6) covers promoters, first directors named, and those making the Section 7(1)(b) declaration.
Producer Company (Section 378C): 10 or more individual producers, or 2 or more Producer Institutions, or a combination of 10 or more individuals and Producer Institutions; Registrar registers within thirty days of receiving the documents. It is deemed a private company with no limit on members and can never become public.

How to solve Formation and Incorporation of a Company questions

Use this method for any question on formation and incorporation, whether it is an MCQ or a short written answer.

1Identify what is being asked: promoter, documents, certificate, effect of registration, false information, or a special case such as a producer company or conversion.
2Recall the stage. Before incorporation the company does not exist. At registration the Registrar issues the certificate. After that date the company is a body corporate.
3For documents, list them in order: memorandum and articles signed by subscribers, declaration of compliance, declaration by subscribers and first directors, address for correspondence, particulars of subscribers and first directors, and directors' interests with consent.
4For effect, link Section 9 to its features: separate legal person, perpetual succession, property, contract, suing and being sued.
5For wrongdoing, link false information to Section 447 and the Tribunal's powers in Section 7(7).
6In a written answer, state the rule first, give the section number, then apply it to the facts in one or two lines.
7In an MCQ, eliminate options that mix up the Registrar with the Tribunal or the Central Government, or that add a common seal.

Quickest way: Three-word memory trick: File, Certify, Exist

When to use it: Use it in the OMR paper when you have under a minute per question.

File: Section 7(1) documents go to the Registrar of the proposed registered office.
Certify: Registrar registers, issues the certificate, and allots the CIN.
Exist: from the certificate's date, Section 9 applies and the company is a body corporate with perpetual succession.
If the facts show lies or hidden facts, think Section 447 first, then the Tribunal.

Common mistakes in Formation and Incorporation of a Company

Saying the company exists once the promoters sign the memorandum.
Students confuse signing with registration.
Fix: A company exists only from the date in the certificate of incorporation.
Adding 'common seal' to the effects of registration.
Old textbooks listed it under the 1956 Act.
Fix: Section 9 now says body corporate with perpetual succession; the common seal words were omitted in 2015.
Filing documents with the Tribunal or the Central Government.
Mixing up registration with approvals and orders.
Fix: Section 7 filing is with the Registrar. The Tribunal acts only later, for example on false incorporation.
Thinking the CIN comes before the certificate.
Students memorise the two items without the order.
Fix: Registrar registers, issues the certificate, and allots the CIN from the date mentioned in the certificate, which is included in it.
Stating that only a company secretary can give the compliance declaration.
Students remember only one of the professionals named.
Fix: An advocate, chartered accountant, cost accountant or company secretary in practice engaged in formation can make it, along with a person named in the articles as director, manager or secretary.
Treating a producer company as public if it has many members.
Students link size to public status.
Fix: Section 378C(5) says it is treated like a private company with no limit on members and never becomes public.

Worked examples

Example 1

Aarav, Meera and Rohan plan a company in Pune. They sign the memorandum and articles, and a company secretary in practice gives a declaration. Before filing anything, can they say the company has been incorporated? State what must happen next.

Show the solution

Signing documents and obtaining a professional's declaration are only preparatory steps.
Under Section 7(1), the documents and information must be filed with the Registrar within whose jurisdiction the proposed registered office is situated.
Under Section 7(2), the Registrar registers them and issues the certificate of incorporation.
Only from the date mentioned in the certificate does Section 9 make the subscribers and later members a body corporate.

Answer: No. The company is incorporated only when the Registrar issues the certificate of incorporation; the founders must first file the documents with the Registrar.

Example 2

Which one of the following is correct about a company's incorporation? (a) The Tribunal allots the CIN. (b) The Registrar allots the CIN and it is included in the certificate of incorporation. (c) The company need not keep copies of the original documents after incorporation. (d) A company has no right to sue in its own name.

Show the solution

Option (a) is wrong: Section 7(3) says the Registrar allots the CIN.
Option (b) matches Section 7(3): the CIN is distinct to the company and is included in the certificate.
Option (c) is wrong: Section 7(4) requires copies of the documents as originally filed to be kept at the registered office till dissolution.
Option (d) is wrong: Section 9 gives power to sue and be sued by the company's name.

Answer: (b)

Exam tips

Learn Section 7 sub-section by sub-section: 1 documents, 2 certificate, 3 CIN, 4 preservation, 5 to 7 false information.
Remember who does what: Registrar registers, Tribunal orders on fraud, Section 447 applies to false information.
Watch for Section 9 wording: perpetual succession is there, common seal is not.
In written answers, give the section number only when you are sure; the main rule in plain words earns the marks.
For the producer company, remember the numbers: ten individuals, two institutions, thirty days.

Practice questions from Elements of Company Law

Formation and Incorporation of a Company in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Formation and Incorporation of a Company: frequently asked questions

Who is a promoter and what does a promoter do?

A promoter is the person who takes the steps to form a company, such as arranging documents, first directors and funds. A promoter has a position of trust towards the company and should not make a secret profit. Note that the supplied Companies Act text for this page does not define promoter, so learn the definition from your study material.

What documents are filed under Section 7?

The signed memorandum and articles, a declaration of compliance by a professional and a person named in the articles, declarations by subscribers and first directors, an address for correspondence, and particulars of subscribers and first directors with their interests and consent to act. They are filed with the Registrar.

What happens if false information is used to incorporate a company?

The persons involved face action under Section 447. The Tribunal can also regulate the company's management, make members' liability unlimited, remove its name from the register or order winding up, after giving the company a hearing.

Can a company change its class after registration?

Yes. Under Section 18, a company of any class registered under the Act can convert to another class by altering its memorandum and articles. The Registrar closes the former registration and issues a new certificate. Existing debts, liabilities and contracts are not affected.