CA Foundation · Business Laws · The Companies Act, 2013
Vikram Exports Pvt Ltd has been incorporated and its Certificate of Incorporation has been issued by the Registrar. A creditor later discovers that one subscriber had signed the memorandum under a minor irregularity in the pre-incorporation formalities and argues the company is not validly formed. What is the legal position?
The company is validly incorporated because the Certificate of Incorporation is conclusive evidence that all registration requirements were complied with. Once issued, irregularities in pre-incorporation formalities cannot be raised to deny the company's existence, so the creditor's argument fails.
- AThe certificate is conclusive evidence that all requirements of registration were complied with, so the company is validly incorporatedCorrect
- BThe certificate is only prima facie evidence and can be disregarded by any creditor
- CThe company is void until the irregularity is ratified by the Registrar
- DThe company is valid only against its members, not against outsiders
Explanation
The Certificate of Incorporation is conclusive evidence that all requirements of the Act relating to registration have been complied with and that the company is duly registered. Hence minor pre-incorporation irregularities cannot be used to challenge existence. Treating it as merely prima facie evidence is wrong.
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