Promotion and Incorporation of Companies
Promotion and name stage
A promoter is a person named in the prospectus or identified in the annual return as a promoter, or one who controls the company's affairs. Promoters stand in a fiduciary position and must not make secret profits. Name reservation is made in SPICe+ Part A and is valid for 20 days; if incorporation is not completed, the name lapses and a fresh application is needed.
Incorporation documents
SPICe+ Part B carries the memorandum and articles, registered office proof, subscriber sheets, declarations and DIN/DSC details. The Registrar issues a certificate of incorporation, which is conclusive evidence that the company is duly registered. A company with share capital must file INC-20A, a declaration of commencement of business, within 180 days of incorporation and before commencing business; a director and a professional certify it. The registered office must be established within 30 days of incorporation.
Pre-incorporation contracts
A company cannot ratify a contract made before it existed. The promoter remains personally liable unless the company enters a fresh contract or the parties agree to novation.
Worked example
A private company is incorporated on 1 June. It must file INC-20A by 28 November, the 180th day, and must not commence business before filing. If it files on 30 November, the filing is late and commencing business earlier breaches section 10A. The certificate of incorporation alone does not authorise commencement for a share-capital company.
Traps that cost marks
Name validity is 20 days, not 30. A certificate of incorporation is not a licence to commence business for a share-capital company. Objects in the memorandum must not be ultra vires. Do not treat a pre-incorporation contract as automatically binding on the company.