Department of Management Studies, NIT-

Tiruchirapalli

Legal Aspects of Business

Team No:5
Report on Section(9)-Effect of Registration of Companies Act 2019

Submitted To
Prof. S. Mohammed Azad
Assistant Professor
Tamil Nadu Law University
Tiruchirapall​i.

Submitted By

R.Aiswarya Rani(215119004)
B.Keerthana(215119020)
M.Karthik(215119043)
Introduction:
Companies Act 2013 is an Act of the Parliament of India which regulates incorporation,
responsibilities, directors and dissolution of a company. The 2013 Act is divided into 29 chapters
containing 470 clauses as against 658 Sections and has 7 schedules in the Companies Act,
1956. The Act has replaced The Companies Act, 1956 (in a partial manner) after receiving the
assent of the President of India on August 29, 2013. The Act came into force on September 12,
2013 with only certain provisions of the Act notified.
Section (9) - Effect of registration -From the date of incorporation mentioned in the
certificate of incorporation, such subscribers to the memorandum and all other persons, as may,
from time to time, become members of the company, shall be a body corporate by the name
contained in the memorandum, capable of exercising all the functions of an incorporated
company under this Act and having perpetual succession with power to acquire, hold and
dispose of property, both movable and immovable, tangible and intangible, to contract and to
sue and be sued, by the said name.A change made to the articles of association takes effect
once it has been registered (for example the financial period, company name, or place of
registered office). An increase or reduction of the share capital takes effect upon registration.

Objectives of the Provisions:

When a company is registered and a Certificate of Incorporation is issued by the
Registrar, it shall have the following effects :
Effect of publicity:
Any information entered in the Finnish Trade Register and duly published under the
Finnish Trader Register Act must be deemed to have become known to a third party (section 26
of the Trade Register Act). In other words, when a circumstance has been entered in the
register and has been duly published, it is considered to have become public knowledge. This is
called the positive effect of publicity of a register entry.
The effect of publicity is of importance to the operation of a company. It can use the details
contained in the Trade Register to check the background of other companies or to get more
details of a contracting party. Third parties can basically rely on that for instance persons
registered as having the right to represent the company actually have that right. If less than 16
days have passed since the publication, the published circumstance can however not be
referred to against someone who proves that he or she cannot have had knowledge of it. Before
publication, a circumstance that has or should have been entered in the Trade Register cannot
be referred to against anyone else than a person who is proven to have had knowledge of it.
This is called the negative effect of publicity of a register entry. A notification submitted to the
Trade Register is registered and the registration is published the same day.
Trade Register entries are published in Virre Information service. Go to ‘Published entries
search’ in Virre Information Service.
Constitutive effect:
In some cases specified by law, registration can also have a constitutive effect, in other
words a particular circumstance takes effect once it has been registered. For example limited
liability companies or co-operatives come into being when they are registered.
Other cases where registration has a constitutive effect in limited liability companies:
• A change made to the articles of association takes effect once it has been registered (for
example the financial period, company name, or place of registered office).
• An increase or reduction of the share capital takes effect upon registration.
• Changes made to the nominal value or accounting par value take effect upon
registration.
Registration gives nationwide protection to your company name.

Filing of company registration papers with the registrar:

To incorporate a company, the subscriber has to file the following company registration papers
with the registrar within whose jurisdiction the location of the registered office of the proposed
company falls.

1. The Memorandum and Articles of the company. All subscribers have to sign on the
memorandum.
2. The person who is engaged in the formation of the company has to give a
declaration regarding compliance of all the requirements and rules of the Act. A
person named in the Articles also has to sign the declaration.
3. Each subscriber to the Memorandum and individuals named as first ​directors in the
Articles should submit an affidavit with the following details:
 i. Declaration regarding non-conviction of any offence with respect to the
formation, ​promotion​, or management of any company.
ii. He has not been found guilty of fraud or any breach of duty to any
company in the last five years.
iii. The documents filed with the registrar are complete and true to the best
of his knowledge.
4. Address for correspondence until the registered office is set-up.
5. If the subscriber to the Memorandum is an individual, then he needs to provide his
full name, residential address, and nationality along with a proof of identity. If the
subscriber is a body corporate, then prescribed documents need to be provided.
6. Individuals mentioned as subscribers to the Memorandum in the Articles need to
provide the details specified in the point above along with the Director Identification
Number.
7. The individuals mentioned as first directors of the company in the Articles must
provide particulars of interests in other firms or bodies corporate along with their
consent to act as directors of the company as per the prescribed form and manner.

Interpretation of Judgements:
Posh Exports Private Ltd. v. The Registrar of Companies:
Posh Exports Private Limited ("Petitioner Company") was incorporated as a private
limited company. The board of directors in the meeting came to know that the documents
compulsorily required to be filed by an Indian company under Companies Act, 1956 ("CA
1956") had not been filed with the RoC by the Petitioner Company and therefore, decided to take
steps in the present petition and seek revival of the Petitioner Company. The board of directors
also undertook to make the statutory compliances and file the requisite statutory records and the
balance sheets in accordance with CA 1956.
When the documents i.e., annual returns and balance sheets, etc., were sought to be filed
on website of MCA, the directors came to know that name of the Petitioner Company has been
struck of for the failure to file requisite statutory documents. The Petitioner Company contended
that the balance sheets of the company were prepared from time to time, however, it was only
recently discovered that none of the balance sheets and the statutory records have been filed with
RoC. It was contended that the accountant did not co-ordinate and further the learned counsel for
the petitioner company submitted that the part time accountant of the company who was dealing
with the aforesaid work was no more an employee of the company.
The petition was allowed in view of the fact that this non-compliance was due to the
non-coordination of the part time accountant and thus the petition was allowed subject to
payment of costs. Consequently, it was decided to restore the name of the Petitioner Company on
the register of the RoC subject to Petitioner Company filling all the statutory documents and
returns for the outstanding period along with the prescribed fees in accordance with CA 1956.

National Bell Co vs Metal Goods Mfg.Co:

In this case, the defendant took the defence that the subject matter trademark of the
plaintiff is being used by various third parties and that the same is common to trade. The Hon’ble
Supreme Court of India discussed this issue and answered the same in this manner: “This
evidence negatives any abandonment of trade marks or letting infringements go unchallenged or
misleading the other manufacturers that the respondent company would not interfere it they were
to use the same marks. Rights in a mark can, of course, be abandoned by its owner but so long as
he remains the registered proprietor of the mark and carried on the business to which the mark is
attached, a plea of abandonment is difficult to sustain. It would, however, be a different matter if
it is shown that there, were repeated, undisturbed infringements. The evidence in the present case
does not show that there were repeated breaches which went unchallenged though known to the
proprietor. Mere neglect to proceed does not necessarily constitute abandonment if it is in respect
of infringements which are not sufficient to affect the distinctiveness of the mark even if the
proprietor is aware of them. (see Re. Farina(1) Where neglect to challenge infringements is
alleged, the character and extent of the trade of the infringers and their position have to be
reckoned in considering whether the registered proprietor is barred by such neglect. [see
Rowland v. Mitchell(2) ]. The plea of common use must fail, for, to establish it the use by other
persons should be substantial.”
Conclusion:
Thus we can conclude that from the date of incorporation, the subscribers to the
Memorandum and all subsequent members of the company are a body corporate. A registered
company can exercise all functions of a company incorporated under the Act. Also, the
company has perpetual succession with power to acquire, hold, and dispose of the property of
all forms. Also, it can contract, sue and be sued by the said name. Further, the company
becomes a legal person separate from the incorporators from the date of incorporation. Also, a
binding contract comes into existence between the company and its members as mentioned in
the Memorandum and Articles of Association. Until the company dissolves or the Registrar
removes it from the register, it has perpetual existence.