Can A Incorporated Company Be Considered As Void Ab Initio (void from the beginning) ???
The incorporation of a company refers to the legal process that is used to form a corporate entity or a company. Section 7 of the Companies Act 2013 and rules made thereunder as amended from time to time are applicable for incorporation of a company.
Under this Act, a company may be formed for any lawful purpose by seven or more members to incorporate a public company and two or more members for a private company or by a single person as One Person Company.
The following documents and information shall be filed with the Registrar within whose jurisdiction the registered office of a company is proposed to be situated :-
The information given by the applicant in the application ( e-form Spice) for incorporation and attachments thereto should be correct and complete, and nothing relevant to the form has to be suppressed. All the required attachments have to be completely, correctly and legibly attached to the form and should be as per the original records maintained by the promoters subscribing to the Memorandum of Association and Articles of Association.
Further, the Practicing Professionals have to ensure that all the documents provided by the promoters are genuine and correct and has to verify all the particulars and attachments with the original documents and the details provided should be true and fair.
Furthermore, Practicing professionals are required to certify all the information, details, documents provided in form by the applicant while making an application for the incorporation of company to the Ministry of Corporate Affairs, this will ensure that the applicant has followed the process of incorporation as mentioned under the Act and the details provided are true and fair.
If any person / applicant furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the registration of a company, he shall be liable for action and where a company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company or by any fraudulent action, the Tribunal may, on an application made to it, on being satisfied that the situation so warrants, pass such orders as it may think fit.
M/s. Colour Books Associates Private Limited was incorporated as on 14th May 2018, and on 20th September 2019, NCLT Bangalore Bench, gave the judgement stating that the incorporation of company was ab initio void.
In the given case, the first directors were husband and wife. The Husband and wife had ongoing dispute regarding their marriage. As the private limited company requires minimum two directors, to comply with this requirement of the Act, the husband who being the first promoter and director, forged his wife’s signature in the relevant documents (i.e. Consent Letter and all other proofs) and added her as the second promoter and director.
Even the practicing professional did not verify the particulars and documents in the physical presence of the concerned party and further he certified the e-form stating that “he has verified all the original documents, and the content given in the e-form is true, correct and complete and no information material to this form has been suppressed”.
The NCLT disposed the above case stating that the Certificate of Incorporation dated 14th May 2018, by the Ministry of Corporate Affairs is invalid with immediate effect and the husband has to discharge all the liabilities, done in the course of the company on behalf of the wife.
It’s the responsibility of the practicing professional to ensure that the particulars and documents attached in the form are verified by them with the original documents and on providing false information or suppressing any information while certifying any disclosure shall be liable for action under section 448 of the Companies Act 2013.
Disclaimer : The views presented are in personal & in generic form and not as a legal advice, further it has nothing to do with where I am employed or provide the services. The viewers are under no obligation to accept the views given nor is it binding on them.
Article written by PCS Kavita Shah, email id: firstname.lastname@example.org