Documents for the Formation of a Company

Any business organization involved in selling any product or service to earn a profit can be registered as a company for better functioning and management of resources. The formation of a company is relatively simple in India, though it is a long and exhaustive process, and documentation is one of the essential parts. Important documents, both in the name of the founders and the company itself, are key to the smooth running of a company. Any missing documentation can lead to legal troubles for the company in the future. One of the significant steps in forming a company, both private and public limited liability companies, is the accumulation of several documents ranging from tax forms and licensing to prospectus and certification of trading. 

Business Documents – Critical steps in forming a company 

Business documents are important documents related to the operation and formation of a company. The chapter on forming a company class 11 deals with this in detail. There are many different critical documents required to form a company, and they are mentioned below. 

Memorandum of Association 

The memorandum of association is the most essential document needed in the steps in forming a company. This document is essentially known as the “constitution of the company” and contains details regarding the name, objectives, registered office/properties, liabilities, and company members. As per the formation of company notes, this document also dictates a firm’s relationship with the outside world. The memorandum of association includes:

• The name clause

• The objects’ clause 

• The registered office clause, and 

• The capital clause.

Articles of Association 

The articles of association is a document that is complementary to the memorandum of association. This document details how the director and management will work in a company. The framing of this document is one of the most significant steps in forming a company as it details how the capital will be divided, the procedure for holding meetings, the rights of the shareholders, and everything else about the working of the management. 

Prospectus 

The prospectus is filed with the registrar of companies after the directors have signed it. It is essentially a document inviting the public to purchase or subscribe to the shares of this company. According to the important documents to be used in forming a company notes and forming a company class 11 chapters, the prospectus is mainly a document required by the public limited companies. 

Certificate of Incorporation 

The certificate of incorporation is a document issued by the registrar of companies. It allows both private and public limited companies to commence business legally. 

Certification of Trading 

For a public limited company, getting a certificate of trading is an essential step in forming a company. Any public firm can only begin its business after receiving a trading certificate. The trading certificate is provided to a company after they have acquired the certificate of incorporation. Any private limited company can commence business without a trading certificate if it has already received the certificate of incorporation. 

Employment Agreement 

The employment agreement forms the base of the employee and organization relationship. This document details the organization’s expectations regarding the employee and how the members of the organization function. It should be noted that though it is a part of the key documents to form company notes, it is not a legal necessity. 

Non-Disclosure Agreement 

All the members of a company sign the non-disclosure agreement. This document protects the company from any data breach and helps keep its privacy intact. According to this agreement, no confidential details regarding the company’s inner workings can be disclosed to the outside world. If such a breach occurs under any circumstance, then the person responsible can face legal consequences. 

Operating Agreement

Though not a legal document, the operating agreement is key as it helps members make major operating decisions in a company. This document is required by every company with two or three founding members. 

Business Insurance 

Business insurance protects the company if any damages occur due to theft, vandalism, natural disasters, and accidents. Considering the risky nature of businesses, insurance can act as an essential safety net. 

Partnership Agreement 

The most important document that is required in any private or public limited company with two or more founders is the partnership agreement. This document details how the profits and losses of a company will be shared between the partners, what each of their roles will be, and who is entitled to what in case the company is dissolved. This document is extremely important as it protects the interests of the founding members and safeguards each of them from losing any part in the profit to the other members. In addition, the partnership agreement also helps keep all partners in tandem and helps with the smooth functioning of the company. 

Conclusion 

The critical documents required for the formation of a company differ in private and public firms. Though there are some, such as the memorandum of association and the certificate of incorporation, required by both types of limited companies, the others are not. In addition, each company needs to file certain legal and non-legal documents with the registrar of companies to safeguard its interests and privacy.