The union of one domain to another. Incorporation offers certain advantages to a company as compared with all other kinds of business organizations. A company is a legal person. Incorporation however the legal process used to form a company or corporate entity. The Act sometimes imposes personal liability on persons behind the veil in some instances like, where business is carried on beyond six months after the knowledge that the membership of company has gone below statutory minimum(sec 45), when contract is made by prescribing the name of the company(sec 147), when business is carried on only to defraud creditors(sec 542). He held it for sometime for a partnership firm, converted the firm into a company which adopted the lease. incorporation definition: 1. the act of including something as part of something larger: 2. the act of including something…. It also explains the advantages as well as disadvantages of incorporation. They are as follows:- The directors also called the ears, eyes and hands of the company. CHANDRA RANGANATHAN AND OTHERS V. COMMISSIONER OF INCOME TAX, CHENNAI. On the one hand they run the company as its owner (Policy maker) and on the other hand they are merely a servant of the company and take remuneration. The lessor thus held bound to the company under the lease. To cause to form into a legal corporation: incorporate a business. But this is subject to the provisions of the Specific Relief Act, 1963. The House of Lords in Daimler Co Ltd. v. Continental Tyre and Rubber Co., held that a company though registered in England would assume an enemy character if the persons in de facto control of the company are residents of an enemy country. • In Germany, Austria and Switzerland, the GmbH ("Gesellschaft mit beschränkter Haftung", meaning "limited liability business association"), as well as the AG ("Aktiengesellschaft", meaning "business association with shares"), are the entities most similar to the corporations in the US. Limitation of liability is another major advantage of incorporation. Reporting after incorporation. In Vali Pattabhirama Rao v. Ramanuja Ginning and Rice Factory, a promoter of a company acquired a leasehold interest for it. The union of one domain to another. Learn more. Sometimes contracts thus made on behalf of a company even before duly incorporated. Section 19 of the Specific Relief Act provides that the other party can also enforce the contract if the company has adopted it after incorporation and the contract is within the terms of incorporation. Incorporation definition, the act of incorporating or the state of being incorporated. The property of an incorporated company thus vested in the corporate body. INCORPORATION, civil law. The disadvantages of Incorporation is as follows: Though for all purposes of law a company thus regarded as a separate entity it sometimes seems necessary to look at the persons behind the corporate veil. However called as pre-incorporation contracts. In Natal Land and Colonization Co v. Pauline Colliery Syndicate, the promoters of a proposed company obtained an agreement from a landlord that he would grant lease of coal mining rights to the company. The Foreign Exchange Management Act of 1999 is applicable for foreign investments and transactions. Dtc Mazdoor Congress And Others vs Union Of India And Others, The Foreign Exchange Management Act of 1999, S.498A IPC – Indian Penal Code, 1860 – Cruelty and Harassment of Wife for meeting unlawful demand for property, MH CET LL.B. It has its own name and property. This term is frequently confounded, particularly in the old A company has no physical existence, it must act through its agents and all such contracts entered into by such agents must be under the seal of the company. To give substance or material form to; embody. incorporation is understood the act by which a corporation is created; by Directors thus entitled to do any work on behalf of the company, what a company can do in ordinary course of business. A company cannot by adoption or ratification obtain the benefit of a contract made on its behalf before the company came into existence. However company is a separate legal entity distinct from its members who incorporate it. A company does its business through its Directors. 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Vide Corporation. A company is a separate legal entity from its owners, with its own rights and obligations. Processes To Compel The Production Of Things, Difference between Compoundable and non compoundable offence. A company, when it comes into existence, cannot sued on pre-incorporation contracts. student of New Law College. Your email address will not be published. How to use incorporation in a sentence. platform of ALL MR ONLINE. n. the act of incorporating an organization. They are as follows:-. In Gilford Motor Co v. Horne, a company restrained from acting when its principal shareholder thus bound by a restraint covenant and had incorporated a company only to escape the restraint. Incorporation laws are governed by state laws, which vary by state. As Incorporation has marvelous advantages but not exempted from it’s disadvantages. In which cases security is required for keeping the Peace? In State Trading Corporation of India v. CTO, the SC held that a company though a legal person is not a citizen neither under the provisions of the Constitution nor under The Citizenship Act. This is done by drawing up articles of incorporation and submitting them to the state in which the new business entity is to be headquartered. But wrong done by the Directors (criminal action ) are the responsibility of the Directors and not the responsibility of the Company. Incorporate Law and Legal Definition. Incorporation definition is - the act or an instance of incorporating : something or the state of being incorporated. A company is capable of attracting professional managers. Required fields are marked *, The site and its contents are copyright of NearLaw.com, INCORPORATION. The liability of members hence limited by shares; each member however bound to pay the nominal value of shares held by them and his liability ends there. Section 15 of the Act provides that where the promoters of a company have made a contract before its incorporation for the purposes of the company, and if the contract is warranted by the terms of incorporation, the company may adopt and enforce it.