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From Business Organization
HUF business is governed by Hindu law and membership is acquired by birth. It is managed by the Karta, whose decisions are binding. Coparceners have limited liability up to their share in family property, while Karta’s liability is unlimited. HUF business enjoys better continuity because business continues even if a member dies.
Business is an economic activity concerned with production and distribution of goods and services. It involves exchange and is generally carried on with profit motive as a reward for risk and initiative. Business is carried out with regularity and continuity and operates under risk and uncertainty due to changing demand, competition, prices and government policies. Modern business also focuses on customer satisfaction and social responsibility.
Incorporation is the legal process by which a company is created and becomes a separate legal entity under company law. Before incorporation, the company does not have legal existence; after incorporation it can own property, enter contracts and sue or be sued in its own name.
Procedure (overview): The promoters arrange necessary approvals such as digital signatures and identification for proposed directors, reserve the company name, prepare incorporation documents and file them with the Registrar along with Memorandum of Association and Articles of Association. After verification and payment of fees, the Registrar registers the company.
Certificate of Incorporation: After registration, the Registrar issues the Certificate of Incorporation. This certificate is conclusive evidence that all legal requirements for registration have been complied with and that the company is legally formed from the date mentioned in the certificate.
Effect: Once the certificate is issued, the company becomes a separate legal entity with perpetual succession. Its existence cannot be challenged on the ground of irregularities in registration. The company can carry on business and exercise its powers subject to law and its constitutional documents.
Therefore, incorporation and the certificate provide legal birth and identity to the company.
