A promoter is an individual who does the vital preliminary work incidental to the formation of a company. They act as nominees or as the first directors of the company.
The promoters enter into a precursory contract with the vendor and make requisite arrangements for the preparation, advertisement, and circulation of the prospectus in order to raise the required capital.
However, it is important to note that a person acting in his professional capacity on behalf of the promoter, for example, a lawyer drafting the agreements and other documents and is paid by the promoter, cannot be termed as a promoter.
A promoter is not liable to receive any remuneration for his work unless a contract expressly approves payment for services offered.
A Memorandum of Association is considered as the constitution or the charter of a company. It contains the powers vested in the company.
A company cannot be registered under the Companies Act, 2013 without the memorandum of association.
The Articles of association contains the rules and regulation regarding the internal management of a company. It is similar to that of a contract between the company and its members. It specifies the rights and duties of members and directors.
The provisions of the articles of association must not be in conflict with the memorandum of association. In any event, conflict arises the MOA will prevail.
After all the documents have been prepared, scrutinized, stamped and signed, they must be filed with the Registrar of Companies for the Incorporation of the company.
After the submission and completion of all the necessary documents, the registrar of the companies shall retain and register the memorandum and articles.
On, the registration of the Memorandum of a company, the registrar shall certify that the company is incorporated. The digitally signed "certificate of incorporation" is then emailed to the directors.
A private company which possesses no share capital can commence its business immediately after its incorporation.
However, other companies can only commence their activities after they have successfully obtained the Certificate of Commencement of Business.