Companies Authorised to Register under this Act
366. Companies capable of being registered
366(1).
For this Part, the word Company also includes different types of non-company entities.
These include:
Partnership Firms
LLPs.
Co-operative societies.
Societies.
Any other business entity formed under another law.
These entities are treated as “companies” only if they apply for registration under this Part.
Section 366 therefore allows such entities to convert into companies under the Companies Act.
366(2).
Any company, whether formed before or after the Companies Act came into force, may register under this Act if it meets the conditions in this section.
This includes companies formed:
Under any Act of Parliament other than the Companies Act,
Under any other existing law, or
Properly constituted according to law in any manner.
The company must have two or more members.
Such a company may register under the Companies Act as:
(a). An unlimited company.
(b). A company limited by shares.
(c). A company limited by guarantee,
It must follow the prescribed procedure for registration.
Such registration will remain valid even if its purpose is to ultimately wind up the company.
However, the following exceptions/conditions apply:
(i).
Some entities are not allowed to register again under this provision.
This includes entities already registered under:
The Indian Companies Act, 1882.
The Indian Companies Act, 1913.
The Companies Act, 1956.
Since they are already companies under earlier company laws, they cannot register a second time.
This rule prevents duplicate registration of the same entity.
(ii).
Some entities already have limited liability for their members under another Act of Parliament (not the Companies Act) or under any other existing law.
Such entities cannot register as an unlimited company because that would increase members’ liability.
They also cannot register as a company limited by guarantee, since that form may impose additional guarantee obligations.
In short, an entity cannot convert into a structure that increases the liability of its members beyond what the earlier law already allowed.
(iii).
A company can register as a company limited by shares only if certain conditions are met.
It must have permanent paid-up or nominal share capital of a fixed amount.
This capital must be divided into shares of fixed value, or be held and transferable as stock, or be a mix of both.
The members of the company must be only those who hold such shares or stock.
(iv).
The entity must call a general meeting specifically for the purpose of approving registration under this Part.
A majority of members present at the meeting must approve the decision.
Members may be present in person or represented by proxy, if proxies are permitted.
The idea is to make sure that the conversion has proper consent from the members.
(v).
If an entity whose members currently have unlimited liability wants to register as a limited company, a stricter approval requirement applies.
At least three-fourths of the members present at the general meeting must agree to the conversion.
Members may be present in person or through proxy (if proxies are allowed).
This higher threshold is required because the conversion will limit the members’ liability, which is a major change and needs stronger consent.
(vi)
If a company wants to register as a company limited by guarantee, member approval must include an additional resolution.
This resolution must state that each member agrees to contribute to the company’s assets if the company is wound up:
While the person is still a member.
Within one year after the person stops being a member.
The contribution is for:
Paying the company’s debts and liabilities,
Covering the costs and expenses of winding up, and
Settling the adjustment of contributions among contributories.
Each member must agree to contribute up to a specific maximum amount, which is the guarantee.
(vii).
A company with fewer than seven members must register as a private company.
This applies post-Companies Act, 2013 amendment (originally threshold was seven).
366(3).
If a poll is demanded when members vote on registering the entity as a company, the majority is calculated based on voting power.
Each member’s voting power must be measured according to the entity’s existing rules (such as shareholding or partnership agreement).
The vote reflects the real decision-making rights already in place before registration.
367. Certificate of registration of existing companies
After the entity meets all the requirements of this Chapter and pays the necessary fees under Section 403, the Registrar issues a certificate of incorporation.
This certificate is signed by the Registrar and states that:
The entity is now incorporated as a company under the Companies Act &
If applicable, the entity is a limited company.
From the moment this certificate is issued, the entity officially becomes a company under the Companies Act.
368. Vesting of property on registration
Once the entity registers as a company under this Part, all its movable and immovable property automatically transfers to the new company.
This includes actionable claims (rights to sue for money or property).
The transfer happens by law, without needing any separate deed, assignment, or documentation.
The new company receives the entire estate and interest that the earlier entity held before registration.
369. Saving of existing liabilities
After an entity registers as a company under this Part, its earlier rights and liabilities remain unchanged.
All debts, obligations, and contractual rights and liabilities from before registration continue to exist.
These can be enforced just as they could have been before the entity became a company.
The change in legal form does not erase or alter any pre-registration responsibilities or entitlements.
370. Continuation of pending legal proceedings
If any legal proceedings were started before the entity became a company, they do not end or get cancelled due to registration.
These cases can continue normally, exactly as if the registration never took place.
This ensures that all rights and obligations connected to those legal proceedings are preserved.
It also protects everyone involved by keeping the legal process uninterrupted, even though the entity has changed its legal form.
These cases can continue in the same court and in the same manner as before.
Registration as a company does not interrupt, discontinue, or require restart of any ongoing legal proceedings.
Ongoing legal proceedings can continue after registration, but no decree or order can be enforced against the personal property or person of any individual member.
This protects members from personal liability for cases that began before registration.
If the company’s own assets are not enough to satisfy a court decree or order, the creditor may apply for the company to be wound up.
Such winding up would take place under the Companies Act or the Insolvency and Bankruptcy Code, 2016, as applicable.
371. Effect of registration under this Part
371(1)
When a company is registered under this Part then 371(2)- 371(7) become applicable to it.
371(2)
The company may have earlier been governed by:
An Act of Parliament.
Some other law.
An instrument like a partnership deed or LLP agreement.
After registration under this Part, those earlier provisions are treated differently:
The parts of those provisions that should appear in a memorandum (if the company had originally been formed under the Companies Act) are considered to be automatically included in the company’s memorandum.
The rest of the provisions are considered to be automatically included in the company’s articles of association.
For a company limited by guarantee, the amount that each member agrees to contribute (the guarantee amount) as stated in the resolution passed during registration is treated as a memorandum clause.
This means the members’ guarantee becomes a formal condition of the company’s memorandum, just like in any company originally formed under the Companies Act.
In this way, the earlier governing documents are absorbed into the company’s constitutional documents (the memorandum and articles) after registration under the Act.
371(3).
Once the entity is registered as a company, all provisions of the Companies Act apply to:
Its members.
Its contributories.
Its creditors.
The company is treated as if it had been incorporated under the Act from the beginning.
However, this is subject to certain exceptions, which apply despite the general rule.
(a).
Table F in Schedule I (model articles of association) applies only if specially adopted by the company through a special resolution.
(b).
Rules on numbering of shares under the Act do not apply if the company’s shares are not numbered.
The Companies Act expects shares to have unique numbers only when the company chooses to issue numbered shares.
If the company has not assigned any distinctive numbers, then the legal requirement does not apply to those shares.
Shares held in demat form are already tracked electronically, so they do not need physical or distinctive numbers.
The numbering rule is designed mainly for physical share certificates.
In a demat system, identification happens through the depository, not through the company’s numbering.
A company cannot be penalised for not following numbering rules if it has never issued numbered shares.
Only when a company issues physical share certificates with numbers do the Section 45 rules become mandatory.
The law recognises that not all companies maintain a numbering system, so the rule applies only where such a system exists.
(c).
If the company is wound up, people who had liabilities before registration continue to remain responsible.
This includes anyone who was liable to pay or contribute toward debts or liabilities that arose before registration.
It also includes those responsible for contributing to the adjustment of rights among members for such earlier debts or liabilities.
It further includes liability for winding-up costs connected to those earlier debts or liabilities.
Such persons will still be treated as contributories during winding up.
Thus, pre-registration liability remains enforceable.
(d).
If the company is wound up, every contributory must pay their share towards the company’s assets for liabilities that arose before registration.
If a contributory dies, their legal representatives become responsible to the extent of the estate they inherit.
If a contributory becomes insolvent, the liability falls on their assignee or receiver as per the applicable provisions of the Act.
371(4).
Regardless of what earlier laws or documents say, certain Companies Act provisions will apply to companies registered under this Part.
(a).
The Companies Act has rules that allow an unlimited company to register as a limited company will apply.
If an unlimited company wants to convert into a limited company, the Companies Act provides specific rules and procedures for doing so.
These rules require steps like passing a special resolution, and changing the company’s memorandum and articles.
The company must also file the required forms with the Registrar of Companies and comply with all other statutory requirements.
(b).
After an unlimited company becomes limited, it will have the power to:
Increase its nominal share capital, and
Decide that a part of its share capital will be callable only during winding up.
(c).
A limited company also has the power to declare that a portion of its share capital cannot be called up except in winding up.
A limited company can reserve a part of its share capital so that it cannot be demanded from shareholders during normal business operations.
This reserved portion can be called up only if the company is being wound up (i.e., during liquidation).
This protects shareholders from being required to pay extra money unless the company is closing down.
371(5).
Some provisions from the entity’s earlier constitution are treated as part of the memorandum after registration.
If those provisions are of the type that cannot be altered under the Companies Act, then they also cannot be changed after registration.
So the company cannot modify essential memorandum-level provisions just because it has now registered under the Act.
371(6).
A company may already have certain powers under its earlier constitution or governing documents to change its structure or internal regulations.
The Companies Act does not take away or limit those existing powers.
The only exception is Section 242, which allows the Tribunal to alter a company’s constitution in cases of oppression and mismanagement.
Apart from that, the company can continue to modify its constitution just as it could before registration, unless the Act specifically restricts it.
371(7).
For the purposes of this section, the word “instrument” covers several types of founding or governing documents.
It includes a deed of settlement, a partnership deed, and an LLP agreement.
This means these documents are treated as part of what gets absorbed into the company’s memorandum and articles after registration.
372. Power of Court to stay or restrain proceedings
Under the Companies Act or the Insolvency and Bankruptcy Code (IBC), courts/Tribunals can stay or stop legal proceedings against a company:
After a winding-up petition is filed.
Before a winding-up order is passed.
For companies registered under this Part, the same protection is extended to contributories (people liable to contribute to the company’s assets).
This applies when a creditor files the application.
Therefore, the court/Tribunal may restrain or stay legal proceedings not only against the company, but also against its contributories, if a creditor requests it.
373. Suits stayed on winding up order
Once a company registered under this Part is:
Given a winding-up order.
Has a provisional liquidator appointed then certain restrictions apply.
No new suit or legal proceeding can be started against the company or any contributory (person liable to contribute assets).
Any ongoing legal proceedings also cannot continue.
This restriction applies to debts of the company.
Legal action can proceed only if permission (leave) is obtained from the Tribunal first.
The Tribunal may grant such permission subject to conditions it considers appropriate.
374. Obligations of companies registering under this Part
Any entity seeking registration as a company under this Part must comply with the following requirements:
(a).
Before an entity is registered as a company under the Act, it must get approval from all secured creditors (those who hold security over its assets).
Secured creditors must either:
Give their consent, or provide a no-objection certificate (NOC).
The idea is to make sure the rights and interests of secured creditors are protected during the transition.
(b).
The entity must publish an advertisement in two newspapers:
One English-language newspaper
One vernacular (local language) newspaper.
The advertisement must be in the prescribed format and inform the public of the entity’s intention to register under this Part.
It must also invite objections from the public.
Any objections received must be properly addressed by the entity.
(c).
The entity must submit a notarised affidavit signed by all members or partners.
The affidavit must confirm that, after registration under this Part:
All required documents will be filed with the previous registering authority (such as Registrar of Firms, LLPs, Societies, etc.).
These filings will ensure the dissolution of the earlier entity form (like a partnership firm, LLP, cooperative society, society, or any other applicable structure).
(d).
The entity must also follow any additional conditions that may be specified in the applicable rules.
This allows regulators to add extra compliance requirements when needed for proper registration and governance.
When an LLP registers as a company under this Part, it does not need to separately dissolve under the LLP Act.
The LLP is considered automatically dissolved under the Limited Liability Partnership Act, 2008.
No additional steps, filings, or formal acts are required to complete its dissolution.
