Section 9: Companies Act- Incorporating companies and compliances in India
Updated: Feb 25
Section 9 of the Companies Act, 2013 deals with the effect of registration. It provides that once a company is registered under the Act, it becomes a separate legal entity with perpetual succession and a common seal. The company can hold property, enter into contracts, sue and be sued in its own name, and do all other things that a natural person can do.
Relevant case laws and rules related to Section 9 of the Companies Act, 2013 are as follows:
Salomon v Salomon & Co Ltd (1897): This landmark case is often cited as the leading authority on the separate legal personality of a company. In this case, the House of Lords held that a company is a separate legal entity from its members, and that the debts and obligations of the company are not the debts and obligations of its shareholders.
Companies (Appointment and Qualification of Directors) Rules, 2014: These rules prescribe the qualifications, disqualifications, and appointment procedures for directors of companies, including Section 9 companies.
Companies (Meetings of Board and its Powers) Rules, 2014: These rules govern the conduct of meetings of the board of directors of companies, including Section 9 companies, and specify the powers and duties of the board.
Companies (Incorporation) Rules, 2014: These rules prescribe the procedures for incorporation of companies, including Section 9 companies, and specify the documents and information required to be filed with the Registrar of Companies.
Section 128 of the Companies Act, 2013: This section requires companies to maintain proper books of account and financial statements, and to have them audited by a chartered accountant.
Overall, Section 9 of the Companies Act, 2013 recognizes the separate legal personality of a company and provides the legal framework for its existence and operation as a distinct legal entity. It is an important provision that forms the basis of company law in India.
In addition to the above, Section 9 of the Companies Act, 2013 also has implications for the liability of the company and its members. As a separate legal entity, the company can enter into contracts and incur liabilities in its own name, and its members are generally not personally liable for the company's debts and obligations.
However, there are certain circumstances where the separate legal personality of the company may be disregarded, and the members may be held personally liable for the company's debts. For example, where the company is used for fraudulent purposes or where the members have acted in a way that is contrary to the interests of the company, the court may lift the corporate veil and hold the members personally liable for the company's debts.
Overall, Section 9 of the Companies Act, 2013 is a foundational provision that defines the legal status of a company and sets out the basic framework for its operation. It recognizes the separate legal personality of the company and provides the legal basis for its existence and operation as a distinct legal entity.
By Siddharth Dalmia
The StartUp Sherpa
+91-9971799250
dalmiasiddharth1994@gmail.com
