|
||||
|
Registering a company By Nilooka
Dissanayake A limited liability company needs to be registered under the Companies Act 17 of 1982. There are companies limited by guarantee such as the Colombo Stock Exchange and there are the peoples companies. We will not discuss these here because as a regular business person, you are more interested in the companies that limit your liability to the face value of the shares you take up in that company. Limited liability
companies can be of two types, namely, private and public. Forming
both types is quite similar. The differences are in the number of
shareholders and the companies' ability to offer shares to the public.
A private company requires a minimum of two shareholders while a
public one needs a minimum of seven. The majority
of the companies you know are private limited liability companies.
That is why their names always refer to them as "(Private)
Limited." There are rules and regulations about naming a company
and limitations on the words and terms you can use. There are also
very old private companies that do not have the "Private"
in their name. As you can see this naming business is rather confusing.
This is why
the Companies Act has special sections setting out the procedure
for naming a business. And this is why the whole registration process
begins with getting an approval for the name you wish to register. So, how do
you incorporate a company? The procedure is rather complicated,
and that perhaps is a bit of an understatement. Still, the Registrar
of Companies has made your life easy by putting some of the details
and forms online. Firstly, you
need to decide upon a name for your company. You must first verify
that no one has used the name before. You can do this online, but
you still need to file the Name search form (A16) like everyone
else at the Companies’ House situated at D.R. Wijewardena Mawatha. In a matter
of a few days, the Registrar will inform you of acceptance of the
name. That was just
a layman's introduction. If you are
serious about business, you need to consult a lawyer or a company
secretary or other professional who will help you draft the Memorandum
and Articles of Association. If you are really a stickler for detail,
try reading the Companies Act. It is not as bad as you would imagine
and, to my knowledge no one has died reading it. Once these
are ready - in the correct number of copies, in the proper paper
size and bound as they should be -you must file them at the Registrar's
office so that the Registrar will examine the content and approve
the documents. Once the name
and the Memorandum & Articles of Association are approved, you
need to submit forms 5, 36A, 46 and 47 and two copies of the approved
Memorandum & Articles of Association. A fee of Rs 135 will be
charged for each form on submission. Form 5 is the
Declaration Of Compliance with the Companies Act. Form 36a specifies
the Intended Location Of Registered Office. Form 46 is called Consent
To Act As a Director - This is necessary so that no one can register
a company with you as a Director without getting your approval first.
Form 47 sets out a List Of People Who Have Consented To Be Directors. The incorporation
fee, charges for stamps and the fee for the Articles of Association
should be paid at this point. The incorporation fee is based on
the authorised share capital of the company. If you complete
the forms properly, and do not give headaches to people at the Companies
House, you can get the incorporation process completed in less than
a week. If you want
super speed, it is best to check the name availability on line and
file the draft of the Memorandum and Articles together with Form
A16. Once the Registrar
is satisfied with your documents, he will issue the Certificate
of Incorporation. This should
be displayed at your place of business. I have tried
to keep this as simple as possible. Then again,
if you are going into business, you will have to get used to living
a complicated life. So, I suggest that you check out the Companies
Act or visit the official website of the Department of Registrar
of Companies of Sri Lanka at http://www.drc.gov.lk Soon the Companies
Act too will be online and your life will be made easier. Don't forget
to read the part about Directors Duties but make sure it does not
freak you out. If the all
Directors of companies knew their duties, (and fulfilled them),
life certainly will be more livable for a whole lot of us and pretty
miserable for the Directors themselves. If you have
specific questions, we look forward to hearing from you. You can
reach us on ft@sundaytimes.wnl.lk or call on 074-304112. The writer is the Managing Editor of Athwela Vyaparika Sangarawa (Athwela Business Journal), the only Sinhala management monthly targeting the small and medium sized business operators and its English version, Small Business International magazine. |
||||
Copyright © 2001 Wijeya Newspapers
Ltd. All rights reserved. |
