BISHOP STUART UNIVERSITY

FACULTY OF LAW

NAME;
REG NO;
YEAR;
SEM;
COURSE UNIT;
LECTURER;
A company is formed by registering it with the Registrar of Companies and obtaining a
certificate of incorporation. The registration process goes through the following steps;
Reservation of the company name.
The registrar will reserve a name that is not an exact duplicate of an existing name, with no
attention given to confusingly similar names that may infringe existing trademarks under section
34 of the Companies Act cap 1061. The registrar by searching his register ascertains whether
the name is available or not.
The promoters must choose a name of their choice and then make an application to the registrar
of companies to reserve the name for their company. The name should not be identical with that
of an existing company or so nearly resemble it as to be calculated to deceive, it should not also
Contain the words “chamber of commerce” except where the nature of the company’s business
so justifies it and lastly it should not suggest patronage (a connection) from government or be
associated, with immorality, crime or scandalous in nature. If the registrar is satisfied, that the
name meets the above requirements, he will approve and reserve the name, the company must
then register within 60 days.
Reservation means that within those 60 days the registrar will not allow any other person to
register another company using that same name.
To guard against the possibility of a negative reply from the Registrar, promoters must have in
mind one or more suitable alternatives. Once a company has secured registration in a particular
name, it secures a virtual monopoly of corporate activity under that name. In case the Registrar
inadvertently approves a name, which by law is not adequate, then the new company may change
its name within 6 months. A company may change its name by special resolution and with the
written approval of the Registrar. Where the registrar refuses to register a name without a good
reason, an application for an order of mandamus to compel the registrar to perform his duty and
register the company can be filed in the High Court.
Presentation of the required documents before the registrar for registration.
From the provisions of section 112, the application for registration must contain
a copy of the proposed articles of association. These articles are a key element of the company’s
constitution and set out the rules governing the internal running of the company. Section 15(a)3

1
Cap 106.
2
Cap 106.
3
Ibid.
states that the articles shall be in the English language. These articles cannot be registered for
the fact that they are not in the language required by the act. If he so wishes to use these rules,
they must be translated in the official language required for his company to be considered for
registration.
Within 60 days after the reservation of the name, the promoters will then present the following
documents to the registrar to have their company registered.
 Memorandum of Association.
 Articles of Association.
 A statement of nominal capital.
 A statutory declaration of compliance.
 A statement with the names and particulars of directors and secretary
 The prospectus if a public company.
The Memorandum of Association of the company
The memorandum of association is the most important of all the company documents because it
contains the powers of the company, it describes the company and the nature of activities that the
company is authorized to do or engage.
Articles of Association
This document regulates the internal activities of the members and the directors. It contains
information on management, who will be the directors of the company, who will be the
managing director, secretary, appointment of the board of directors, qualifications of directors,
the chairman of the board, meetings (how meetings of the company should be called and
conducted), the classes and rights of shareholders, transfer of shares, borrowing powers of the
company, properties, control of the company finance, dividends/profits and how they should be
distributed, auditing of books, the company seal and how it should be used .
Registering with the Relevant Authorities.
From the provisions of section 114, the application for registration must contain
a copy of the proposed articles of association. These articles are a key element of the company’s
constitution and set out the rules governing the internal running of the company. Section 15(a)5
states that the articles shall be in the English language. These articles cannot be registered for
the fact that they are not in the language required by the act. If he so wishes to use these rules,
4
Cap 106.
5
Ibid.
they must be translated in the official language required for his company to be considered for
registration.
There must be a declaration of compliance. This is a statement declaring that all the necessary
requirements of the Companies Act with regard to the formation of the company have been duly
complied with and that the directors agree to continue complying with them. In order to
minimize the amount of checking which needs to be done by the registrar of companies, a
statement of compliance (i.e. a statement that the requirements as to registration have been
complied with) signed by every subscriber to the memorandum must be delivered to the registrar
of companies with the registration application6. It is an offence to make a false statement of
compliance.
The registrar will assess how much duty is to be paid on registration of the company; it will be
assessed basing on the capital.
Payment of stamp duty and registration fees
The registrar will then assess how much duty is to be paid on registration of that company. It is
assessed basing on the capital that the company is starting with, the more the capital the greater
the stamp duty. Registration fees are also paid. S.22 and Regulation 6 of the Companies
General Regulations.
Obtaining a Certificate of Incorporation
Once all the required documents are submitted together with the registration fees and assuming
there has been proper compliance with the formalities and no problem about the company name,
the registrar would issue a certificate of incorporation of the company which is a conclusive
evidence that there has been compliance with the requirements of the Companies Act cap 106 in
respect of registration under section 3(3).7
Once incorporated, the company is a separate legal entity from the shareholders which means
that it is the company which conducts business, owns property, hires employees, incurs debts,
makes profit, to mention but a few. 8 The members of the company enjoy limited liability and are
6
‘(2) A Statutory Declaration by an Advocate Engaged in the Formation of the Company or by a Person Named in
the Articles as a Director or Secretary of the Company, of Compliance with All or Any of the Requirements Referred
to in Subsection (1) Shall Be Produced to the Registrar and the Registrar May Accept the Declaration as Sufficient
Evidence of Compliance.’, , Companies Act cap 106.
7
‘Conclusiveness of Certificate of Incorporation. (1) A Certificate of Incorporation given by the Registrar in Respect
of Any Association Shall Be Conclusive Evidence That All the Requirements of This Act in Respect of Registration
and of Maters Precedent and Incidental to Registration Have Been Complied with and That the Association Is a
Company Authorized to Be Registered and Duly Registered under This Act.’
8
Brenda Hannigan, Company Law (Oxford University Press 2018) 83.
not required to participate in the management of the company which is a matter for the directors.
In the case of JUBILEE COTTON MILLS LTD Vs LEWIS (1924) AC.958; the
certificate was dated 6th January 1920 but it was not signed and issued until 8th January. On the
6th of January, the directors allotted shares and debentures. The allottee later refused to pay the
amount due on the shares arguing that the company did not exist on the date of issue. It was held
that the company was deemed to have come into existence on the 6th of January 1920.
Therefore, the allotment was valid and the allottee must pay for the securities allotted to him.
Principally the effect of registration is that from the date mentioned in the certificate of
incorporation, the subscribers to the memorandum, together with such other persons that from
time to time become members of the company become a body corporate by the name contained
in the memorandum, capable of exercising all the functions of an incorporated company, with
power to hold land and having perpetual succession and a common seal, but with such liability
on the part of members to contribute to the assets of the company in the event of it being wound
up.
In summary, the procedure for establishing a private liability company is a complex
endeavor that necessitates meticulous planning and implementation. By adhering to these steps
with diligence, entrepreneurs can create a strong legal structure for their business, ensuring
compliance with relevant regulations and setting the stage for future expansion. Each phase of
this process is vital, as it not only legitimizes the business operations but also safeguards the
personal assets of the owners from any liabilities that the company may incur. This protective
measure is crucial for entrepreneurs looking to mitigate risks while pursuing their business
objectives.
REFERENCES
1. The Companies act cap 106
2. Salomon v Salomon & Co Ltd | [1897] AC 22
3. Business Associations, Cases and Materials on Agency, Partnerships, and Corporations (University
Casebook Series). 8th Edition.

4. Jubilee cotton mills ltd vs lewis (1924) ac.958.