incidental to the application [Sec. 113 (3)]. The delivery of certificate

incidental to the application [Sec. 113 (3)]. The delivery of certificate should be in the mode prescribed uls 53 either personally or by post.

Stickers on Share Certificates. A share certificate has to be issued by the company whether shares arc fully paid up or partly paid up. Where shares are

partly paid up and the shareholder pay, the call money, necessary endorsement should be made on the share certificate. Previously, companies were

asking the shareholders to return the share certificate for making necessary endorsement. The present practice is that, after call money is received by the

company, it sends a sticker which the shareholder has to stick on a pre-determined place on the share certificates. This is convenient as it avoids costs of

sending the share certificate for endorsement and its return.

Share certificate is a prima-facie evidence of title of a member. Legal Effects of Issue of Share Certificate. The legal effects of the

issue of a share certificate are mainly two:

1. Estol)pel as to Title. A share certificate under the seal of a company is prima facie evidence of title, i.e., it estoppes the company from denying the title

of the person, to the shares, wbose name is mentioned therein, provided he acquires the share in good faith (i.e. without notice of forgery), for value and

under a genuine tnmsfer. Thus. a share certificate is a declaration by the company to the whole world .that the person in whose name the certificate is

made out. and to whom it is given, is a shareholder in the company. Dixon Vs. Kennaway & Co.. (1900) I Ch. 833. L was the secretary of a company and

also a stock broker. D applied for 300 shares in the company, and paid for them. L’s clerk. who owned no shares. executed transfer in fhvour of D. The

company. without requiring the production of a share certificilte from the clerk. registered the tmnsfer and gave D a new certificate. Hec. the company

was estopped from denying the validity of D’s certificate. and was liable for damages to D.

Remedies Against the Directors, Promoters and Exigent

It is important to say that these remedies are available to a misled investor whether he rescinds his contract or not. In other word,’, resection of the contract is not necessary for availing these remedies. These remedies are resorted to when the misled subscriber docs not want to rescind the contract or cannot rescind the contract because the company goes into liquidation.

A misled investor may also make all or any of the following persons [Section 62(1)] liable to pay compensation Orland penalty for miss-statements in the

prospectus:

(a) The directors of the company at the time of issue of the prospectus. (b) Every person who has authorized himself to be named and is named in the prospectus as present or future director.

© Every promoter.

(d) Every other person who has authorized the issue of prospectus. Experts like an engineer, a valuer, an auditor, legal advisory, etc., are

not included under clause (d) above except in respect of their own untrue statements.

The word "ultra' means 'beyond' and the word 'vires' means

'ultra vires' a company means 'beyond the powers of a company'. The momentum of a company defines its powers. Any activity of a
company beyond its Memorandum is, therefore, ultra vires the company. Any act ultra vires the company is void and consequently, it does not bind the
company.The objects clause of the Memorandum of Association of a Company reveals the purposes for which a company has been' incorporated. The

company can, therefore, undertake such activities which are essential for such attainment. Everything else is beyond the powers of the company or is

ultra vires. Any person dealing with the company must ensure beforehand that the contractual relationship he contemplates with the company is within its

powers (i.e. intra vires) otherwise later on the courts will not enforce the rights and obligations arising out of such relationship.
The doctrine of ultra vires was first applied in the case of Ashbury Railway Carrige Co. v Riche. In this leading case, a company has been
formed with the object of carrying on business as mechanical engineers and general contractors. The directors entered into an agreement for financing

the construction of a railway line in Belgium, which was ultra vies the company. The company repudiated the contract itself later on. Riche sued the

company for breach of contract and claimed damages. Held, the contract being ultra vires, was null and void. It was not binding on the company and the

question of awarding damages did not arise.

Companies Act and has obtained a Certificate of Incorporation

A Company is said to have been fondled when it has been registered under the Companies Act and has obtained a Certificate of Incorporation
from the Registrar of Companies. But prior to incorporation, the promoters" have to undertake several steps preparatory to incorporation.
Thus the first two stages in the formation of a company are: 1. Promotion Stage. and 2. Incorporation Stage. A private company and a public company
having no share capital can commence business as soon as it is registered (incorporation). But 1 public company cannot commence business unless it
has obtained a certificate of commencement of business from the Registrar of Companies. Therefore, a public company has to pass two more stages
before it can commence business: 3. Subscription Stage, and 4. Commencement Stage. Thus. a public company having share capital has to pass
through all the four stages e.g. (i) promotion. (ii) incorporating, (iii) capital subscription, and (iv) commencement of business.
We shall discuss all these four stages one by one.
FORMATION OF A PUBLIC COMPANY
briefly the different steps involved in the formation of a Public Company.
The process of formation of a company can be divided into the following stages:
1. Promotion
2. Incorporation"
3. Capital subscription, and
4. Commencement of business. v
Of these, the first two are connected with the formation of private
company and of a public company not having any share capital. They can commence business immediately on incorporation. But a public company
having a share capital has to pass through all the four stages before it can commence business or exercise borrowing powers.