A private or public limited company must be registered under the country’s Company Act. In the registration process, the proposed company must comply with different sections of the act.
Now we would acquaint ourselves with the registration process.
Process of the Registration of the Firm
Registration of a firm is not compulsory by law.
But generally, the firm seeks registration to avoid certain disabilities. The following necessary information has to be provided on the prescribed form to the registrar for the registration of the firm.
- Name of the firm under which the business is to be carried on.
- Principal place of business of the firm.
- Name of sub-office (if any) where the firm may conduct business.
- Nature of business.
- The duration of the firm.
- The name of partners, their permanent addresses, and other particulars.
- The date of joining of each partner in the firm.
In addition to all these following steps must be ensured:
- Signature and verification of prescribed form: The statement of the prescribed form shall be signed by all the partners and duly verified.
- Prescribed fee and Submission of form: Necessary prescribed fee will be paid, and form will be submitted to the local registrar’s office along with copies of challan.
- The entry of Registration: When the registrar of a firm is satisfied that the requirements of registration have been duly complied with, he shall ask the concerned person to record the statement in a register is called the register of the firm.
- Changes in the form: It is also advisable that every change in the number of members, their addresses, or place of business should be duly notified on a prescribed form to the registrar.
Advantages and Importance of Registration
The advantages of registration may be grouped into.
- Legal advantages.
- General advantages.
Legal Advantages of the Registration of the Firm
Settlement of Claims
A registered firm can file suit against third parties. So the rights of registered firms are safeguarded by law. But an unregistered firm or its partner cannot enforce its claim against the third parties or its co-partner.
Protection of Rights
The rights and privileges of new partners are also protected in registered firms.
But if an incoming partner fails to register himself, he will incur great risk, because he will not be in a position to file suit for his dues against his firms or his co-partners.
Protection of Property
The property of the retired or deceased partner continues to be liable for the acts firm does after his death or retirement until public notice is served for the change to a registrar, so there is a strong inducement for partners of registered firms to have the changes noted in the register.
But there is an unregistered firm, the private property of the out-going partner will be considered liable to charge the debts despite retirement.
Protection to creditors
The registered firm has to maintain the correct, complete, and up to date record of its partners who will be liable for the obligations of the firm.
The statement recorded in the register regarding the constitution of the firm would afford a strong safeguard against an untrue refusal of partnership and the evasion of liability to persons who want to deal with the firm.
General Advantages of Registration of Firm
The government provided many facilities and privileges to registered firms. It gives protection to business and production, which makes it more profitable.
People have more confidence in the registered firm than in the unregistered firm because they think that these firms are working under the supervision of the government, and there are no chances of fraud or misrepresentation on behalf of registered firms.
Thus they make business contracts with them without any fear.
Bank and other financial institutions provide credit to registered firms without any hesitation. As these firms abide by the government rules and regulations, so they have full trust in them.
The registered firm has full legal protection as compared to unregistered firms.
As they work strictly by government rules and regulations, so they have no fear from the government to turn their work Illegal. Thus these firms work with liberty without any fear,
Registration adds to reputation. Other firms cannot copy their products. Such firms use their trademarks, which are registered, and no other firm registered or not registered can use this trademark.
These firms advertise only their trademark but not products. When people find a product up to their standard, they note its trademark. This makes the firm’s business more profitable.
Consequences or Effect of Non-Registration
The non-registration creates the following disabilities.
Disability of Firm
An unregistered firm cannot file suit for the recovery of the dues or the other matters against third parties.
Disability of Partner
The partner of a non-registered firm cannot bring a suit for the enforcement of a right against a third party or his co-partner unless the firm is registered.
Ability Against Firm and Partner
The third-party has full right to file a suit of their dues against the unregistered firm and the partners.