According to Sec. 35, certificate of incorporation is conclusive evidence with regard to the proper and regular registration and formation of a company. It cannot be challenged even if irregularities prior to registration are subsequently discovered.
It is considered as conclusive even if it was legally impossible that the company could have been properly registered, e.g., signatures of all the members were forged or where instead of seven only six members had really signed or the persons signing were incompetent to enter into contracts etc.
The date appearing on the certificate of incorporation is conclusive even if it is wrong. The validity of the certificate of incorporation cannot be disputed on any grounds whatsoever. However, grant of the certificate of incorporation to the company will not make the objects of the company legal if they are otherwise illegal.
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Peel’s Case (1867):
ADVERTISEMENTS:
The memorandum of association of a company, after signature of the subscribers, was materially altered without their consent. However, the Registrar issued the certificate of incorporation.
The subscribers’ objection was that they never signed the memorandum with which the company was registered since the original memorandum was altered in a way so as to neutralize and annihilate the original execution and signature of the document.
But the learned judge observed, “when once the certificate of incorporation is given, nothing is to be inquired into as to regularity of the prior proceedings.” It was, therefore, held that company was properly incorporated.
Moosa Goolam Arif v. Ebrahim Goolam Ariff (1913):
ADVERTISEMENTS:
Out of the seven subscribers to the memorandum of association of a company five were minors. The guardians of the minors made separate signatures for each minor on the memorandum of association.
The Registrar, however, issued the certificate of incorporation. The validity of certificate of incorporation was challenged. It was held that though the Registrar should not have issued the certificate but the certificate was conclusive for all purposes.
Jubilee Cotton Mills Ltd. v Lewis (1924):
On 6th January, 1920 the necessary documents were delivered to the Registrar for registration. Two days later he issued the certificate of incorporation but dated it 6th January instead of 8th.
On 6th January, company allotted shares to Lewis. It was contended to be void since the company was not in existence on that date. It was held that the certificate of incorporation is conclusive evidence of all that it contains. Therefore, in law the company was formed on 6th January and allotment of shares was valid.
ADVERTISEMENTS:
In brief, the certificate of incorporation is conclusive with regard to the following matters:
(a) That the association has been duly registered under the Act.
(b) That it was properly authorized to be registered as a company under the Act.
(c) That the date borne by the certificate of incorporation is the date of the birth of the company. The company shall be deemed to have come into existence on that very date.
(d) That all the requirements of the Act in respect of the registration and of matters precedent and incidental thereto have been complied with.
Thus, in case certificate of incorporation is improperly procured, the legal personality of the company cannot be extinguished by cancellation of the certificate of incorporation.