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The Formation of A Company

The document outlines the four stages of forming a company: promotion, incorporation, capital subscription, and commencement of business. In the promotion stage, promoters conceive an business opportunity and undertake steps to formally establish the company by preparing necessary documents and obtaining approval. They then apply for incorporation with the registrar of companies. After incorporation, the company raises capital through public offering or private placement. Finally, it applies for a certificate of commencement of business from the registrar to officially start operations.

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Naman Sachdeva
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0% found this document useful (0 votes)
54 views6 pages

The Formation of A Company

The document outlines the four stages of forming a company: promotion, incorporation, capital subscription, and commencement of business. In the promotion stage, promoters conceive an business opportunity and undertake steps to formally establish the company by preparing necessary documents and obtaining approval. They then apply for incorporation with the registrar of companies. After incorporation, the company raises capital through public offering or private placement. Finally, it applies for a certificate of commencement of business from the registrar to officially start operations.

Uploaded by

Naman Sachdeva
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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THE FORMATION OF A COMPANY

TO FULLY UNDERSTAND THE PROCESS OF THE FORMATION


OF A COMPANY, ONE CAN DIVIDE THE FORMALITIES INTO
FOUR DISTINCT STAGES WHICH ARE EXPLAINED IN DETAIL
IN THE FURTHER SLIDES.
THE FIRST STAGE: PROMOTION
IT INVOLVES CONCEIVING A BUSINESS OPPURTUNITY AND
TAKING AN INITIATIVE TO FORM A COMPANY SO THAT A
PRACTICAL SHAPE CAN BE GIVEN TO EXPLOITING THE
AVAILABLE BUSINESS OPPURTUNITY.
A PROMOTER IS SAID TO BE THE ONE WHO UNDERTAKES
TO FORM A COMPANY WITH REFERENCE TO A GIVEN
PROJECT AND TO SET IT GOING AND WHO TAKES THE
NECESSARY STEPS TO ACCOMPLISH THAT PURPOSE.

AFTER THOUROUGHLY EXAMINING THE FEASIBILITY, THE
PROMOTERS ASSEMBLE THE RESOURCES, PREPARE THE
NECESSARY DOCUMENTS, GIVE A NAME AND COMPLETE
ALL THE LEGAL FORMALITIES AND FINALLY OBTAIN A
NECESSARY COMPANY CERTIFICATE ENABLING THE
COMPANY TO COMMENCE BUSINESS.
STEPS IN PROMOTION
APPROVAL OF THE COMPANYS NAME IS TAKEN FROM THE
REGISTRAR OF THE COMPANIES.
SIGNATORIES TO THE MEMORANDUM OF ASSOSIATION
ARE FIXED.
CERTAIN PROFESSIONALS ARE APPROPRIATED TO ASSIST
THE PROMOTERS.
DOCUMENTS NECESSARY FOR THE REGISTERATION OF
THE COMPANY ARE PREPARED.
THE NECESSARY DOCUMENTS ARE:
1. THE MEMORANDUM OF ASSOSIATION
2. ARTICLES OF ASSOCIATION
3. CONSENT OF PROPOSED DIRECTORS
4. AGREEMENT, IF ANY, WITH PROPOSED MANAGING OR
WHOLE TIME DIRECTOR
5. STATUTORY DECLARATION.

INCORPORATION
THE PROMOTERS GIVE AN APPLICATION ALONG
WITH THE NECESSARY DOCUMENTS TO THE
REGISTAR OF COMPANIES AND REGISTERATION
FEES. THE REGISTRAR, AFTER DUE SCRUNITY,
ISSUES CERTIFICATE OF INCORPORATION.
THE REGISTERATION MAY BE REFUSED IF THERE IS
ANY DEFECT IN THE DOCUMENTS.
THE CERTIFICATE OF INCORPORATION IS A LEGAL
EVIDENCE OF THE EXISTENCE OF THE COMPANY IN
THE EYES OF LAW.
EVEN IF THERE HAS BEEN A MAJOR DEFECT IN THE
INCORPORATION,THE LEGAL EXISTENCE IS NOT
AFFECTED.

CAPITAL SUBSCRIPTION
A PUBLIC COMPANY RAISING FUNDS FROM THE PUBLIC NEEDS
TO TAKE THE FOLLOWING STEPS FOR RAISING FUNDS:
i. SEBI APPROVAL
ii. FILE A COPY OF PROSPECTUS WITH THE REGISTRAR OF
COMPANIES.
iii. APPOINTMENT OF BROKERS, BANKERS AND UNDERWRITERS,
ETC.
iv. ENSURE THAT MINIMUM SUBSCRIPTION IS RECEIVED.
v. APPLICATION FOR LISTING OF COMPANYS SECURITIES.
vi. REFUND/ADJUST EXCESS APPLICATION MONEY RECEIVED.
vii. ISSUE ALLOTMENT LETTERS TO SUCCESSFUL APPLICANTS
AND
viii. FILE RETURN OF ALLOTMENT WITH THE REGISTRAR OF
COMPANIES.

A PUBLIC COMPANY RAISING FUNDS FROM FRIENDS OR
RELATIVES BUT NOT THE PUBLIC HAS TO FILE A STATEMENT IN
LIEU OF PROSPECTUS WITH THE ROC AT LEAST 3 DAYS
BEFORE ALLOTMENT OF SHARES AND RETURNS OF
ALLOTMENT AFTER COMPLETING THE ALLOTMENT.


COMMENCEMENT OF BUSINESS
A PUBLIC COMPANY RAISING FUNDS FROM THE PUBLIC HAS TO APPLY TO THE
REGISTRAR OF COMPANIES FOR THE CERTIFICATE OF COMMENCEMENT OF
BUSINESS ALONG WITH THE FOLLOWING DOCUMENTS:
A. A DECLARATION ABOUT MEETING MINIMAL CAPITAL SUBSCRIPTION
REQUIREMENT;
B. A DECLARATION ABOUT DETAILS IN RESPECT OF ALLOTMENT TO DIRECTORS.
C. A DECLARATION ABOUT NO MONEY BEING PAID TO THE APPLICANTS; AND
D. A STATUTORY DECLARATION
A PUBLIC COMPANY RAISING PRIVATE FUNDS HAS TO SUBMIT DOCUMENTS B.
AND D. LISTED ABOVE.

THE REGISTRAR, UPON SATISFACTION ISSUES CERTIFICATE OF
COMMENCEMENT OF BUSINESS WHICH IS ALSO AN EVIDENCE OF THE
COMPLETE FORMATION OF FORMATION REQUIREMENTS.

KEEP IN MIND THE TWO TYPES OF CONTRACTS:
i. PRELIMINARY CONTRACTS: CONTRACTS SIGNED BY PROMOTERS WITH THIRD
PARTIES FOR THE INCORPORATION OF COMPANY.
ii. PROVISIONAL CONTRACTS: CONTRACTS SIGNED AFTER INCORPORATION BUT
BEFORE COMMENCEMENT OF BUSINESS.

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