Formation of a company

Formation of a company

• 1.
  FORMATION OF A COMPANY
• 2.
  STAGES IN THEFORMATION OF A COMPANY  PROMOTION  INCORPORATION OF A COMPANY  CAPITAL SUBSCRITON  COMMENCEMENT OF BUSINESS
• 3.
  PROMOTION OF ACOMPANY  First stage in the formation of a company  Promotion means the initial work involved in bringing a business concern into existence and making arrangements for its proper running
• 4.
  PROMOTER  Promoter isa person who undertakes to form a new company and carries out all the preliminary work in connection with its establishment as a going concern.
• 5.
  TYPES OF PROMOTER Professional Promoters  Occasional Promoters  Entrepreneur Promoters  Financier Promoters
• 6.
  PROFESSIONAL PROMOTERS  Promotionis their main profession or occupation  They are experts who specialise in company promotion. They float the company and hand it over to the shareholders or their representatives.
• 7.
  OCCASIONAL PROMOTERS  Thesepromoter take interest in floating some companies  They take up the promotion of some company and once it is over they go to their original profession  Eg. Engineers, lawyers etc… may float some companies
• 8.
  ENTREPRENEUR PROMOTERS  Theyare both promoters and entrepreneurs.  They conceive idea of a new business unit, do the groundwork to establish it and subsequently become a part of the management.
• 9.
  FINANCIER PROMOTER  Somefinancial institutions like investment banks or industrial banks, may take up the promotion of a company with a view to finding opportunities for investment.
• 10.
  FUNCTION OF APROMOTER  Identification of Business Opportunities  Feasibility Studies  Name Approval  Fixing up signatories to the Memorandom of Association  Appointment of Professionals  Preparation of Necessary Documents
• 11.
  INCORPORATION  Second stagein the company formation  A company is said to be incorporated when it is registered with the Registrar of Joint Stock Companies.
• 12.
  The following documentsare required to be submitted to the Registrar of Companies:  Memorand of Association  Articles of Association
• 13.
   Agreement withthe proposed directors  A copy of the Registrar’s letter approving the name of the company  A notice about the exact address of the registered office  Documentary evidence of payment of registration fees  A statutory declaration that all the necessary requirements of the law for registration have bee complied with
• 14.
  MEMORANDOM OF ASSOCIATION It is the Charter or Magna Carta of the company.  Most important document of the company with which a company is registered
• 15.
   It definesthe company’s objects, capital and power  It governs the outside relationship of the company
• 16.
  CONTENTS OF MEMORANDOM OFASSOCIATION  Name Clause  Registered Office Clause  Objects Clause  Liability Clause  Capital Clause  Association Clause
• 17.
  ARTICLES OF ASSOCIATION It is to be filed with the registrar to get the company registered.  It contains the rules and regulations for internal management and administration of the company
• 18.
  MEMORANDOM OF ASSOCIATION ARTICLES OF ASSOCIATION Constitution or charter  Fundamental document  Relationship between company and outsiders  Compulsory  Contains the objects of the company  Bye-laws of the company  Subsidiary document  Company and its members  Not compulsory  Mentions the ways by which the objects can be
• 19.
  CAPITAL SUBSCRIPTION  Thirdstage in the company formation  Here, the public company can raise the required funds from the public by means of issue of shares and debentures
• 20.
  The following stepsare required for raising funds from the public:  SEBI Approval  Filing of Prospectus  Appiontment of bankers, brokers and underwriters  Minimum subscription  Application to stock exchange  Allotment of shares
• 21.
  PROSPECTUS The Companies Actdefines prospectus as “any prospectus, notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for subscription or purchase of any shares or debentures of a body corporate”
• 22.
  COMMENCEMENT OF BUSINESS Last stage in the formation of a company  At this stage, the ROC issue a Certificate of Commencement of Business to a public company  After getting this certificate, the company can start its business