FORMATION
OF COMPANY AND RELATED MATTERS
Stages
in the formation of Company
1) Promotion: Section 2(50) defines
a promoter as a person named as a to the MOA of the company and is named as
such in the prospectus. The promoter has the control of the company, directly
or indirectly, as a shareholder, director, or otherwise. According to the
instructions of promotor directions or instruction of board of company are
performed.
The
task of the promoters in the promotion of the company includes the discovery of
a business idea, detailed investigation of the idea, gathering together or
assembling of men, material, and resources, financing the business idea through
equity and debt. The promotion of the company helps to prosper the business of
the company and make a profit out of it.
2) Incorporation and registration: After
the compilation of the promotion, the company moves to the second step that is
registration of the company. The promoters have to enquire about the
availability of the name of the company they have selected. Documents of the
company are needed o be filed with the registrar along with fee and
declaration. The two main documents are the Memorandum and the Article of
Association. Some businesses may also
require licenses if the subject of their business is restricted. Arrangements are needed to be made with
bankers, lawyers, brokers, underwriters, and others especially in the case of
public companies.
3) Capital subscription: This
step of capital subscription is a very easy step for private companies but for
the public companies it has to complete certain formalities. A private company
may commence its business once the company is incorporated. Section 19 of the Act allows a private
company to make its arrangements for the capital upon incorporation. Whereas, a
public company can raise its capital only upon filing the prospectus and after
the completion of other formalities.
4) Commencement of business: A
private company can start its business upon registration, whereby the public
company needs to meet the requirements given in Section 19.
0 Comments