1. SUBMITTED
BY
SMITHA .R.S
B.Ed COMERCE
N.S.S TRAINING COLLEGE
PANDALAM
9/21/2014 1
2. Introduction
Formation of a company refers to bringing a company in to
existence . A lot of preliminary work s to be done for bringing a
company in to existence. The process of a company formation may be
divided into four stages namely , 1. Promotion 2.Incoroperation or
registration ,3. raising of Capital, 4 .Commencement of business . A
public company has to pass through all the four stages before it can
start its business. But a private company can commence business
immediately after completing the firs two stages . Each of the four
stages is discussed below .
3. PROMOTION
Meaning
Promotion s the first stage in the formation of a company . It
refers to the sum total of the activities in starting an enterprise .The
term ‘ Promotion ’ had been defined by Gerstenberg as, ‘’the discovery
of business opportunities and the subsequent organization of fund ,
property and managerial ability in to a business concern for the
purpose of making profits .The person who undertakes the promotion
is called Promoter .
4. INCORPORATON
A comapany comes in to existence only when it is registered with the Registrar of comapanies . For
incorporation , the promotors have to take the following steps ;
1. Decide as to the form or type of company to be formed – whether a private limited
company .
2. Ensure the availability of the name by which company is to be registered .
3. Apply for the industrial licence , if necessary .
4. PrepareMemorandumof Association and artcles of Association and get them
printed , and signed by atleast 7 persons ( 2 for private company .
after completing the above formalities ,the promoters should submit an application an
for incorporation of the company .The application should be submitted in the Registrar of
application should be submitted to the registrar of companies of the state in which the
Registered office of the company is to be situated along with the registration fees.
It should accompanied by
1) Memorandum of Association
2) Articles of Association
3) List of directors, their names,addresses,age and occupation.
4) A written consent of the directors to act as directors.
5) Agreement with directors of appointment as managing director or manager.
6) Address of the registered office of the company
7) A declaration by any director, managing director, manager or secretary of the company that
all the requirement of the companies act necessary for registration have been observed.
5. RAISING OF CAPITAL
This stage involvers raising of capital for the company. In orders to
raise capital the promoters have to take the following steps:
(1) Obtain consent of the securities Exchange Board of
India(SEBI)
(2) A Prospectus must be filed with the register
(3) An account has to be opened with a scheduled bank as
the application
money has to be deposited with the bank.
(4) Application received from the public has to be processed
and shares are to be allotted.
6. COMMENCEMENT OF BUSNESS
A Public company cannot commence business immediately after obtaining the certificates
of incorporation and raising the required capital. In order to commence business .It has
obtain a certificate called “Business Commencements Certificates “. For obtaining this
certificate, the promoters should apply to the Registrar of companies together with the
prescribed fees. The registrar well issue this certificate provided the following conditions
are satisfied.
1. The has filed with the registrar a copy of the prospectus or where a prospects has not
been issued , A statement in lieu of prospectus.
2. The company collected from the public the minimum subscription.
3. The Directors have taken up and paid for their qualification shares.
4. A declaration by one of the Directors or secretary of the company to the effect that all
the requirement of the Company Act in respect of commencement of business have
been complied with .
